Would you be willing to buy a home at a bargain price if you had to let its previous owner live there until they die?

That’s the question posed by the new movie “American Dreamer” (out in theaters and streaming on demand on Friday), which tells the story of a down-and-out adjunct professor named Phil Loder (played by Peter Dinklage). Loder is determined to buy a house, but most properties are priced far beyond what he can afford.

Then he stumbles across a listing for a gorgeous lakeside mansion selling for $5 million—or for $240,000 “with live in,” meaning the property’s elderly homeowner, Astrid Fanelli (Shirley MacLaine), gets to stay in the house until she kicks the bucket.

“But what if she lives another 20 years?” Loder wonders aloud to his real estate agent (Matt Dillon).

But Loder is desperate, so he makes an offer—only to learn that this opportunity is much more than he bargained for.

Life estate sales: A small but growing trend

“American Dreamer” illustrates in a darkly comic way just how unattainable homeownership has become today. But it also raises an interesting question: Are home sales where the seller stays in the house all that common in real life?

These types of sales, known as life estate sales, are rare. Current Realtor.com® data shows that there are only 37 active listings nationwide with “life estate” in the description. That means they account for 0.0029% of listings, or about 1 out of every 35,000.

Yet some say these types of sales could be creeping upward in popularity.

Probably the most famous case is Hugh Hefner, who sold his Playboy Mansion in 2016 for $100 million with the condition that he could remain in the home until his death. It was purchased by Hefner’s next-door neighbor, who did not have to wait long to have his run of the place: Hefner died in September 2017 at the age of 91, about one year after the sale.

In theory at least, life estate sales make a lot of sense in today’s market and can be a win-win for both buyers and sellers.

“With a lot of baby boomers getting older, they’re thinking about how to cash out on their homes without moving. Life estates could be the solution,” says John Bucher, broker of KMF Business Advisors in Florida. Buyers benefit, too.

“In cities where even a tiny apartment costs an arm and a leg, younger people are looking for ways to own property. That’s where life estates come into play,” says Bucher. “It’s like investing in your future. You might not relax under its shade soon, but with a little patience, that property’s worth could skyrocket.”

But despite these potential benefits, life estate sales are a challenge to pull off. Real estate agent Marjary Kanale learned this after agreeing to take on the sale of a three-bedroom, 1,200-square-foot ranch in Savannah, NY, where its 72-year-old owner hoped to stay put.

“She doesn’t want to move, but she’s struggling to maintain it,” Kanale says.

Although the homeowner was open to having someone live with her in the house, she was ideally hoping a buyer might just use her 40 acres to farm or hunt, or build a new house somewhere on its expanse.

Kanale even priced the property so it was a steal at $299,900. Yet after five months on the market, she received only 15 inquiries, none of which panned out.

“We had a hard time selling it due to the lifetime use,” Kanale admits. “Some buyers asked which bedroom they’d get. Others asked about her health.”

A breeder of hunting dogs expressed interest but did not come through.

“She can’t go through another winter there alone,” Kanale continues. “So she’s finally decided to sell it outright and move out.”

The house will be relisted in April for $350,000. Without the life estate contingency, Kanale anticipates a swift sale.

Inside the awkward negotiations of a life estate sale

Jayedene Chesini, a real estate agent with Berkshire Hathaway HomeServices, took on a life estate sale in January where the 67-year-old seller was hoping to remain in her house in Yuba City, CA.

Knowing this area was extremely desirable, Chesini played up this three-bedroom property‘s potential in the listing: “Rare opportunity awaits in a highly sought-after location. Priced at $325,000, the seller requires a life estate. A unique chance to own a substantial parcel in a coveted area.”

Priced below comparable properties nearby, the listing quickly drew over 50 inquiries.

The problem: “Many had no clue what a life estate was,” Chesini says. “And they were shocked. They were like, ‘She wants to live there for free?’”

The negotiations got even more uncomfortable from there.

“The sad part is they don’t want to ask, ‘When is this person going to die?’ It’s such an awkward question,” Chesini says. “So they ask about health issues. I just address it with ‘I don’t have a crystal ball.’ These days, you just don’t know. I’ve seen people in their 90s where I wonder how are they still alive?”

Chesini tried her best with buyers to brainstorm creative solutions to get to the closing table.

“One buyer said they’d let her live there five years, then after that she’d have to pay rent or move out,” she says. Another buyer considered building an addition or ADU on the property where she could live, but zoning restrictions made this idea untenable.

“The sale fell out of contract twice because they couldn’t agree on the terms for the life estate,” says Chesini.

