January 30, 2018 by 8aL3Vw
By Bob Mandel
The new economy is bringing together more sellers who can’t sell their houses today and buyers who can’t buy today. Selling a home is like any type of sale where there are two parties trying to make a deal. If one door is shut another one can open or it’s a no deal. This is giving birth to the Rent to own option.
This week I have been confronted with sellers or Buyers 6 times interested in this option. We did one yesterday. The scenario was a seller who has been on he market for 8 months. They were listed previously with a full service company with no offers and moved out of state where they bought another house. Their house was modestly priced but they still could not get anyone to buy it and take advantage of the tax rebate program. Every month that went by they were laying out $1100. They were considering renting and then an opportunity arose this week.
A qualified couple indicated that they wanted to purchase the home but needed to sell their home in Washington. They proposed renting until their home sold and then would close on ours. My seller agreed to do the deal even though they would lose $200 a month on the rent.
The math worked. If they take the house and close in 5 months that is equivalent to 1 month of $1100 that they would have to lay out and now they have a buyer instead of a vacant house which costs more to maintain and riskier to watch over from out of state.
There is always a down side to Rent to owns as far as risk of a tenant that messes up the house, or that you have to evict for not paying the rent.
So, what type of Rent2Own person doesn’t have credit problems? Young people who have good credit but don’t have 2 years of employment history coming out of college with good jobs like Nursing or Teaching or other professions with student debt. Young people who have no history of credit that always paid cash. Divorcees who are getting a significant divorce settlement. People who are waiting for an inheritance or lawsuit settlement are part of the people that would be looking for the Rent2Own option and are great candidates in a tight market. There are also people who can gifts from family, but do not have the employment history yet. Another possibility is a Rent2Own person who has a co-signor on the option agreement assuring that the person occupying the home will be guranteed to get a loan within the defined period of time.
In a perfect world this would not be the best option for the seller. But, our world is far from perfect. The Subslimers have made our world harder to sell homes and flexibility is they key to come up with the next best solution if you can’t sell. Holding on to a house can cause foreclosures, and bankruptcies, which will affect property values. Rent to owns are better then renters as they have a vested interest to keep up the house since they will lose earnest money if they can’t perform. With the low interest rates of today, many more people will be seeking out this option
About the Author: Bob Mandel is a Broker and Advocate for change in the real estate industry. Bob is passionate about assisting buyers and sellers and is an advocate for Columbia SC Rent To Own deals that benefit both parties.
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