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Can I Sell My House and Still Live in It
While it may seem weird and impossible to sell your house and still live in it, many people are actually doing it. This is often the case for homeowners who need the equity of their house but don't want to leave their neighborhood. But how is selling your home and living in it still possible if your name is no longer on the deed?
You can sell your house and still live in it through three options: selling to an investor and becoming a tenant, home reversion, and negotiating with the buyer. Among all these options, the most common is the sale-leaseback or selling the house to an investor and then agreeing to be the tenant of the property.
To learn more about the options we have shared above and find the best buyer that would allow you to stay in the property after the sale, check out the rest of this blog!
Can You Sell Your House and Stay in It?
Yes. You can sell your house and stay in it, depending on your agreement with the buyer. Most buyers understand how hard it is to move places, so they agree that the seller remains in the property for a certain period until they have settled everything.
Note, however, that this setup has its drawback when selling your home. The buyer may ask for a discounted sales price due to post-closing occupancy and the holding costs it may incur. In other words, you won't really be living there for free. You'll sacrifice a portion of the sales price so you can stay in the property a while longer.
It is also possible that you won't have to pay a single cent nor cut back on the sales price in order to live in your property after it is sold. This is called home reversion.
We will discuss all of these in detail in a later part of this article. For now, what is clear is that you can absolutely sell your home and stay in it after closing.
Reasons Why Homeowners Want to Still Live in the Property After Closing
There are endless reasons sellers want to stay in a property even after selling it. Some of the most common ones are:
Moving Preparation
Let's be honest; moving when you sell your home can be pretty tough, especially if there are too many personal belongings that should be packed and moved (i.e., furniture, appliances, etc.). Moving can also be expensive, so if the proceeds of the home sale went to buying another property and a budget for moving wasn't saved, there would really be a delay.
Aside from the physical and financial aspects of moving, many sellers are also not ready to deal with its emotional impact. This is to be expected since many memories are attached to a home. It may take time for sellers to finally accept that they are indeed moving; hence, the need for them to stay longer on the property.
Relocation
Most people move due to job relocation and they don't do it until the sale of their old house in the real estate market comes to a close. This is understandable since they need the proceeds of the sale as a down payment for a new house and want to avoid double closing fees.
The problem with waiting until the sale closes, however, is that the preparation for moving only happens after the house is sold. Unlike typical home sales where the property is vacated before it is put on sale, people who plan to relocate usually stay longer after closing to pack and move their belongings.
Amazing Neighborhood
If the neighborhood is amazing, it is really difficult to move. Who wouldn't want to live near a great school or hospital? Or near the malls, a nice park, or the metro? Moreover, if the neighbors are really friendly and the HOA does a good job, leaving can make you wonder if you made the right choice.
Sellers who want the equity in their home but are deeply attached to their neighborhood may find themselves overstaying or selling to a real estate investor so they could be the tenants of their old home.
Great House
Some houses are really perfect—not in the actual sense of the word—but in how they suit a family or a person. This is another reason why there are people who want to stay in a property even after they sell it.
The house grew on them and its amenities may be hard to come across. For instance, a house with a jack and jill bathroom for siblings or a house with lots of natural light or a home with the exact number of bedrooms as the occupants.
How to Stay in the Property Even After You Sold It?
If you think the only way to live in a property you've sold is to sneak in and become a squatter, you are wrong. There are a lot of legal ways to live as if nothing's changed even after selling your home.
Negotiate With the Buyer Through the Help of Your Real Estate Agent
It's a great idea for home sellers who need to stay in the property for a short period (ex. packing their stuff, etc.) to talk to the prospective buyer or the buyer's agent for a post-closing occupancy. Buyers may allow this for free but typically negotiate an amount of funds to be given to the buyer depending on how long the seller plans to occupy the property.
If the stay would take some time, let's say a few weeks or months, the buyer's agent may use this to their advantage. They may draft an agreement and collect rent or put in an offer that discounts the cost of the seller's stay post-closing.
In both cases, if the house is sold traditionally on the seller's market, the seller would benefit from asking the help of a real estate agent in negotiating.
Sale-Leaseback Agreement
A sale-leaseback agreement is ideal if you want a lump sum of cash but want to stay in your property for a long time. This is possible if you sell to cash buyers or real estate investors.
Generally, a sale-leaseback or seller rent back is a transaction wherein a property owner sells to a cash buyer, investor, or mortgage lender who can lease the property back to them. The seller then receives a lump sum of cash and the buyer is assured of rent payments. It's a win-win situation for both the buyer and the seller.
Note, however, that the previous owner is restricted from doing actions related to the property, unlike before. Depending on the lease agreement, the number of occupants may be limited, pets may not be allowed, remodeling may have limitations, and the number of guests and hours of stay may be set by the new owner.
