What Is Rent-to-own, And Should You Get Involved In It? Here’s The Catch In The New Way to Buy

What are rent-to-own homes? Well, these homes are a way for people who don’t qualify for a mortgage, but want to still buy a house. This option is something that allows a person to lease the house with the option to buy it when the term is over.

The isn’t necessarily the most common way to buy a house, and the availability of homes being sold this way are rare. However, it can be a good idea, and some people do make it work. Here are some things that make it something you should consider.

Perhaps you are really close to being able to get approved for a mortgage, but you’re not fully there yet. You may have a low credit score. See: A Deeper Look into How Rent-to-Own Works. Or, you may have great credit, but low credit history. You might have just gotten an amazing job, but haven’t been there long enough for the bank to consider is a stable thing. You also might be self employed; even if you make great money, the bank still finds that risky.

These are all situations in which the homeowner can buy a house, but the bank hasn’t quite seen their potential yet. So, if you rent to own, you’re giving yourself a good two years to get your credit in check, while getting closer to owning the home. It gives you time to improve your credit score, or get a better job, or fix any blemishes on your credit report. Read: How Rent-to-Own Homes Work.

When you choose this option, you are going to be paying a lease option fee; you can consider this your deposit, which by the way, you won’t get back. So don’t put down a deposit unless you’re sure you want to buy the house; or, if you’re not okay with losing that money.

The downside of rent to own is that you’ll have wasted money on rent if you don’t buy it. You pay the owner extra rent each month; the regular rent, and then a smaller portion that is set aside for the downpayment on the house. So, if you don’t buy it, you lose that money as well.

Another downside to these situations, is that there isn’t a standard contract for this type of buying situation, like there are in the closings for the traditional method of buying. This means, that the owner can write whatever they want in the contract. You should consider consulting with an attorney if you are looking at a lease to own situation. For further reading, see: Rent-to-Own Agreements Can Benefit the Buyer and Seller.

 

Are You a Seller, Wanting To Be Present at Every Viewing? Here’s Why You Should Schedule a Lunch Date (Or Be Anywhere Else) During Your Open House

When a buyer is viewing a home, they should feel incredibly comfortable. They don’t want to feel like ean intruder. This is just one of the many reasons the seller shouldn’t be there when their home is being viewed. They should be able to open and look at your closet, without feeling like a thief, or something else uncomfortable. They will need to look under your sofa, look in your medicine cabinets and drawers, and many other things. See: The Worst Things to Say to a Sellers Agent

Honestly, you should be worried if you have a buyer that doesn’t want to do these things, because that means they aren’t serious about the house. For example, when you’re shopping, if you take the item off the rack to glance at it and put it back, you aren’t serious. It’s when you take it off the hanger, study the fabric, and try it on that you mean business.

If the seller is present, the buyer won’t be able to do these things because they’ll feel uncomfortable with you watching them do it. When the seller is present in front of a buyer in their home, they both are losing. The seller is probably losing a buyer, and the buyer is losing a house that they may have really liked. The buyer never stood a good chance, if you were there. Check out: 14 Steps to a Flawless Open House.

Another reason the seller shouldn’t be there is that they end up talking too much, by accident. It’s in a persons nature to fill uncomfortable silences with noise. And unfortunately, the seller may end up revealing things about the house that the buyer shouldn’t have known about. For example, you might talk about how great the neighbors are. Then, if the room becomes too quiet, you might accidentally throw in a comment about how rude one of them is. 

It’s also possible for a seller to damage the buyer’s ego. For example, when a buyer asks questions, the seller could respond in a way that will hurt the sellers feelings. For example, if the seller says “yes, the living room was orange when we moved in, which was god-awful, so we painted over it, thank goodness!” The buyer might have wanted to actually paint the room orange. You never know what you’ll say that might turn them off.

There are not many situations in which it is beneficial for a seller to be present at an open house, or viewing. There is no excuse for a seller to be there. Even if you take the dog for a walk, or go to lunch, it really doesn’t matter where you go. Just don’t be there! For further reading, see: The Dirty Secret About Open Houses – They’re Not For Selling Houses.