Can I sell my home and still live in it?

Selling your home can be a complicated affair. The real estate transaction itself is just the tip of the iceberg; you still have to find a new house, and you may have to find temporary housing or storage for your belongings if the closing timeline between moving out of your home and moving into your new one doesn’t align exactly. Some homeowners don’t want to leave their home but need to tap into their home’s equity for an influx of cash.

Whether you’re experiencing a financial crunch or you don’t want to deal with the hassle of moving after selling your home, you may want to sell your house and continue to live in it. Yes, this is possible! You can tap into your home’s valuable equity without moving, but it may require some sacrifices and will depend on finding the right buyer.

Why would someone sell their home and still live in it?

There are many reasons why somebody may want to sell their home and still live in it. We touched on a couple above, but let’s dig into some more detail:

• You love your house: They say home is where the heart is, and staying in a house after selling it gives you greater financial flexibility without leaving a place you love.

• Need an influx of cash: For many people, their house is their biggest asset. However, it’s not a liquid one. Selling a house can net you hundreds of thousands of dollars, which you can hold onto if you forego a down payment on another house.

• Retirement: The demands of homeownership may be too much for older people living on a fixed income. By selling a home and leasing it back as a renter, homeowners can transfer the property management and maintenance work to someone else while saving on property taxes and other mortgage escrow payments.

How do you sell your home and still live in it?

There are several avenues you can pursue if you’d like to sell your home without having to move.

1. Sale-leaseback agreement

The most common way to stay in your home after selling is by negotiating a sale-leaseback agreement. This agreement involves selling a home to a buyer and then entering a lease with the new owner. Basically, the homeowner transfers property rights to a buyer and becomes a tenant with the buyer as their new landlord. Most of the time, this involves selling the home to an investor or real estate investment company. 

Investors get to acquire a property without the burden of searching for a new tenant. Sellers get to stay in their home, avoid an annoying home search and moving process, and gain some fiscal solvency.

Pros

• Generates a nice profit from the home sale.
• You get to stay in the home.
• No more property management or maintenance costs.
• No more property taxes, insurance premiums, or liability concerns.
• No searching for a new home or dealing with temporary housing during a move.

Cons

• Usually, investors don’t offer the highest price you could get on the open market.
• Cashes out home equity, so you won’t see any benefits from rising home values.
• You must enter a lease agreement that will likely prevent them from making any material changes to the home without landlord approval.

2. Home reversion agreement

A home reversion, also called a reverse mortgage, is when a homeowner sells their home equity to a lender for either a lump sum, a monthly income stream, or some combination of both. This is fairly uncommon and is usually limited to elderly homeowners who don’t want to sell their home outright but also don’t plan on passing it down to heirs.

There are both full home reversions and partial home reversions. In a full home reversion, a lender typically pays between 20-60% of the share you hold in your property depending on your life expectancy, potential for home value appreciation, and the cost of upkeep. Partial home reversions allow homeowners to keep at least part of their home equity, giving them the option to sell the home in the future and still pocket some cash. In a full home reversion, the lender takes full ownership of the home when the owner passes away. In a partial home reversion, a seller may still be able to pass down their partial equity to heirs.

Pros

• You get to stay in the home.
• Lump sum or monthly payments make it easier to manage living costs, especially on a fixed income.
• No searching for a new home or dealing with temporary housing during a move.
• There are tax benefits to selling equity.

Cons

• You won’t get the best price for your home equity.
• You retain costs of ownership like maintenance, property taxes, and insurance premiums.
• Reduced or eliminated equity for heirs.

3. Negotiate with the buyer

Nobody enjoys moving, and selling a house can be a tedious process. If you’d like to stay in the house for just a few months or a year so that a child can finish school or you can attend to some other personal business, you can always negotiate with the buyer. The new owner may allow you to stay in the house and pay them rent for a period of time, let you stay in exchange for a discounted price, or some other agreement.

Often, home buyers have their own affairs to figure out. Whether they’re still trying to sell their own house before moving or they’re investors who don’t want to rush to find a new tenant, there are several reasons why a new owner may be willing to negotiate with a seller to let them stay.

Pros o

• You get to stay in the home.
• You’ll likely sell the home for a better price than you would to a sale-leaseback company.
• You can put off the challenges of a move for a little while.
• Negotiation with a buyer offers more flexibility than with a bank or company.

Cons

• You’ll likely to have to concede by paying rent or reducing the sale price.
• You may retain some costs of ownership.

4. Sell to a family member

Rather than wait to pass a home to a child or another inheritor, some homeowners opt to sell to a family member. This is an easy way for older homeowners to capitalize on home equity and get an influx of cash during their life, while ensuring that the house stays in the family after their passing. 

It’s important to note, however, that selling to family is legally dicey. You cannot sell a home below fair market value to a family member, so you’ll need to get proper inspections and appraisals, as well as a strong purchase agreement to keep everything above board.

Pros of selling to family

• You get to stay in the home.
• Family members likely make better landlords than strangers.
• Keeps the home equity in the family.

Cons of selling to family

• There are many legal hurdles to selling to family so be sure to consult with an attorney to properly manage the process.
• You may owe capital gains taxes.

3 companies that buy your house and rent it back

There are several companies that specialize in sale-leaseback agreements. They make the closing process easy and seamlessly transition you from owning to renting your home without you having to move. The major tradeoff to this, however, is that these companies never offer a premium price for your home that you might get on the open market.

Sell2Rent

The only nationwide sale-leaseback company, Sell2Rent was founded in 2019 and has quickly become one of the premier companies specializing in buying homes and leasing them back to sellers. The company always pays in cash, facilitating fast closings and an easy transition from owning to renting.

EasyKnock

EasyKnock operates in all states except California, Delaware, Massachusetts, North Dakota, Maryland, New York, South Dakota, Vermont, and Washington, as well as select markets in other serviced states.

One of the more innovative sale-leaseback companies, EasyKnock offers a range of programs for homeowners looking to tap into their home equity. You can do a traditional sale-leaseback or leverage the MoveAbility program to sell your home to EasyKnock, pocket the cash, and use it to finance your next home purchase within the next 12 months. It gives you a little more flexibility if you’d like to stay in your home temporarily rather than permanently.

Truehold

Truehold operates in select markets in Ohio, Missouri, Kentucky, Oklahoma, Indiana, Pennsylvania, New Mexico, North Carolina, Georgia, Tennessee, and Texas. It focuses on fast transactions, sometimes in as little as 48 hours or less, and streamlined closing processes in fewer than 30 days.

Alternatives to selling your home

If you want to tap into your home equity without selling your home, there are ways to do that, too. Keep in mind, however, that whenever you do tap into equity, you won’t pocket a full profit if you sell your home later.

Home equity line of credit (HELOC)

When you’ve accrued equity, lenders allow homeowners to borrow from that equity in the form of a home equity line of credit (HELOC). Unlike a reverse mortgage, HELOCs function more like a credit card. During a “draw period”, you can use home equity to pay for certain items and only pay on the interest accrued on the equity you used. At the end of that period, however, you’ll owe the principal amount plus interest.

Cash-out refinance

Many homeowners choose to refinance at some point during the lifetime of their mortgage. It’s a good way to get a lower monthly payment when interest rates drop. In a cash-out refinance, you replace your current mortgage with a new one, pocketing the difference in home equity in cash. However, you will pay costs and fees and may become saddled with a higher interest rate if rates have risen since you first got your mortgage.