Rent vs Buy in Reseda>Question Details

Marisa Riet, Home Buyer in Reseda, CA

Is rent with option to buy a safe option?

Asked by Marisa Riet, Reseda, CA Sat Apr 9, 2011

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6
Shannon French’s answer
Hi Marisa, I think you'll be hard pressed to find a rent-to-own deal that does not require a non-refundable option fee. But that doesn't mean it's not a safe transaction. What you are purchasing with that fee is the exclusive locked-in price and terms for a specified time period. Are you able to refund the seller of the lost time he/she reserved the home for you at those designated terms in the event you don't buy? Of course not...that would be silly! Just like when you buy an option on a stock...it's non-refundable...unless of course you choose to exercise that option therefore realizing the value it secured for you.

Just renting with the first right of refusal has it's own risk as well...what if at that specific time the owner has a buyer and at that point you are unable to purchase whether it be due to financing or just bad timing.

Rent-to-own/Rent with an option is highly customizable and in response to "What if the property loses value": you can easily add a clause specifying that the terms will continue until the property does appraise for the contracted price unless some other arrangement is reached (i.e. the seller having the option to reduce the price to the appraised value for example). This way your option fee still counts towards the purchase and is not "lost".

There's always advice to work with an agent and/or consult an attorney, and I'll further that advice to say if you're working with an agent...make sure they specialize and/or have lots of experience with lease options and same with the attorney you have who reviews the contract. Just like with doctors...there's all kinds and you wouldn't go to a Pediatrician to advise you on brain surgery.
1 vote Thank Flag Link Wed Apr 13, 2011
It is safe so long as you DO NOT put up non-refundable option money.

Better bet is to put a clause in your lease agreement simply stating that should the owner choose to sell during your lease term that you have a FIRST RIGHT OF REFUSAL. Meaning you would get first dibs to make an offer.

EmilyKnell1@yahoo.com
562-430-3053 cell
Realtor Since 1996
1 vote Thank Flag Link Sun Apr 10, 2011
As safe as any other transaction, provided you take proper percautions and execute a contract that covers the terms of your agreement. We recommend contacting an attorney for this service.

Good luck,

Bill
1 vote Thank Flag Link Sun Apr 10, 2011
Excellent advice Mr_Real_Estate!
0 votes Thank Flag Link Thu May 19, 2011
It could be based on the lease agreement IN some instances can be a nightmare . Always use a Realtor in any real estate transaction
0 votes Thank Flag Link Sun Apr 10, 2011
Hello Marisa,

There are not to many lease to own options. When you do a lease to own option you are agreeing on a price now. A portion of your rent (usually above what you are paying for rent goes towards the purchase option.

You may consider just buying a home with an FHA loan for as little as 3.5% down.

If prices go down you aren't protected. Interest rates could also go up by the time you are ready to purchase you may not be able to afford it.
Monique Carrabba
The Carrabba Group
Keller WIlliams Hollywood Hills
mcarrabba@kw.com
(323) 899-2900
0 votes Thank Flag Link Sat Apr 9, 2011
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