Home Buying in Wheaton>Question Details

Craigmartinez, Home Buyer in Wheaton, IL

My sister has offered to rent to own her house. She has had a hard time selling it and My husband and I love her house. They bought the house for

Asked by Craigmartinez, Wheaton, IL Fri Apr 23, 2010

298,500 with a 60,000 down payment. They want to rent/sell it to us for 285,000. What we don't undersstand is how do we figure out what we should pay them each month. Mortgage is 1,700. They will pay the taxes and also get to claim the house on their taxes at the end of the year. How do we figure out equity,etc. Who should we talk to? We don't want to spend to much money hiring people to help.

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7
Craig Martinez,

There may be many reasons why your sisters house didn't sell for $298,500. Just because your sister want to sell it to you for $285,000 doesn't mean that you have yo purchase it for that amount and put yourself in a financial jeopardy. There are many things involved in purchasing a home. If you have any questions please contact me at fredythomas@yahoo.com at your convenience and I will be happy to help you.

Fredy Thomas
0 votes Thank Flag Link Wed May 26, 2010
Craig,
You don't mention how long ago your sister purchased her home. As others have indicated, you need to determine the "fair market value" for the home. In this market many homes have dropped 10 to 20% in value. I recommend you hire a "fee appraiser" to provide you with a valuation based on today's value. A valuation of rentals in the neighborhood will also help you establish the monthly rent. Other things to consider is if a portion of the rent will go toward the purchase and the length of the lease/purchase. It is important that you use a real estate attorney to draw up the contract. The other question you want to explore is why has the home not sold? Are their factors/features that are negatives or is it priced to high or the supply/demand raito? Although you love the house now, you need to look at long-term and will you be able to resell the home when you are ready to move on? I would be happy to provide recomendations for you. Good Luck.
0 votes Thank Flag Link Sat May 1, 2010
Craig,

I know you love your sister, but unless you are financially well off enough to support her make sure you are not putting yourself in financial jeopardy.

You need to know the value of the home ( not just pick a price out of thin air), also it sounds like you are doing a lease purchase. You need to get a better idea of what rents go for in that area as well.

Lease purchases are very complex and often go sour before the purchase side is ever completed. This could cost you more money that you will never see again as well as putting your relationship with your sister at risk. The deal has to be fair for both sides.
0 votes Thank Flag Link Mon Apr 26, 2010
Hi Craig Martinez,

There are many factors to take into consideration before committing to this transaction. Here is a list of questions/considerations that you need to take into factor:

1. Do you know the current worth of the home? What if the home is worth less than what you are purchasing it for? Also, what if the value of the home goes down in a year or even in the next 6 months? There might be no equity to discuss
2. Are you pre-approved for a loan? Or will you be pre-approved.
3. How much of a down payment do you plan on putting down? Lending is not like it used to be. It is not easy to obtain a mortgage loan these days.
4. How much are rentals going for in the area? If rentals are going for $1500, do you pay more because of what their mortgage is?

I can probably come up with another 5 more reasons why you really need to consult with a professional. You need to have your interests protected especially when it comes to such a large purchase. If you need any help, I would be happy to lend a hand.

Thanks

Cherrie Catama
Newman Realty
cherrie@newmanrealtyillinois.com
0 votes Thank Flag Link Mon Apr 26, 2010
Hello Craig

It will be prudent to use an attorney or a Real Estate agent and do all the Contracts accurately.

You are buying a near $300K house, does it not make sense to do it properly and correctly?

Goodluck.
Perry
Web Reference: http://www.ruthandperry.com
0 votes Thank Flag Link Fri Apr 23, 2010
It's best to spend a little money upfront and make sure you're doing it right than get into a situation that may cost you more in the end.

You should consult with a Real Estate Attorney to make sure ALL contracts are legal and in the best interest of "both" parties. When all details and concerns are addressed and put in writing with an attorney, if anything comes back later, you will have a "legal and binding" contract that shows mutuality of agreement on the rent to purchase with both parties agreeing.

It's best to pay for the attorney to do it right the first time because all the money in the world can't mend a broken family situation.

Best of luck!
Web Reference: http://www.WeberHomes.INFO
0 votes Thank Flag Link Fri Apr 23, 2010
First a warning, the old saying never do business with friends and family.... So first thing you need to do is meet with a local and trusted loan officer to get prequailified. They will tell you if you quailify for any programs now and if not what you willneed to do to quailify and how much time you will need so you know how long of a lease you will need. the most important thing is they will tell you if you can quailify for that amount. Now if you do quailify for that amount, and you know how long you will need to get a loan. You need to figure what market rent is ofr that area as well as you should see what market price is for the house. When you are ready , make sure everything is in writing, you shoudl have 2 agreements, 1 is the rental agreement and 1 is teh purchase agreement. It shoudl spell how much money gets credited to you for down payment and closing sosts. i would include teh seller payin 3% of your closing costs in teh purchase agreement. In teh rental agreement figure what 5% of teh purchase price is, and divide by the amount of months the lease will be , and that amount shoudl be credited to you when you buy the house. If you dont purchase you dont get any credits though. good luck working things out
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Fri Apr 23, 2010
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