Rent to Own Thoughts

Written by realty pro on 20 September 2010

Rent to Own

With the recent negative economic situation and its effect on the housing market, homeowners have been stuck trying to sell their homes, and have had to watch as their home value slipped and they had to keep making payments on their home. A rent to own agreement might be a way for a homeowner stuck with an unmovable home in the current depressed real estate market.

On the other side of the table, the economic situation has affected many potential buyers of homes as well; due to job losses, missed mortgage payments, heavy debt, and ultimately, bad credit, they have been unable to procure a mortgage for a new home. Couple this with the fact that banks hit a standstill where they were not making loans and it is a slow recovery for them as well. For people who are finding it hard to get a home loan in the current market a rent to own situation might be worth considering.

Rent to Own-Win Win

A solution for both homeowner and potential homeowner would be a “Rent to Own Home”, which is basically an arrangement whereas the homeowner allows a tenant who is in reality a potential buyer for the home to rent their home, with an option to purchase that home at some preset future date in at a priced agreed in advance in the rent to own contract agreement.

This would benefit the homeowner by having someone renting their home, making their monthly payments, taking care of the home and even potentially making repairs.

Rent to Own-FSBO

This works for you if you are selling your house on your own in a For Sale By Owner/ FSBO format, or if you are listed with a realtor, this opens up a whole new market for you – buyers who cannot qualify for a mortgage now, but perhaps they will be in 6-24 months down the road.

As a potential buyer of a home, a Rent to Own is an ideal situation, as it permits you to “try before you buy” to see if you like the home, the neighborhood, the schools, etc.

Rent to Own-Real Estate Attorney

As a caveat to both types of individuals described above, always check out the local rules/laws in your state, town, or municipality, as there are big differences depending on where you live. You’ll want to confer with a real estate agent and perhaps a real estate attorney as well.

For both Buyers and Sellers of Homes, Rent to Own may be your best option in any type of economy. Rent to Own could just be the solution to your problem.

Regardless of whether you are a homeowner who cannot sell a home because of negative equity or a buyer shut out of the housing market because of credit issues a rent to own purchase agreement might be an ideal short term solution to your problem.