Inventory is rising, sellers are running out of incentives and buyers are walking away from closings because of financing trouble. We are currently experiencing the effects of a free falling real estate market and one of the solutions for both sellers and buyers could be the “Rent to Own” option. Hardly used in Chicago’s real estate market in the past, -rent to own- seems to be the only option for buyers with blemished credit and sellers with the urgency to sell.
Developers started the –rent to own- craze, after the free plasma TV and the credit for closing costs trend wasn’t helping buyers become homeowners. Those last 2 – 3 units in a development are offered as a –rent to own- option to serious buyers. The trend has been accepted by all sellers that have a hard time selling their property.
At the end of the rental agreement, buyer has improved his credit score and has built credibility with a lending institution to obtain a loan and the seller has sold his property. The down side to the seller is that he has to agree to the sale price of the property at the beginning of the –rent to own- contract. That means that if in one year the property has appreciated tremendously, he would not be able to increase the sale price. The seller needs to evaluate loss from paying an unwanted mortgage vs. loss from the difference in sale price.
This is why the –rent to own- option should be discussed with a Realtor and handled like a regular home sale transaction. Realtors are the ones that have a list of developments or individual sellers that want to offer the –rent to own- approach and are able to help buyer and seller evaluate their most advantageous outcome.
0 Responses to “The “Rent to Own” solution for both Sellers and Buyers”