Best of Both Worlds?: Rent-to-Own
Some sellers uneasy with fluctuating home values and buyers facing financing issues are looking to a solution more frequently reserved for the automotive industry: rent-to-own agreements. While not a perfect option for every buyer or seller, a lease-purchase or lease-option agreement can be a viable real estate solution for many individuals.
It's important to note that while potentially advantageous for some buyers and sellers, these types of arrangements are very complicated. Anyone considering heading down the rent-to-own path should enlist the aid of an experienced and trusted real estate attorney.
How does a rent-to-own agreement work?
Essentially, these arrangements allow the buyer to act as renter for a set period of time, with the owner serving as landlord .The buyer pays the seller option money for the right to later purchase the property. The option money generally does not apply towards the down payment on the home's purchase. The occupant typically makes total monthly rent payments that are above market rate for comparable rentals in the area, and a predetermined portion of that monthly payment is applied as a credit towards the purchase price of the home. During the lease period, the home may not be sold to any other buyer.