Having Trouble Selling Your House? Consider a Rent-to-Own Sale
Is your local housing market slow? Do you need to move out of your house quickly and just can't seem to find a buyer? Then you might want to consider putting your home on the market as a rent-to-own listing. By doing so, you will open the market to more potential buyers for your home—ones that may not have enough cash for a substantial down payment or who cannot get a loan because they have poor credit scores. This agreement is also sometimes referred to as a lease option.
Like the term implies, a potential buyer will actually be renting your home in the beginning. That means they can move in immediately and start living in your house. As part of the arrangement, you will collect a one-time, non-refundable lease option fee. For this fee, your renter will now have the opportunity to purchase your house in the future as long as they fulfill the terms of the contract that the two of you have signed. Your potential buyer will also have to pay you rent for an agreed-upon period of time, with a portion of that rent going towards their down payment.
Ultimately, if all works out as planned, at the end of the lease, your buyer can decide to purchase the house by paying the rest of amount they owe. However, if they decide that they don't want the house, they will then forfeit all of the money that they have paid you as rent as well as their option fee.
If a rent-to-own agreement sounds attractive to you, it's important to work with a real estate lawyer to ensure that your contract protects your rights, as well as that of the buyer. Some of the elements that you will need to cover in your contract include three things.
First, the contract should include the period of time that your buyer must rent your house before they can purchase your house. Typically, this period is two years.
You will then need to determine who will pay for maintenance of the home. You will need to be very specific in your contract about what you consider maintenance. For example, does it include buying a new roof, if necessary, or just general landscaping care.
Finally, you should explicitly state the size of your option fee. This varies from contract to contract, but is typically between 2.5 and 7 percent of the purchase price.
Although a rent-to-own agreement is not a common way to sell a home, it can be a good option if you are having difficulty selling a house. To learn more about your options, contact services such as Attorneys Funding Group Inc.
