Home Buying in 27560>Question Details

WistfulBuyer, Other/Just Looking in Morrisville, NC

Does rent to own properties exist or is this a home buying scam? How would a potential home buyer find properties offering this option?

Asked by WistfulBuyer, Morrisville, NC Sat Feb 9, 2013

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to the agents here - help me out with something, please.

I often see these kind of questions, and sometimes a variety of agent responses encouraging that this can be a good option for the consumer in need - those of us here seem to understand the dangers involved for someone who already has financial issues...

ok, but ....one agent on another forum referred to "lease-own" as though it were different from "lease or rent with an option to buy"....or a lease purchase, etc.. She seemed to emphasize the "danger" was in being evicted.........and seemed to thnk she was describing a different agreement than a "rent with the option to buy".

My question si:
Aren't they all basically one and the same, but just with different wording?

(although, I will grant that anything is possible if the terms are structured that way).

But - to my question - Am I missing something?
1 vote Thank Flag Link Sun Feb 10, 2013
Lease Options and "rent to own" are exactly the same EXCEPT rent to own applies some portion of the rent payment to the purchase price whereas LO credit to purchase price is just the one time option payment. Monthly credits only work if you can show the bank (i.e. future lender) that the Tenant-Buyer was paying a rent premium.
Flag Sat Mar 9, 2013
It depends on the situation and the conditions. It's definitely something to discuss with an attorney. I find that buyers who look at this the most fall in to 1 of 2 categories. Either they know the seller or they are worried about getting financed.

If you fall in to the category of worrying about getting financed, check with a qualified RE agent who may know of a great Mortgage Broker. For a small fee a Mortgage broker can usually find you a great deal, help you get financed, or get you back on the path to getting financed.

If you need more assistance, contact me at the web reference below
0 votes Thank Flag Link Wed Oct 2, 2013
We have Lease Option properties at RentTriangleHomes.com

The real estate market continues to demand flexibility. Lease Option properties can work for credit worthy buyers who are in a two home trap or who need time to work out SMALL credit issues.
0 votes Thank Flag Link Sat Mar 9, 2013
A potential buyer can sit down with their Realtor and their Realtor can provide a list of properties offering these terms.

Best of Luck
0 votes Thank Flag Link Sat Mar 9, 2013
Paramount Realty Solutions actively offers Lease Option Properties (i.e. sometimes called "rent to own"). You can find these properties at RentTriangleHomes.com

Lease Options are regulated by law (Senate Bill 1015) but are legit and work great for Tenant-Buyers in a two home trap or who just need another 6-18 months to work out SMALL credit hiccups.
0 votes Thank Flag Link Sat Mar 9, 2013
I don't know about "scam," but to me it's kind of stupid for the buyer.

This is like deciding, "Gee, we'd like a new refrigerator, but the only ones we can buy on credit are these brands that aren't even rated by Consumer Reports, so let's go down to the store tomorrow and get one!"

The typical homebuyer evaluates between ten and a hundred homes before purchasing one. Given that maybe one out of a hundred (probably out of a thousand or ten thousand) homes on the market are "rent-to-own," you're basically selecting from the dregs that nobody with decent credit and a downpayment wanted to buy - or at a price that they didn't want to pay.

We used to talk about "price AND terms," and recently, the only "terms" that have mattered have been cash offers vs financing. But this RTO thing . . .

BUT: Let's just say the our renter/buyer actually finds a home and the terms are good and they think they're getting a good deal. WHAT IF . . . the seller stops making their mortgage payments, the seller sells the property to someone else (oops!) . . . or a major repair comes up?

From the seller's point of view . . . WHAT IF the buyer stops paying rent, or breaks something major in the house (the kid tried to flush a roll of TP down the upstairs toilet, for example . . . ) . . . Maybe you've been getting an extra 15% a month, but the difference between, say, $1000 a month and $1150 is nothing compared to your buyers thought they just about owned the place and started an unpermitted dormer addition and ran out of money.

I am not a fan.
0 votes Thank Flag Link Sun Feb 10, 2013
Rent to own may exist, however no buyer should ever be foolish enough to get involved. Rent to won is a "scam" in that a savvy seller entices a less than savvy buyer into accepting their terms which are weighted so heavily in favor of the Seller/property owner that the chances of the buyer ever owning the home are slim to non which is the Sellers goal all along. There are no lists of these properties and the reason is simple the sellers don't want attention drawn to themselves.

Do yourself a favor, start saving your money, (this means living below your means), if you've got some credit issues start working on getting them squared away and avoid getting involved with anyone offering to allow you to "rent to own"
0 votes Thank Flag Link Sun Feb 10, 2013
Make sure you really understand what is involved with a "rent with the option to buy" arrangement.

Usually, there is non-refundable upfront money - you will pay for the option to buy OR the right to walk away if you cannot, or choose not to buy the home for whatever reason.

If you do not have money to give as a deposit now, you will be asked to pay rent OVER and above the normal rent. That overage would be applied to the sale price if you buy the home, but forfeited if you do not complete the purchase.
Contrary to what some consumers think, this is not just a matter of "you pay rent and all of it is applied to the purchse....but if you can't buy the house, you simply walk away and get back your deposit.

So......anyone with financial issues now, better make sure they can follow through at the end of the lease period, or they will lose that money.
Also, usually the sale price is set now, not at the end of the lease.
And.........if the seller isn't making payments or is upside down on his mortgage, there will be huge problems that may put your deposit in jeopardy.
The list of potential issues goes on and on.

Look before you leap!
And, as has been suggested below - if you pursue this avenue - make sure an attorney is involved to protect your interests.
0 votes Thank Flag Link Sat Feb 9, 2013
They are difficult to find (or do a search for) as sellers will not advertise this and typically will use this as a last resort, if they can't get it sold and need to move quickly. So it's often best to look for rentals then negotiate the rent to own, if you can. Mike is exactly right, consult an attorney to draw up the details.
0 votes Thank Flag Link Sat Feb 9, 2013
They exist but are sometimes more difficult to find simply due to the fact that anyone with a home to sell wants to sell it and anyone wanting to buy a home simply buys it.
0 votes Thank Flag Link Sat Feb 9, 2013
Think scam. They are set up to benefit the seller, not the tenant/buyer.
You can look on Craigslist.
Do not get into a rent-to-own without hiring an attorney to write the contract. And many attorneys will not write those contracts, since so few rent-to-owns ever result in a closing.
If the seller tells you that you don't need to have a home inspection, appraisal, title search, attorney, property survey....Run Away!
.
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0 votes Thank Flag Link Sat Feb 9, 2013
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