Houses for rent to own are always have a high demand. This is because not many of these houses are found in the market. Unlike home sales rent to own houses give you the advantage of moving and staying in an area that you like without fully committing to buy the house.
It is one of the best ways to work on your credit and still have a chance to buy your dream home. It may take 3 or so years before your lease to purchase the home agreement gets to be in fact.
What Are Rent To Own Homes
These type of listings are those homes which require you to buy the house at the end of the lease or they give you the option to buy the house at the end of the lease or after a certain period.
Your monthly rent payments will include both your rent and the funds that will contribute to your down payment of the house in the future.
There is also a none refundable upfront fee which is known as the option fee, this fee is negotiable and may range between 1% to 5% of the purchase price.
There are two types of lease agreements that you can sign for you to rent to own a house. Which is the lease purchase agreement or the option to buy agreement. I will highlight below the differences between these two agreements.
- Lease to purchase agreement This type of agreement will require you to buy the house at the end of the lease
- Option to buy agreement If you sign this type of agreement with your landlord who in this case is also the seller you have no obligation to buy the house at the end of the lease if you no longer want to buy it, what it only means is that the seller has reserved the right to sell you the house at the end of the lease agreement or at a later date.
When you are looking to rent to own a house make sure you are pre approved for mortgage before you make any solid decision, and also get the house appraised.
Finding rent to own listings can be very hard since there are not so many real estate agents that offer these kinds of listings.
They may not be as common as the sale or rental listings but that does not mean they are not there, most rent to own agreements are done when a homeowner has had the house that they are selling on the market for too long. This may give the seller a reason to list the house as a rental which has an option to rent to own as a way to find a home buyer
Some landlords may decide to sell the house that you are living in as the tenant, But you love it you may also ask for a rent to own arrangement with the landlord.
As I have highlighted above rent to own listings may be hard to find but they are there and you only have to search and do your research in your area. You just need to look for rentals that include the option to buy or look for sale listings that have been on the market for so long and they seem not to be going anywhere. Another thing that you could do is ask your landlord if they are open to a rent to own agreement.
Rent To Own Process
The purchase price of rent to own homes will be set up front. As a home buyer you will be left to do the negotiation with the landlord own your own since no real estate agent will take up this task.
This is mainly because getting paid for their service can be hard since they are only paid their commission after the sell, which can be some time in the future. This is why you then need to do your research on comparable home sales before talking about prices with the landlord.
Having to agree on the purchase price years before you buy the house can be both an advantage to you and also a disadvantage. The advantage is that you will still buy the house at the price you locked the value in the future, but the disadvantage is that the opposite is also true, If there is a drop in prices in that area you will still buy at that same price.