After two months on the market, the seller decided to sell without the life estate clause and move out. Chesini quickly found a buyer and is set to close in April.

“It’s heartbreaking,” Chesini says. “We’re trying to find her a new place, but it’s sad.”

‘It truly has to fit a buyer’s needs’

“Life estate sales are not a quick or easy sell at all,” says real estate agent Banks Prevatt, who has been trying to unload an $850,000 life estate house in Big Torch in the Florida Keys for over 200 days without one solid offer.

“People like to stay at home at that age. I understand,” Prevatt says, adding that the homeowner is in his mid-80s and still maintaining the property. But someday, “it may come to pass where he has to move.”

Prevatt did successfully complete a life estate sale once because the buyer was interested only in having a dock for his boat—not the house.

“It truly has to fit a buyer’s needs,” says Prevatt. “I’m looking for an investor buyer, or someone who might want to retire in Florida someday, but pay today’s prices.”

The risks and rewards of a life estate sale

“This situation may sound idyllic, but it’s a potential nightmare from a real estate perspective,” says Cara Ameer, a real estate agent licensed in Florida and California. “Someone without family who could use some companionship along with income may find this attractive, but there is so much room for things to go sideways.”

It’s worth pondering some questions: If the home seller’s elderly, are they being taken advantage of? Are they of sound mind and legal competency? Does the homeowner have any heirs ? Are the heirs aware of the sale?

“If the heirs are unaware of what the person is doing, they may be utterly shocked to find out what transpired,” says Ameer. “Those people—such as adult children—may attempt legal action to undo the process.

“I’m not saying it can’t be done, but numerous legal protections would need to be put in place for both parties,” Ameer continues. “I would recommend that the buyer and seller each retain an attorney so they can work through all risks and legalities.”

Despite these complications, Bruce Ailion, a real estate agent and attorney in Atlanta, anticipates that these deals might become more common out of necessity.

“My daughter and her husband in Boston, making $500,000 a year, can’t buy a home within an hour of work,” Ailion explains. “They look at dumps priced at $800,000 to $1.2 million but get outbid by multiple cash offers. I advised them to leave the conventional market. With many properties in Boston being multiunit, I could see them purchasing a property with a portion of the property used by the life estate holder. For buyers, it might be the only way to afford a home in the neighborhoods they want. Many older sellers want to stay in their homes until they die. Structured carefully, this might be an answer for both young buyers and elderly sellers.”

Ailion adds that while this type of deal is uncommon between strangers, it’s more plausible between family members. But this does not mean such arrangements are smooth sailing.

“In 40 years, I have only encountered one example: a mother who thought she had a deadly illness purchased a home for her daughter and son-in-law. She structured the sale to them as a life estate,” Ailion recalls. “Twelve years later, the mother recovered from her illness, and the couple tried to sell the home. They thought they owned the house and didn’t understand their mother had that life interest. Their relationship soured. It became my job to explain to the couple what they really owned, mediate a broken family relationship, and arrive at an acceptable financial distribution to get the mother to release the life estate. Real estate agents earn their fees not as salespersons but as psychologists.”

In other words, buyer (and seller) beware. If you’re curious and want to explore this unusual opportunity, here are some listings of homes currently for sale with a life estate clause. Some have been on the market for months, while others have already snagged pending offers—which suggests that certain buyers are willing to navigate the complexities of this arrangement if it helps them finally own a home.

1774 Todd Rd, Toms River, NJ

Price: $575,000
Details: The life estate listing even includes the home seller’s age, saying, “The current occupant (aged 92) will reside in the property until their passing.”

5387 Highway 201, Ontario, OR

Price: $1,900,000
Details: Attention, farmers! This listing states, “Here is your chance to expand your operations… The property on 4.49 acres includes two fully functional onion/potato storage units. Home and attached garage are currently subject to a life estate.”

6978 N Highway 23, Eureka Springs, AR

Price: $199,700
Details: On the market for over 300 days, this mobile home listing on 5 acres states, “The west part of tract 17 containing 2.35 acres shall transfer title with a life estate deed.”

70740 Fern Hill Rd, Rainier, OR

Price: $199,900
Details: This three-bedroom “oasis” is in a life estate where the listing urges buyers to “consult your Realtor to discuss what this entails, buyer to do their own due diligence.”

115 E Michigan Ave, Jacksonville, IL

Price: $99,900
Details: This “cute” and “cozy” two-bedroom house is being sold “as is” with a life estate. At that attractive price, someone bit. This property is under contract.

67 Gregg Pl, Staten Island, NY

Price: $650,000
Details: This multifamily house was on the market for just a few days before snagging a pending offer.

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