Use of Occupancy Explained!
A constant conversation with sellers is, “I want to move but am afraid I won’t have anywhere to go.” There are multiple solutions to this problem, but one that has become common in the last few years is the Use of Occupancy Agreement (UOA). What is a use of occupancy agreement (some call it a rent-back agreement)? This agreement between the buyer and the seller allows the seller to sell the home but maintain residence there for up to 59 days. The seller would be renting the house from their buyer for 59 days. Why 59 days? Most of the buyer pool will be utilizing a mortgage to finance their home. The lender only allows a buyer to rent back to a seller for 60 days. And this is why we use 59 days as the amount of time you will need.
Benefits For Sellers:
Removes the need for finding a short-term rental and storage unit. This is particularly helpful in the South Shore real estate market, where winter rentals are limited, and summer rental pricing increases exponentially.
Allows them the opportunity to capitalize on the overabundance of buyers in today’s market. Subsequently, multiple buyers mean multiple bids for a potentially higher price.
Bridges the time gap if the date when a seller has to vacate doesn’t align with the closing date a seller has for their new property.
Allows sellers more time to clean out and move.
Allows sellers more time to secure a new property.
Allows sellers more time to do work/updates to their new home before moving in.
Benefits for Buyers:
Buyers can purchase a home without worrying about future mortgage rates.
Buyers do not lose any money. The seller would be paying the buyer’s mortgage or an agreed-upon amount for the 59 days.
Buyers can use this type of agreement to make a stronger offer, increasing their chances of securing the property.