Home Buying in New York>Question Details

Barak Papada…, Home Buyer in New York, NY

What is it with people in the US? Why is everybody a skeptic? Is it very unusual to ask a homeowner here to rent with the option to buy?

Asked by Barak Papadakis, New York, NY Sat Oct 27, 2012

People are looking at me like I'm a criminal or have some kind of ulterior motive to rip- them off or something. I have excellent established credit here in US for 10yrs now. I've been in my same job for 7yrs getting promoted 3 times during that period so I don't plan to run away somewhere. Is it asking too much?

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Hi Barak,

How are you? Seems as though your search for a new home is becoming a little frustrating for you. A forum like this is great to ask general questions but I would suggest that you select an agent who can work with you & for you to not only show you various options which fit your needs but also negotiate favorable terms on your behalf. What Janet says is true but based on the information you've provided it sounds like you're creditworthy & financially sound so what is your rationale for wanting to "rent to buy"? Feel free to check out this nice 1bdrm coop available http://www.postlets.com/res/8294009 & the seller may very well entertain your offer. It's being shown tomorrow 12pm if you're interested in seeing it.

Looking forward,

Christine Gordon
Licensed Real Estate Salesperson
Cell: 917.881.2924
Fax: 347.328.9352
Apartment updates available at http://www.christinegordon.postlets.com
"Home is where the heart is."
4 votes Thank Flag Link Sat Oct 27, 2012
hey thanks and thanks for offer to show this place. sorry you had to cancel today because of storm sandy blowing through but i am definetly going to contact you again to see it.
Flag Sun Oct 28, 2012
Barak,

If you want to rent first with an option to buy rather than approaching sellers that want to sell immediately in a hot market find a condo or coop that is for rent and put a rider in the lease giving you first option to buy if and when owner decides to sell.

All my rental deals in coop and condos include such a rider as long as both owner and tenant agree. The sale price is not agreed upon at the time the lease is signed but within 60 days from receiving notice that the owner decided to sell. You then have first option to buy if you and owner agree on price and terms.

In my experience, I have found that many New Yorkers want to hold on to their NY apartments when life circumstances change such as relocating for job, marriage family etc. At first they rent their NY apartment because they want the option of being able to come back but once they eventually accept their new life in a new place they usually sell.

The first question almost every buyer asks at every NYC listing is "what is the sublet policy" They want the option to rent. So you want he option to buy. It is not unusual.

A coop may even be a better option than condo because many coops only allow the shareholder/owner to sub-lease for two years. After two years the owner is required to move back or sell.

Mitchell Hall
Lic. Assoc. R.E. Broker
Corcoran
office 212.877.6268
fax: 212.230.4244
iPhone: 917.312.0924
MHALL@Corcoran.com
http://nycblogestate.com
2 votes Thank Flag Link Sat Oct 27, 2012
hey thanks good idea! I'm going to start looking at places that are for rent. I have everything good with credit and job i just dont want to commit to purchase if i dont now for sure that i like the place that why i want to rent to buy. not because i cant get a mortgage like some people here suggest.
Flag Sun Oct 28, 2012
Mitchell Hall, Real Estate Pro in New York, NY
MVP'08
Contact
Barak,
I am a little unclear what you are asking, but it seems that you would like to rent with the option to buy and homeowners are not willing to do this. If I am interpreting your question correctly, I can tell you that "rent with an option to buy" is something sellers only do in a very bad market. It is something sellers do when they cannot find a buyer, so they allow a buyer who is not quite able to buy yet, perhaps still saving toward the downpayment, a chance to live there, pay rent, and purchase later applying some agreed-upon portion of rent paid. When we were in our housing crisis of late 2008 and 2009 here in NYC, developers with unsold condos were offering that for a time.
We are, however, in a very robust market now. Sellers can sell easily in most neighborhoods and do not need to offer this option.

