are rent to owns ok?

Asked by RIta Perez, New York, NY Thu Jan 31, 2013

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Debra (Debbi…, Agent, Livingston, NJ
Thu Jan 31, 2013
My Ree

Glad to read you're going to forget the RTO idea, and continue moving forward with your plan to save more money for a down payment and a cushion.

All the best to you!

I also suggest you sit down with a mortgage rep to see how you look "on paper" in regard to qualifying for a mortgage.

Good luck!
1 vote
Mack McCoy, Agent, Seattle, WA
Thu Jan 31, 2013
- I have always been a renter and don't want to keep throwing my money away.

Sure, I think we understand that. I think you'd be throwing more of it away on an RTO, personally!
1 vote
Debra (Debbi…, Agent, Livingston, NJ
Thu Jan 31, 2013
No, in my opinion they are not "ok", and I have shared that view everytime someone asks!

If you have money for a deposit - you will risk losing it if you don;t buy the home....that's right - it is non-refundable......if you don't have money, you will (usually) be asked to pay an amount of rent OVER and above the normal rent - only that overage would be applied to the purchase, but forfeited if you do not, or cannot, buy the home.

I think a lot of consumers mistakenly think all their rent is applied to the sale, and they can simply decide not to buy the house, get their money back, and walk away.

it really doesn't work that way in a rent with the option to own situation.
You are paying for that "option" - the right to walk away.

The advantage is on the seller's side.

If you are having financial issues now, you really should work on them before looking to buy a home - even if you could find this sort of deal.
There aren't many of them, because most sellers who want to sell, and CAN sell (they aren't upside down on their mortgage) ...will sell now, not a year or 2 from now.

Do yourself a favor - protect your assets - work on strengthening your financial position, and then buy a home in the normal fashion when you will have a full selection to choose from.

Best wishes............
1 vote
Thanks very much for the information. I have always been a renter and don't want to keep throwing my money away. I've just heard a few horror stories about RTO properties. So, I will not be going that route. At present, I can only afford to put $20,000 down so I'm still saving for closing costs and a cushion. Thanks again!
Flag Thu Jan 31, 2013
Marsha Bowen…, Agent, Livingston, NJ
Thu Jan 31, 2013
Rent to own can work for some depending on the terms. As long as there is full disclosure and agreement with both parties, this arrangement can work. Not every agent is experienced at the process and not all situations are the same. Quite frankly, it's really the attorneys on each side that draw up the agreement to the best interest of both parties.

Just make sure you do your homework on the process and have a good attorney to draw up the agreement.

0 votes
Travis Waller, Agent, Englewood Cliffs, NJ
Thu Jan 31, 2013
Definitely wouldn't recommend. Rarely do you find many Realtors knowledgeable on this topic, but I have to agree with Ron on this one. He hit this nail on the head. On the surface, it sounds perfect but realistically, its the worst.
0 votes
Ron Thomas, Agent, Fresno, CA
Thu Jan 31, 2013
The homes are probably Okay; its the terms that can be prohibitive!

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.

There is no FORM printed by anyone; there are just too many variables.
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!

Good luck and May God bless
0 votes
Enough said. I would prefer to just buy it. I had no idea there was so much involved with a rent to own. A musician friend of mine has always rented to own. The houses have been lovely. Thank you for the information.
Flag Thu Jan 31, 2013
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