Asked by Reza, McLean, VA Thu Nov 24, 2011

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Miguel Avila, Agent, McLean, VA
Thu Nov 24, 2011
Yes. Generally you pay a much higher rent and then get the excess and more back as a rebate at settlement. However, with interest rates this low, it may make more sense to buy instead of rent. Contact me to see what may be best for you.
1 vote
Paul Pavot, Agent, Fairfax, VA
Mon Dec 19, 2011
Hi Reza,
It's hard to answer this question without knowing the details of how the deal is structured, the circumstances for the buyer and seller, and how selling price is determined. Every deal is different. For the seller, rent with an option to buy can help secure on-time monthly payments with a potential purchase at a price that is acceptable. The negative aspect is that the seller can miss out on potential price increases for a future sale. From the buyer's perspective, it can force them to save a downpayment and not have to move when the lease is over. Some will argue that option to buy may put the buyer at risk of paying too much, but appraisal contingency should help mitigate this exposure.

Let me know if I can be of help, buying a home doesn't have to be a scary endeavor.

Best Regards,
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0 votes
Melissa Bark…, Agent, Washington, DC
Sat Nov 26, 2011
There are few of these in this market. They tend not to be best option for all parties.

Good luck!
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0 votes
Jim Simms, Mortgage Broker Or Lender, Louisville, KY
Fri Nov 25, 2011
Not sure I understand the question, but I do understand rent options, they can be dangerous for the tenant. This type of transaction the underlying assumption is the seller will be able to perform in addition to the tenant/buyer. That is a very big leap of faith on your part, sellers are not subject to the same federal regulation as banks, do you really know the seller well enough to give them your hard earned money? I have discussed this in the blog entry linked below. Other entries in my blog will also shed some light on the subject.

The reason most people seek this type of transaction is because they are not eligible from a mortgage from a traditional lender. Any work around to side step the mortgage underwriting guidelines shifts the risk from the lender to your side of the ledger, greatly increasing the odds of disaster. The guidelines are actually fairly liberal despite what most people believe. I hope my observations keep you away from harm, good luck.
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John Fitzger…, , Fairfax County, VA
Fri Nov 25, 2011
Almost certainly not. These tend to be bad deals for both renter and landlord.

For the renter, you'll be paying at least $1,000.00 per month over the going rate. Why is this a good deal for a renter, when this same money could be saved and invested?

For the landlord, in an era of rising rents, especially, why should the landlord tie up his property with a multi-year contract that locks the landlord in to a price which may be under market by the time the option is exercised?
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