Best,
Jenet Levy
Halstead Property, LLC
jlevy@halstead.con
212 381-4268
http://jenetlevy.halstead.com
2 votes Thank Flag Link Sat Oct 27, 2012
While Lease/Option is not usually a SCAM, it is one way that Seller can take advantage of a Buyer:
Most Buyers are not aware of the pitfalls involved.
There are no standard forms, nor are there standard numbers that can be assigned:
The Agreement can be drawn up by anyone, and can include any provisions that the parties will agree to.
This is a blurb that I use to caution buyers about L/O:

Lease/Option
You are desperate!
Your Credit or Finances, or both, will not allow you to go the conventional route:
You need the Seller to help you out!

The Seller will know it, and you are going to pay dearly for this service:
There aren't too many altruistic Sellers out there.

The terms that can be written into a Lease/Option can be dangerous to you:
How long is the Option period?
How much money are you putting in to the Option?
What happens if you are not able to execute the Option?
How do you know what your financial situation will be 2-5 years from now?
How much is the rent in the meantime?
Who will be responsible for maintenance and repair in the meantime?
What will be the Market Value of the home in 2-5 years?
What will be the Selling price 2-5 years from now?

This is the Ultimate Caveat Emptor!
2 votes Thank Flag Link Sat Oct 27, 2012
hey thanks, this is good. i guess i just didnt know the whole story but it made sense to me before because i wanted to be in a place for a while before i make the committment to buy it.
Flag Sun Oct 28, 2012
A contrarian viewpoint: Lease-options work in stronger markets, too. People (agents or sellers) who think they don't don't fully understand some of the benefits of lease-options.

Lease-options tend to be more difficult in many markets because, often, a prospective seller needs to sell in order to take whatever next step is planned. For instance, a seller may want to buy a different house, but knows he/she won't be approved with that first mortgage hanging overhead. Or the seller needs the cash from the first sale to make the second purchase. In that case, a lease-option isn't usually practical.

An owner with a rental, similarly, may not be interested in selling. There could be tax considerations. Maybe the rental is just a cash cow, and the owner likes the $500 or $1,000 or whatever that he/she is netting every month.

So the owners who are the best targets for lease-options are ones who are willing to either rent or sell, but don't need to cash out immediately. And that's a comparatively small percentage. I wrote a blog on how to find some of them. See http://bit.ly/findaleaseoption

Also, just understand human nature. People will generally say "no" to a proposition that they don't fully understand. So you have to approach the prospects the right way. Quick example: When I was telephoning potential lease-option sellers, I'd never ask: "Would you consider a lease-option?" It was more along the lines of "Would you be willing to rent now and possibly sell in 3 or 4 years?" That's something people could easily understand.

Hope that helps.
1 vote Thank Flag Link Sat Oct 27, 2012
hey thanks this information and plus other infomation on your website is helpful to me.
Flag Sun Oct 28, 2012
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
"Rent with an option to buy is not common at all in my area (suburban NYC area) - in the 27 years I have been in the business, I have never had one deal like that.....even in this economy!

As was mentioned below - most sellers want to sell when they put their home on the market - not come up with an creative contract for a future sale.

Usually there are financial reasons why a seller will consider this kind of arrangement .......and also financial reasons why a buyer might be looking for this kind of arrangement.

If I want to buy a coat, I go into the store and buy it. If I don't have the financial resources to buy it now.......then - I might consider a layaway arrangement, even if it involves losing the deposit....that's sort of what rent w/ option is like.
You can't fault a seller who wants to sell NOW, rather than wait for a later time frame.

So, out of curiosity - according to what you shared - you are financially solvent - why are you looking for this kind of arrangement?
0 votes Thank Flag Link Wed Nov 7, 2012
Barack, no, it's not asking too much but sellers want to sell, not make things complicated. If they say sell and you're trying to get them to come around to your way of thinking, I would not be surprised that they want nothing to do with you. Nobody wants to get into a situation where someone else has possession of their property and there are grey areas. and yes, they probably think you (a stranger to them) are trying to rip them off. Nobody wants the hassle of going to court. Have you ever seen the movie "Pacific Heights?"

