Home Selling in 90043>Question Details

Robert, Home Seller in 68510

Curent renter wants to rent to buy. How much above curent rent do we charge fo the down payment?

Asked by Robert, 68510 Wed Jul 7, 2010

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Hi Robert,
So far all of the answers provide good insight to your questions. Should you sell to your tenant, be sure to handle is as a sale. If it means hiring a 3rd party to help you, then so be it. Get an assessment of the market value on your home & make sure the buyer is quailfied through a bank or loan officer.
Best Success,
Kim
Web Reference: http://homesellingdiy.com
2 votes Thank Flag Link Wed Jul 7, 2010
In this market a property can go from active to pending after 1, 2 or 3 days on the market. The renter should contact the listing agent immediately to have an opportunity to make an offer. Time is of the essence. The renter needs to be pre approved.
0 votes Thank Flag Link Mon Jul 29, 2013
The subject property's value has to be established. I would suggest contacting a professional realtor for current sales in the area. Is this a For Sale by Owner or is property listed with a Realtor? The down payment is set by the lender not seller. This question was asked 2008 and this is 2013. Conventional lenders are requiring 10% down payment and FHA is about 3.5% down payment. Down payment not set by rents but sales price and lenders requirements based on the sales price.

Gail Mercedes Cole
EXP Realty
310.853.9933
0 votes Thank Flag Link Tue Jun 25, 2013
You need to review terms and conditions with you listing agent all is based on terms and conditions of the contract, state law and etc.

Lynn911.com
Web Reference: http://www.lynn911.com
0 votes Thank Flag Link Wed Jul 7, 2010
This is one of the rare occasions when I don't think a Realtor is your best solution. We Realtors are limited to using a contract where the most we do is fill in specified blanks that fall within certain parameters. We cannot practice law, and since there is no standard contract pertaining to this type of transaction, that puts us out of it. You really do need an attorney to draft this agreement for you. In addition, the risks and benefits need to be clearly explained to each party.
Reators CAN handle lease options. These are transactions between a seller and prospective buyer that allows the prospective buyer to rent the home for a specific period of time and monthly rent, with the right to purchase it for a specific price at any time in the length of the agreement. This differs from your situation, in that a large deposit, called "option money" is paid up front in exchange for the option to purchase down the road. It's a sort of "holding fee". When a Realtor undertakes one of these transactions for the parties, there are three negotiations that occur and three contracts that are made: The lease, the option, and the purchase agreement. All are made up front, and the option money, along with the security deposit and first month's rent, are collected by the seller. The option is the buyer's: they elect whether to buy at the end of the option period. In exchange, the seller keeps the option money, and if the buyer exercises the option, some, all, or none of it may be credited to the down payment, depending on what was negotiated.
As you can see, it's complex. If you want a lease option, it can be handled by an experienced agent. A lease purchase (rent to own) should be handle by an attorney or paralegal to draft the agreement.
As to dollar amounts, it's all negotiable, so whatever you can agree on that is fair to both parties and makes the risk wort it.
Best,
Deborah Bremner
REALTOR, 00588885
(D) 818.564.6591
TheBremnerGroup@gmail.com
Blogging at: http://TheBremnerGroup.com/blog
0 votes Thank Flag Link Wed Jul 7, 2010
First, the excess above the current rent is NOT a down payment. It's a rent credit, or option fee.

I'm not a lawyer, so this isn't legal advice. However, you really want to have the excess considered an option fee so that you can retain it if the tenant-buyer doesn't purchase. Also, calling it a down payment suggests a sale is occurring--which it may not. Thus, if the tenant ends up not paying rent, you might be forced into foreclosing, rather than evicting. You don't want to do that.

But to address your specific question: Whatever you want. Frequently/typically, it's several hundred dollars (depending on the amount of the fair market rent). And, looked at another way, often about 25% of the option fee is credited toward the purchase price. But it's really all negotiable.

Example: Fair market rent is $1,000. You might charge $1,200 a month, with $300 per month credited toward the purchase price. Example: Fair market rent is $1,600. You might charge $1,850, with $400 a month credited toward the purchase price.

Again, really, all that is negotiable. You might decide to charge only fair market rent. Or you might charge more, but give a really hefty credit.

Hope that helps.
0 votes Thank Flag Link Wed Jul 7, 2010
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
You must set a reasonable sales price. You will need to have a lease purchase option agreement. With that in place, you can determine how much per month from the rent will be applied towards rent. However, there are other extremely important terms entailed in this contract which must be placed in writing before you collect any monies. I am local to your area. Feel free to contact me for assistance.
0 votes Thank Flag Link Wed Jul 7, 2010
Are you going to offer owner financing to the renter? What sort of terms? These are the sorts of questions and details we would need to give a more thorough, accurate answer. This sort of transaction is also best handled through a Realtor who can help you negotiate a fair deal for you, with your best interests in mind. There is a lot of paperwork and intricacies to consider, and missing some crucial details may cost you. Feel free to contact me and I'd be happy to walk you through the steps and help get you started on the right path.

Richard Schulman
Keller Williams Realty
#1 Listing & Selling Agent KW Westside Realty
(310) 482-0173
schulmanrd@yahoo.com
0 votes Thank Flag Link Wed Jul 7, 2010
Robert,

To the point, that would be dependent on what type of financing the renter/buyer can qualify for with a financial institution. You set your selling price and the buyer does their due diligence to get the appropriate financing in order to obtain ownership. Please let me know If I can be of any additional assistance.

Best Regards,

Daniel R. Howard
Lic#01880426
Russell Real Estate Development Co
310-743-6921
danielmakesithappen@gmail.com
0 votes Thank Flag Link Wed Jul 7, 2010
Why dont you just sell now on the open market?

Glen
0 votes Thank Flag Link Wed Jul 7, 2010
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