Home Buying in Saint Louis>Question Details

Jill, Renter in Saint Louis, MO

What is the best way to find a rent to own/lease to own home, on my own or thru an agent?

Asked by Jill, Saint Louis, MO Fri Jan 11, 2013

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I would suggest renting until you are able to save up for a down payment for a home, providing you are able to get financing.
1 vote Thank Flag Link Sun Jan 13, 2013
good advice!
Flag Sun Jan 13, 2013
Over 95% of the lease purchase contracts written in the greater St Louis area never make it to closing. There are risks for both the buyer and the seller with lease purchase contracts.

In the St Louis area, we negotiate 2 contracts - the first is a rental contract from date x to date y. The second is a purchase contract where the purchase date is the ending date on the lease contract. The buyer is responsible for doing all their inspections up front and those are negotiated up front so everyone knows the status of the home prior to the buyer/renter moving in. The appraisal and the loan commitment date, however have to be within a month before closing, which leaves the seller very vulnerable to what the property values for the area will be when it is time for the second contract to kick in since the sales price is negotiated up front.

They are also vulnerable, because if the buyer isn't able to qualify for a loan when the lease ends (and sometimes that is because the rules for credit scores, how much money you have to put down, etc have changed not because the buyer didn't fix the issues that initially caused them to rent rather than buy right away), they now have a tenant in place, with tenant rights that they have to get out of the home in order to sell it to someone else. I have seen it get to the point where the buyer refused to leave and the seller had to go through the process of evicting them, plus the seller then has to go through the home and make it "show ready" again before it can go back on the market (paint, clean carpets, etc).

On the buyer's side, typically the homes that are set up for lease purchase are the ones that have a bit more difficulty getting sold. Often they have an "issue" that has prevented regular buyers from finding them attractive enough to put in an offer - it may be a wet basement, or a horrible backyard, or they make be on a very busy street or any number of other things. The really nice homes, esp since we are back to a sellers market in much of the greater St Louis area, are selling quickly and the sellers don't need to deal with a lease purchase contract offer. That means that the buyer who choses to put themselves in a lease purchase contract starts out by limiting the homes available to them to ones that have issues that will 99% of the time still be there when they get ready to sell the home in the future.

Bottom line, I highly encourage people to fix their issues first, then buy a home as a regular purchase so they can consider all the homes in their price range, not just the ones that have issues
1 vote Thank Flag Link Fri Jan 11, 2013
great answer - thumbs up from me!
Flag Sat Jan 12, 2013

my advice?

if you can't qualify now for a loan, or need to save up money for a down payment, I suggest you simply rent and deal with those issues for the time being.......then buy a home when you're financially sound and ready to move forward !
1 vote Thank Flag Link Fri Jan 11, 2013
0 votes Thank Flag Link Sat Jan 26, 2013
I agree with the comments posted here. Rent & save up--then buy--for real. None of this lease-purchase monkey business. After all, why limit your housing choices based on which sellers are willing to do a lease purchase?
0 votes Thank Flag Link Sat Jan 26, 2013

I have just worked on a lease/purchase property recently. What I found was many real estate agents will tell you it is very difficult. In my opinion it is not. There are many sellers out there that have not considered leasing there properties until a buyer can close, but will! All an agent has to do is ask.

Good luck!
0 votes Thank Flag Link Fri Jan 11, 2013
No one said it was "difficult" - what I said was..... it generally favors the seller not the buyer for the reasons I listed.
Buyers looking for lease to own usually can't get a mortgage now, or don't have a down payment.
Many sellers who look for a lease w/ an optiont to own are doing so because they can't sell their properties in the normal fashion for a variety of reasons - thus, both parties often turn to that option out of desperation...and that's not a good position for anyone to be in.

and : it's "their properties" not "there properties".
Flag Fri Jan 11, 2013
Jill - please be very careful of any rent to own transaction, as it usually favors the seller, and has a lot of potential issues for the buyer.

Make sure you comepletely underdtand what it involves.

I ifnd that many consumers think it simply means you pay rent, and if you decide to buy the house, all the rent you paid is put towards the purchase.