The great thing about this, though, is that the old owner doesn't have financial obligations to the property other than paying rent.
Rental Rate
If you plan to live on your old property, do not expect that the rent will be as low as your monthly mortgage. There are a lot of factors that go into calculating rent for a leaseback agreement:
- Mortgage and interest
- Property taxes
- The price of homeowner's insurance
- Homeowner association dues
- Funding for repairs
- Holding costs
It is a good idea to negotiate with the buyers for a lower rental rate early on. Even landlords understand how hard it is to pay rent. In case the prospective buyer cannot accommodate a more affordable rent, a workaround is lowering their cash offer to purchase your house.
Home Reversion
Home reversion is an equity release where you sell home equity in exchange for a regular income or lump sum. Lenders who purchase a share in your property typically pay for 20 to 60 percent of the share you sold. This depends on several factors, such as your life expectancy, upkeep and home insurance, and house appreciation.
Home reversion is ideal for the elderly, typically those who are in their 70s, as there are fewer risks. Home reversion is also great if you do not have any heirs that will inherit the property. This is because the lender will take ownership of your home when you die if you are on a lifetime lease.
With home reversion, you are given the right to live in the property via the security of tenure. If you sell your home in the future, the companies or lenders who provided you with home reversion will receive a part of the purchase price according to their share and what's left would be yours.
- Full Home Reversion: In this situation, you are selling the full legal ownership of your property. After you die, the home reversion company will claim your home.
- Partial Home Reversion: For partial home reversion, you are only selling a share or a percentage of your property. You can still sell your house in the future, but a percentage will be claimed by the companies or lenders.
Costs Associated with Home Reversion
Although home reversion would allow you to live rent-free in your home until death, you would still have to pay for a few things:
- An arrangement fee for the company offering reversion
- Legal costs
- Maintenance and repairs (unlike renting, you have to shoulder these things as long as you are living on the property)
- Home valuation or appraisal to determine the home's full market value
- Property taxes
Some of the major benefits are the money you'll receive, tax benefits, being rent-free until death, and no moving stress.
Meanwhile, the major drawback is that should you choose to sell, you won't get the whole sales proceeds or your heirs would have nothing to inherit if you opt for full home reversion.
Do You Need the Help of Real Estate Agents in Home Reversions?
You don't necessarily need a real estate agent for home reversion since you aren't putting the house on sale, only a share of it. There would be no listing or retail buyers involved.
You'll talk directly to home reversion companies or lenders in most cases. If you aren't confident dealing with them yourself, the best person to ask advice from is a real estate attorney and not an agent.
Selling Your Home to a Cash Buyer That Will Rent it Back to You
Even with great listing photos and a well-staged home, getting multiple offers and finding a retail buyer who would lease the house back to you is difficult.
Most potential buyers on the MLS search online for houses that they can move into and not properties they can lease to tenants. Your best bet in selling your house if you want to stay in it after closing is a cash buyer or real estate investor.
Renting from a Cash Buyer
Cash buyers or real estate investors purchase occupied or vacant properties in cash from sellers and use them as a source of income. They find tenants who can occupy the property until its market value appreciates and it's ready to sell.
These buyers or "landlords" would gladly furnish you with a sale-leaseback or long-term leaseback agreement since it saves them time to find new tenants and make repairs.
Cash buyers also purchase houses as-is, so you don't have to worry that you need to make repairs. Moreover, they close fast, so you'll get the amount of the cash offer in your bank in as fast as seven days.
Sale-Leaseback Process
Typically, here's how a sale-leaseback or long term lease back is processed with a cash buyer or investor:
- The seller and the investor agree on the sales price and closing date.
- The seller and the buyer agree on the lease terms, including length and monthly rent.
- The home sale contract, as well as the lease agreement, are executed.
- The sale closes and the seller receives the money. The ownership of the house is transferred to the investor.
- The original owner of the house settles a security deposit payment and stays in the house as a tenant.
Final Thoughts: Can I Sell My House and Still Live in It?
A homeowner's personal attachment to a home is one of the major reasons why they still want to live in it even after closing. Often, they negotiate with the buyer for a post-closing occupancy either short term or long term (otherwise known as a sale-leaseback).
If you are one of these homeowners looking into selling your house and living in it after, your best bet is to sell to a cash buyer or real estate investor. These people will pay you in cash and rent your house back to you!
When you are ready to sell your property, reach us here at Sell My House Fast. Many of our local cash buyers are actively looking for sale-leaseback arrangements and can help you out.
Fill out our form below or call us at (844) 207-0788 to learn more about selling your home and living it after.
