Post-Occupancy Agreements: The Best Way to Sell Your Home Without Lowering the Price
When you’re on the clock to sell your home in a buyer's market, you may be tempted to slash your asking price.
But I’m here to tell you price reductions aren’t the only way to generate interest in your home!
With careful planning and an agent who understands your needs, you can sell your home for your asking price months before you need to and continue packing stress-free.
The secret, my friend, is a post-occupancy agreement with your buyers.
What’s a Post-occupancy Agreement?
A post-occupancy agreement is when a buyer agrees to rent the home back to the seller after the home is sold. The agreement can be up to 60 days (in Colorado), and usually, the sellers agree to pay the buyer rent.
This concession will benefit you, the seller, because:
The home is sold at your asking price (unless other concessions are made).
It’ll save you the hassle of finding short-term accommodations to bridge the gap between leaving your old home and moving into your new residence.
It’ll save you money because a mortgage is almost always cheaper than paying rent. You also won’t need to rent a storage unit during the interim.
This concession is compelling for buyers because it gives them cash flow for up to 60 days before they move in.
What’s the Cost of Rent?
Rent is usually the amount of the mortgage payment or the home’s approximate mortgage payment. It’s typically a fixed amount split up by a daily, weekly, or monthly rate.
The cost of rent for a post-occupancy agreement can include:
Dues (HOA, Metro District, Condo, etc.)
Taxes
Homeowners Insurance
Principal and Interest (i.e., your mortgage)
The lender must be notified and agree to this concession.
You might also have to pay a security deposit to either the buyer or the title company in case any damage occurs during post-occupancy. This deposit is returned – provided there’s no damage.
Can a Post-Occupancy Agreement Be More Than 60 Days?
The short answer is no. 60 days is the limit in Colorado.
A post-occupancy agreement is a pre-approved legal contract from the Colorado Real Estate Commission. Real estate agents are required to use these pre-approved contracts and cannot alter them.
The post-occupancy Agreement (or Seller Rent-Back Agreement) states:
"This form is to be used only for short-term residential occupancy for a term not to exceed 60 days. A residential lease must be used for a term longer than 60 days."
Pro Tip: The post-occupancy agreement only allows you to remain in the home. It doesn’t give you the same tenant rights you’d have in a landlord-tenant relationship with a residential lease.
Can Post-Occupancy Agreements Be Changed After Signing?
Although the pre-determined language of a post-occupancy agreement can’t be altered, the timelines can be modified by an amendment at the buyer’s or seller’s request. However, both parties need to be in agreement.
For example, suppose you enter into a post-occupancy agreement for 60 days but realize you only need to stay in the home for 45 days. In that case, you can request an amendment to the contract. If the buyer agrees, the amendment will update the post-occupancy agreement with the revised timeline.
Your Next Steps
When you start to work with your real estate agent, you’ll discuss your timeline from listing your home to handing over the keys. This is the best time to ask if a post-occupancy agreement is right for you.
If it is, you’ll want to flag it as a priority when you sort through offers (step 5 of my comprehensive guide to selling your home).
Have other questions about selling your home? Shoot me an email! I’d love to help you have a seamless handoff.