You mention how qualified you are in your question. If this is the case, I would think you have a good amount of liquid assets. I also think you are not with a broker. You want things your way but owners don't need to do what you want just because you want. Good luck.
0 votes Thank Flag Link Wed Nov 7, 2012
What is it with people in the US? We don't like the 'change' we got.
Why is everyone skeptical? Our economy is the free enterprise. Devil is in the details.
Is it unusual......?

Homeowners, for the most part, what to sell their home...NEED to sell their home in order to buy a new home or separate themselves from the burdens of continuing to own that piece of real estate. Only when the owner KNOWS they will be better of even if you don't buy, should they entertain your offer.
They are not skeptical...they are business folk making business decisions.

Why don't you BUY instead? You state you are able. You have credit history. Your choice of purchase options look just like that of those who are unqualified to buy. It's like an obese person giving weight loss advise...things just don't seem right.

Give Christine a call and I'm sure she can get your proposals presented to the RIGHT seller and in the RIGHT context with the RIGHT assurances in place.

Best of success to you,
Annette Lawrence, Broker/Associate
Remax Realtec Group, Palm Harbor, FL
727.420.4041
http://RealEstateMadeEZ.us

Big Water: http://youtu.be/S7xjAs52MiI
0 votes Thank Flag Link Tue Oct 30, 2012
It is not common in New York...the owners want more flexibility, as to the price and timing to sell their home. Nothing can prevent you from making an offer when the owner decides to sell. The owner usually goes with the highest offer and the most probable to close when deciding on the buyer.
0 votes Thank Flag Link Tue Oct 30, 2012
Quite simply, people are naturally wary of things that are not the norm and rent to own is not a common occurance because most owners need to cash out the equity in the property in order to move on.

Michael Richman
Licensed Real Estate Associate Broker
Bellmarc Realty.
681 Lexington Avenue
New York, NY 10022
Phone 212-688-8530 x223 Cell 917-991-2528 Fax 212-758-7495
Email mrichman@bellmarc.com
0 votes Thank Flag Link Sun Oct 28, 2012
Rent with the option to buy is not common in our market place. If it's not stating in the listing then it's safe to sign it isn't an option and to generalize everyone in the US as being skeptic is ridiculous. Hopefully in the future you will become mortgage eligible, if you are not already, and be able to purchase a home. Best.
0 votes Thank Flag Link Sat Oct 27, 2012
Rent to purchase arrangements are very difficult and most homeowners are warned to stay away from it. There is nothing to stop you from offering to purchase a home you are renting when you are ready to purchase and maybe the owner may be interested in selling.

House values change; how do you agree on a purchase price that is fair to all involved? One of the great mysteries of rent to buy.

If you have such a good history, great credit rating, why not just purchase?
0 votes Thank Flag Link Sat Oct 27, 2012
Jenet is absolutely right on the mark with her answer. While the first answers may have merit in the states the people who gave these answers are from. This particular question is New York based and this is the exact right answer for our market here.
0 votes Thank Flag Link Sat Oct 27, 2012
Aloha Barak,

I agree with the other posters. The agreement makes or breaks the transaction. If it isn't written properly, it can favor one side or the other, a recipe for disaster. Writing a fair deal is hard to do. A "standard" real estate agreement in Hawaii is 13 pages now.
0 votes Thank Flag Link Sat Oct 27, 2012
Absolutely agree with Ron on this one. With a Lease/Option, it is very important that you have a very good team representing you--your attorney especially. Agreements can easily favor the homeowners interest. Again, that is why it is a good idea to have someone who you can count on.

I hope this answered your question! If you have any further questions, please feel free to contact me by the ways below.

Wishing you all the best,


De Vonte Williamson
Licensed Real Estate Salesperson
Proudly Serving Long Island
Coldwell Banker Residential
Direct:(631)638-6193
Mobile: (631)384-3695
cbmoves.com/DeVonte.Williamson
DeVonte.Williamson@cbmoves.com
"I Stand Behind Getting You Results!
0 votes Thank Flag Link Sat Oct 27, 2012
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