It (usually) does NOT mean that!!

Usually, there is NON-REFUNDABLE money (deposit) the buyer must put up, or "option"money - you are paying for the right to exercise your option to buy the house at a later date. The seller must sell at the agreed upon price to you - you do not have to buy, but you are paying for the right to walk away - that money will be forfeited if you do not complete the purchase for whatever reason.

If you don't have money to use as a deposit, usually an amount of rent OVER and ABOVE the normal rent is paid, and that overage is applied to the purchase.
You lose that money if you do not buy the house!

So....if you cannot qualify NOW for a loan, for whatever reason, be very certain you will be approved later on.......or you will lose your deposit.........also, be sure the seller is financially sound and not underwater with the mortgage.
Make sure you are protected so that the contract stipulates the house must appraise out at the price you agreed to (that sale price is usually decided now, not at the end of the lease).

I could go on and on, but I won't - just warning you to make sure you really understand what is involved.
If the agent you work with is unsure, or you don't have an agent - please seek the advice of a real estate attorney before signing on any dotted line!

Best wishes........
0 votes Thank Flag Link Fri Jan 11, 2013
The information the other Realtors gave you is excellent. BE WARE of people advertising they have home, some maybe a scam. As a Realtor I had someone trying to do over the internet on one of my properties. Fortunately the person looking, call directly to the agent (myself). Also with the lease with option to buy or rent maybe you should look into some of the programs out there that can assist you if need be. Only you know your circumstances. As an agent who council her buyers, I present them with a budget and discuss the pros and cons with them. If you like call me 314-304-3324 or email: vernae@gmail.com. Have a great day.
0 votes Thank Flag Link Fri Jan 11, 2013
Since rent to own properties may not be listed as such, consider working with an agent of your own. Keep in mind that rent to own can be risky and one could stand to lose a bit of money, therefore do inform yourself well, and consider consulting with an attorney who specializes in real estate beforehand. If you haven't done so yet, visit with any licensed loan officer, see if you can buy outright...
0 votes Thank Flag Link Fri Jan 11, 2013
Greg gave some really good pointers on dealing with a good realtor to find a rent-to-own home. If you do find a deal with a realtor, make sure you ask all the right questions before signing any documents. I also want to add if you do find one on your own with a FSBO, have your contracts reviewed by a good real estate attorney to make sure you are well protected in the deal.
0 votes Thank Flag Link Fri Jan 11, 2013
Good morning Jill. There are many good Realtors in the St. Louis area. You can certainly try on your own, but keep in mind there are some things put in place by various municipalities to protect tenants making sure the place you live in habitable. A Realtor knows those things and will make sure they are addressed with an owner/landlord. You can search on many different sites for Realtors, like Trulia. If you are looking for downtown properties I would encourage you to use Realtors that know and live in the area. If West County, then Realtors out there, etc. The important thing is that your Realtor is familiar with the area and knows the ins and outs of the municipality in which you may live.

You can visit StLouisPremierLofts.com, Highrises.com, StLouisMissouriHomes.com for current listings and to see learn about living in the City if that is an option you are considering. Any Realtor can help you by searching the MLS. I set all of my clients up on Listingbook so we can work together on finding a great place to live.

Hope this helps.

Gregg Sharpe
314 566-8778
0 votes Thank Flag Link Fri Jan 11, 2013
Hi Gregg, thank you for your advice. Here is my issue, my credit scores are low and I have been trying to work on my credit and as you know, its a slow process. Most of my credit issues have to deal with medical and student loans. My second issue is that I don't know how to find an agent in the specific school districts I'm looking in. Looking for a house has become a daunting task for me, cause I feel like I'm never going to find what Im looking for with my credit and budget issues. Do you have any advice or know of someone who may be able to help me with out taking me to the cleaners?
Flag Sat Jan 12, 2013
You should try both: own your own and thru an agent. An agent by possibly find you a good deal, or you could network with the right people and find one. Try Craigslist and newspapers I have seen good deals posted on both resources.
0 votes Thank Flag Link Fri Jan 11, 2013
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