My House Is Not Selling With My Realtor! Now What Can I Do?

So, let's pretend for a moment that your house has been up for sale for a few months and you are now having a difficult time affording the mortgage for both your new and old home. What are your options? You can always decide to sell at a much lower price but that will drastically cut into your profits or worse yet force you to bring money to settlement. This would be the perfect opportunity to look into selling your house rent to own. The top three benefits include 1.)You could get your house sold fast. 2) Most likely get all your expenses covered plus have a little profit. 3) Get your asking price or closer to it. But before embarking on such a journey, you should probably learn a little more about it.

How it works for starters: Before entering into a rent to own agreement, both the buyer and the seller will need to decide on a final sale price up front as well as monthly rent for the property being sold. Both of these amounts are subject to negotiation and most of the time, an real estate agent doesn't even need to be present. It would be a wise idea to have an attorney draft a contract for the buyer and the seller to use to protect both parties interests. Once the buyer and seller agree on a price, and the contract is signed and the deal is sealed and is in effect until the end of the rent to own option period.

Rent to own homes are typically leased out for one to three years. However, the option period to purchase the property in full is available to the buyer at any time during the length of the contract from day one to the last day. At any point the buyer can decide to purchase the house. The rent to own contract also includes a fixed purchase price. This can be quite beneficial for the buyer when housing prices are rising. It may seem like a benefit to the seller if housing prices are dropping. But if housing prices have dropped too severely this will make is difficult for the seller to get a traditional mortgage to ultimately purchase the home. And if the buyer can not purchase the home it may not help the seller depending, unless they really did not care either way whether the buyer followed through with buying their home. As you can see, rent to owning a home is actually quite simple of a process.

For the buyers who is now a renter and is ready to take the next step toward homeownership and do so by way of rent to owning a home, they will often pay something called an "option fee" upfront. Also the rate of rent will often be slightly higher then other similar homes in the area. However, this higher rent payment is offset from a portion of each monthly payment being credited back to the buyer when they purchase the house. This option fee is a pre-specified amount that the renter is going to pay the seller. If, at the end of the rent to own period, the rent to own buyer does follow through and purchase the home, the option fee will become a part of the down payment. If they do not decide to buy, the option fee stays with the seller and none is returned to the buyer.

Sure the rent to own home buyer pays a rent that is higher, but many see this trade off as a worthwhile investment when the alternative is coming up with a a twenty percent down payment to obtain a traditional mortgage or just continuing as a straight renter with nothing to show for their monthly payments as time goes on. On a $200,000 home that is $40,000 plus closing costs which could push the total to $45,000-$50,000. It is a win-win for both parties and can save a lot of time and money in the long run.

Let's take a look at a quick example of how the process might work in the real world. Let's say that there is a home worth $200,000. For a straight rental for this would probably be $1,500 per month. For a rent to own the buyer the payment may be $1,695 per month and receive $300 of rent credit each one. If you add in the up front option fee, in this case 2.5%, that would be $5,000, that would be $15,800 in acquired credits after three years. All of this money would go towards a down payment on the property.

Rent to own homes are excellent alternatives for buyers who can't drop that much money on a down payment for a home. It is also a good option for those individuals who don't have a credit score that is up to par. And as for the sellers, they are eager to remove themselves from the burden of their old home so that they can start new somewhere else. Plus, they can earn a relatively large amount of money in the process.

In conclusion as with any business-related venture, there are mutual risks associated with rent to own homes. However, as most people would agree, the benefits definitely outweigh the risks and in the end, everyone wins

Comments? Questions? Email Here

© HowtoAdvice.com

How to Advice .com