Home Equity

What is a Residential Sale-Leaseback?

By Tom Burchnell
residential sale-leaseback

A residential sale-leaseback is a relatively new concept in real estate. You’ve likely never heard of it for that reason. However, we here at EasyKnock believe the idea has a big future. It gives homeowners a new housing option that they likely never imagined. It allows them to sell their home without moving out.

In a residential sale-leaseback, an individual or company would purchase the home, providing a lease agreement to the seller, allowing them to remain in the home as a tenant. The owner-turned-lessee would pay monthly rent while continuing to live in the house. The terms of these leases vary, but generally speaking, a longer lease would allow for a lower monthly payment.

It seems a little counterintuitive when you think of all the advice that people receive about home buying; for example, that buying is always a better idea than renting. However, there are many reasons why a residential sale-leaseback might be a great option for some people. Let’s cover some instances where sale-leaseback might be not only viable but an ideal scenario.

Homeowner Needs Cash

If you need actual money instead of a long-term investment like a home, but you don’t necessarily want to give up living there, a residential sale-leaseback can help you. This need for liquid assets could be due to job loss, early retirement, or other life events. The money may be used to pay off debts or to cover medical bills. Whatever the reason, there is a time in almost every homeowner’s life when this option might come in handy.

In some sale-leaseback contracts, the seller is offered the option to buy the home back. This option could be perfect for people trying to improve their financial situation. It is a way to buy some time to get finances straightened out without altering a homeowner’s lifestyle.

As a Transition Between Selling a Home and Buying a New One

A residential sale-leaseback is great for people who are looking to sell their home, particularly when the market is skewed towards sellers and inventory is low. It can give people the chance to find their dream home or even to build it from the ground up. It buys time to make the transition, allowing people to avoid moving all their belongings multiple times. It takes the rush out of house hunting.

To Take Advantage of the Housing Market and Avoid Market Decline

Say the housing market is absolutely fantastic and your home is now worth more than ever and you’re worried the boom won’t last, but you’re not quite ready to move just yet. Or maybe you’re not sure that the market is going to hold and you’re worried that you’ll lose money if you wait to sell. That’s not a problem with a sale-leaseback. You can stay in your home, but get out from under the mortgage.

Key Takeaways

The reasons why a residential sale-leaseback might be a good option are as varied as homeowners themselves. Talk to your financial advisor or real estate agent to discuss the ways a sale-leaseback could work for you. If selling your home but staying in it sounds like the way to help you improve your finances, then head to EasyKnock to learn about their residential sale-leaseback plan, Sell & Stay, which even offers a buyback option. 

Home Equity
Tom Burchnell
Written by Tom Burchnell
Director of Product Marketing

This article is published for educational and informational purposes only. This article is not offered as advice and should not be relied on as such. This content is based on research and/or other relevant articles and contains trusted sources, but does not express the concerns of EasyKnock. Our goal at EasyKnock is to provide readers with up-to-date and objective resources on real estate and mortgage-related topics. Our content is written by experienced contributors in the finance and real-estate space and all articles undergo an in-depth review process. EasyKnock is not a debt collector, a collection agency, nor a credit counseling service company.