You may hear the phrase “Guaranteed buyout” and think, “YAY! That’s my ticket out of this house!” But is it, really?
In theory, a guaranteed buyout will let homeowners move forward with plans to build a home. They are guaranteed that if their home doesn’t sell within a certain time frame, then the builder, a Realtor, or an investor will purchase the home. That way, your new build does not need to wait for your home to sell. The buyout amount is set in advance. This can also save you from having to make 2 mortgage payments if your first house doesn’t sell before your next one is ready.
In some cases, though, a guaranteed buyout is not as great as you would hope. They are not all the same, and what your neighbor tells you might not be the same kind of program you will get (which is a reason why you need a REALTOR to help guide you through all of this).
Most people don’t realize that a guaranteed buyout will usually offer you between 75%-95% of your home’s market value. I have heard that 80% is a very common number in the Indianapolis area. If you do not have much equity in your home, you may end up bringing money to closing to make up the difference. Also, if you were hoping to use the equity as a down payment or for upgrades to your new home, that might not be possible.
It is very important that you do your homework and know what you are getting yourself into with a Guaranteed Buyout program. Will the buyer purchase it outright or only take over your payments? Will you get enough for the home to have any equity left over? Is their assessment of a fair market value really fair?
I can help guide you through the process, and help you determine if it might be right for you.