Selling a home is very difficult in an economic downturn due to falling property prices, job losses and lenders not lending. A sell and rent back has grown in popularity as it allows that person to sell their home to a property cash buyer, get a quick house sale and continue to live there as a tenant. A property cash buyer typically offers 75% of the properties true market value.
Benefits of Sell and Rent Back
- Prevents property repossession. A sell and rent back to a property cash buyer can help to prevent property repossession. Provided that a minimum of 25% equity is available, a quick house sale can halt repossession proceedings.
- Handled privately. There are no estate agent boards put up so the general public will not know that a sell and rent back is taking place. The entire process of selling property is dealt with privately.
- No estate agent and legal fees. A quick house sale performed in conjunction with a property cash buyer means that a sell and rent back avoids estate agent fees of 1-2% of the sale value.
- Sell a house quickly. Access to a property cash buyer means that the sale can be speedily completed. This allows the seller to reduce monthly bills or avoid property repossession.
- Affordable rent. A sell and rent back means that the seller normally enjoys lower rental payments and more affordable household bills.
Negatives of Sell and Rent Back
- Below market value. In order to attract a property cash buyer and secure a house quick sale, sell and rent back schemes usually involve selling a house for up to 80% of market valuation. Critics argue that it is possible to secure a higher price on the open market.
- Assured shorthold tenancy agreements. Those considering a sell and rent back should be careful to avoid assured shorthold tenancy agreements that only last for 6 or 12 months. Once this period elapses, it is possible for the new landlord to remove the tenant. Only accept a quick house sale from a buyer seeking to build a long term business relationship.
- Negative equity. A sell and rent back scheme will not be accepted by a property cash buyer should insufficient or negative equity exist. This is because all offers are below market value.
- Market regulation. There is very little sell and rent back regulation, leaving considerable scope for unscrupulous property cash buyers to operate.
- Complex rules. Sell and rent back scheme rules can be complicated to follow for those selling a house. To make matters worse, they all use a different set of criteria and rules.
A sell and rent back scheme will allow those selling a house to avoid estate agent and legal fees, but most schemes will only offer 75% of the open market value. However, a quick house sale from a property cash buyer can help families avoid property repossession.
Those struggling to prevent property repossession should check to see if they have an unlawful mortgage agreement. This could mean that a homeowner is entitled to compensation or even the write-off of the full debt in certain circumstances. This also applies to illegal loan agreements and unlawful credit card agreements.