How does a rent to own work? We are trying to sell our home by any means necessary.

Asked by Erin Younan, Madison Heights, MI Fri Apr 3, 2009

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Tracie Morgan, Agent, Trussville, AL
Fri Apr 3, 2009
There are two ways of doing this. Rent WITH THE OPTION TO BUY and RENT WITH CONTRACT TO BUY.
I would always advise anyone to have a REALTOR or a Lawyer draw up the necessary paperwork. A lease with the option is basically where the possible buyer would put down a rather large deposit (this could be non-reundable or allowed toward the price of the home if they decide to purchase. You would not be able to sell this home ot anyone else without giving them first dibs at the price you agreed upon.
An Lease with contract to buy is different being that you have a lease contract with deposit and a contract to purchase with earnest money and do pretty much everything just as if you would if you were closing in a month. Such as inspections ect. The seller may be reluctant do do any repairs until it gets closer and is reassured this will close and this in most cases is OK. So you have a contract to buy and close at a later date and a lease contract to expire when it is expected to close. My advice to you is to make sure that which ever you chaose you make sure they are working with a mortgage broker that has evaluated their credit and ask for a letter from that broker stating that provided that their client does everthing they tell them to and there is not change in their income they will be able to purchase your property for the amount agreed upon at the time agreed upon to close. Keep in mind that Real Estate Laws vary from state to state.
0 votes
smith3gary, Agent, White Lake, MI
Fri Apr 3, 2009
Erin,

I would agree with Derek. If you are working with an agent, as indicated in your profile - Buyer and Seller then you need to ask your agent.

I would like to suggest inserting "legal" means necessary in your question. In some cases not all methods are legal.
Web Reference:  http://mi-living.com
0 votes
Keith Sorem, Agent, Glendale, CA
Fri Apr 3, 2009
Erin
You need to talk with your Realtor and a CPA with knowledge about income properties.
If you have to move, but cannot sell for the right price, a couple of tips:
Know what the tax implications will be at the time you do sell...and that may be in a few years.
Know the cash flow that may occur, so if you are negative, how will that affect your tax situation and family budget.
0 votes
Derek Bauer, Agent, South Lyon, MI
Fri Apr 3, 2009
Erin,

Is your home currently on the market? If so, your agent should be able to assist you with this. If it is not, feel free to contact me direct and I would be happy to share with you some ideas and explain how a rent-to-own, or possibly a land contract would work.

Derek Bauer, Associate Broker / Realtor
Real Estate One - West Bloomfield
734.678.4745 - direct
Derek@DoorToDreams.com
Web Reference:  http://DoorToDreams.com
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