It’s More than Renting
The amount of caution a buyer has in a rent to own plan is directly related to how much above market rental you are paying. There are a number of precautions you should consider when entering into a rent to own purchase option. This article looks at renting to own as an option in selling your home.
Many situations suit themselves to Rent to Own. Often, they come as a result of timing and a slow real estate market. One such scenario occurs during a typical sale and purchase:
The homeowners decide to move. They list the property and put up a ‘For Sale’ sign. While they wait for offers to come in on their current home, they find a new home and buy it. The closing date on the new home comes and goes but the first house languishes unsold. The homeowners are stuck making mortgage payments on two homes until they find a buyer.
Even when homeowners haven’t already purchased and moved, Rent to Own may be a convenient option. Many homeowners don’t wish to commit to a new home until the ‘Sold’ sign goes up on their existing home. In a sluggish market, if a listing sits on the market for 60 days or more without bringing in an offer, a Rent to Own contract can speed up a move.
The Rent to Own option can save the day when a job transfer calls for an immediate out-of-town move. It gives families the flexibility to move quickly without leaving behind a vacant house. Because the sale is delayed, real estate market ups and downs play a smaller role in the selling price.
Rent to own makes sense when there is no rush to sell the property, allowing the seller to ride out existing market conditions. Long-time homeowners who have accumulated significant equity in their property make good candidates. They can afford to purchase another home without selling their current property.
When the seller has little or no equity in the home, rent to own can deliver an eventual profit through the appreciation of the property, while through a traditional sale, realtor’s commissions can result in a loss.
If the current value of the property is lower than the price paid, rent to own can help the seller weather the market conditions and allow the home to regain part of its value. This is only a good decision if the seller can cover the difference owing.
Josee Guindon
Real Estate Investor/Consultant
Edmonton, AB
http://www.ClickMyPlace.com
Contributed by: Josee Guindon from EzineArticles.com
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