You have just bought a new home, signed the deal, packed and ready to move in. But what about your old home? Sometimes, it is difficult to sell off a house especially in cities where real estate prices are sky-rocketing. It makes more financial sense to pay rent in such places than to own your own home. Though you have advertised your old home on the market and there are buyers approaching, the deal somehow does not get finalized. What do you do in such situations?
In such instances, the rent to own option is the best for most house owners. This is also referred to as lease to own in many places and the process is quite similar to that of getting a car lease. The process is quite simple; you rent your home for a fixed sum of money to a renter and at the end of a predetermined period which is most instances is three years; the renter gets an option to purchase the house. The best part of this deal is that a part of the rent paid serves as income for the seller and another part serves as down payment for the renter who will later on be the prospective buyer.
This real estate option is a great idea for both sellers and buyers but the most important thing is that a clear contract needs to be drawn up to avoid complicated legal hassles later on. The biggest advantage that sellers get from the rent to own process is that they can make an income so that they do not get burdened with two mortgages to pay off. And the biggest benefit for buyers is that in spite of not having enough money for a down payment or a bad credit history, their dream of owning their own home now becomes a reality.
The first and foremost thing that a seller has to do before drawing up the contract is to decide on both the sale and the rent price. These amounts are of course open to negotiation but once the contract has been signed, the sale price of the house cannot be changed no matter the status of the real estate market during this period. Renters will be asked to pay an option fee and rent premium, part of which is income for the seller and part of which becomes the down payment after the lease period.
The rent to own option is a beneficial process for buyers and sellers if the right kind of contract is drawn up and all the legal rules are followed.