How Leasebacks Help Sellers Avoid Rushed Moves

A leaseback is something Jules and I talk about regularly with sellers, especially when they're selling but the timing on where they're going next isn't a hundred percent lined up yet. The way it works is you sell your home and close on it, but instead of handing over the keys that night, you rent your home back from the buyer for a period of time that's negotiated as part of the transaction. It can be anywhere from a week to sixty days, sometimes longer depending on the situation. The new buyer is now the owner of the home, and you get to stay in it until your move is ready.

Jules and I bring this up with our clients from the very beginning — not after we have an offer, but before the home ever goes on the market. By the time we're sitting down to talk about pricing and the listing itself, we already know whether the seller's timing on the other end is going to line up with a normal thirty-day closing, or whether we need to be thinking about a leaseback or something else from the start. That's how we run a listing. The timing question gets answered before it can become a problem, not after.

This can happen for a few different reasons. Some sellers are moving to a different state and the home they're buying there isn't going to be ready for another month or two. Some are moving into a new home that's being built and the construction on the home is running behind schedule, which is something we see a lot with builders in the area. Families with kids in school can't leave mid-year and need the move-out date to line up with the end of the school year. Some sellers are seasonal residents who already know where they're headed and just want a little flexibility on when they actually make the trip back north. In every one of these, the seller knows exactly where they're going — the timing just doesn't fit a normal thirty-day sale, and a leaseback gives them a way to sell the house now without having to be out of it before they're ready.

A leaseback can also help the buyer in a lot of these transactions, and that's something Jules and I make sure to talk through with the listing agent on the other side when we're negotiating the offer. Bluffton attracts a lot of buyers who are moving in from a different state or a different county, and they have their own timing to manage on their end. A buyer might still be finishing up the sale of the home they're leaving. Another might need extra time to coordinate movers or wrap up a lease where they're coming from. Some are buying now because the financing is lined up the way they need it to be, but they're not actually planning to be in the home for another month or two. When the timing on a leaseback works for both sides, the leaseback is part of why the transaction works at all — not a favor the seller is asking the buyer for.

There are a few pieces of the leaseback Jules and I always have negotiated as part of the offer, because we want every part of it in writing and clear before the deal is signed.

One is the daily rate for staying in the home after closing. The daily rate covers the buyer's carrying costs — their mortgage payment, the property taxes, their homeowner's insurance, and any POA or regime fees they're paying. We take what the home is costing the buyer on a monthly basis, divide it by thirty, and that's the per-day amount the seller pays for each day they're in the home after closing. We negotiate that number with the buyer's agent up front so there's no question about it later.

Another piece is the deposit. The buyer is letting the seller stay in a home they just paid for, and the deposit gives the buyer some reassurance in case anything happens during the leaseback period. The deposit gets refunded after the seller hands the home over in the same condition it was in at closing, minus any potential wear-and-tear repairs from the time they were still living there. A quick side note on this — a home that's well-maintained when the buyer is buying it is almost always a home that's well-maintained when the seller is the tenant for a few weeks. In all of the leasebacks Jules and I have negotiated, we've never had a deposit held.

The other piece is the move-out date. It goes in writing as a specific date, with a specific amount the seller pays for any day past it, so everyone understands the schedule the same way. Almost every leaseback we do goes smoothly because the seller is just as motivated to leave as the buyer is to move in, and having the date and the per-day amount in the paperwork up front is how we keep it that way.

There are also situations where a leaseback isn't going to be the right move, and Jules and I will tell our clients that going in. If the time you need in the home is longer than sixty or ninety days, that can potentially create an issue if there's a lender involved on the buyer's side, because some loan products have requirements around when the home has to become owner-occupied. If the buyer is using a loan product that requires immediate occupancy, a leaseback isn't going to be an option at all. The daily rate matters too — if it doesn't feel fair to the buyer, it becomes a sticking point in the negotiation, which is one of the reasons we have that number negotiated carefully on the front end.

In the Lowcountry, the leasebacks Jules and I negotiate most often are for sellers moving into a new home that's being built and is taking longer than the builder anticipated, families with kids in school who can't move mid-year, and seasonal residents who already know where they're headed and want flexibility on when they actually make the move. For each of those, the leaseback turns what could have been a situation with two separate moves and the cost that comes with it into one move on the seller's own timeline.

When a leaseback is negotiated correctly on the front end, it takes the question of where you're going to live and puts it on the calendar, so you can focus on the actual move instead of the timing around it. That's why Jules and I bring it up at the very beginning of the conversation with sellers, not after the home is already under contract.

If you're starting to think about listing in Bluffton and the timing of your next move is part of what you're working through, that's exactly the kind of thing Jules and I talk through with our clients in the first conversation. A leaseback is one option. There are others. The right one depends on you, your timing, and the buyer who ends up writing the offer on your home.

A couple of other reads that go along with this one — our earlier piece on Structuring Flexibility When You Need To Sell Before You Move covers the broader options sellers have when timing is the issue, and Why Rushing To Market Usually Creates More Stress Later covers what happens when sellers try to force the timing instead of working with it.

Jeff & Jules Moran
Anchor & Isle Real Estate

Bluffton & Hilton Head Island

Strategic Marketing. Experienced Negotiation. Real Results.
Real Estate. Financing. One Strategy.