With so many homes for sale, and so few homes to rent available, I am more and more often encountered with the question, ” would they be willing to do a rent-to-own?”.
I think this is more evidence that homeownership is still in fact the American Dream. It shows that many renters, though not qualified for whatever reason at the moment, inherently do wish to own rather than rent their homes. This scenario however, can be quite complex, and there are some advantages and disadvantages for both parties involved.
For instance, the seller will want some incentive in order to agree to take the property off the market for the duration of the lease agreement. This incentive is usually in the form of a premium tacked on to the purchase price. Why would a buyer want to pay a premium for the house you ask? Well, if there are circumstances which prevent a purchase from qualifying for a mortgage, but they anticipate a change in income, or credit in the future, they may wish to try to start building equity in a home by renting it, and requesting a portion of the rent be credited to them as downpayment money at closing. For instance, if a home is listed for $350,000, perhaps a purchaser would offer $2000/month with $300/month credited back to them at the closing table, enabling them to bring $3600 less in closing costs.
Prior to taking possession, a purchase price is determined. Usually the last 60 days of the lease term, the parties enter into the contract to purchase at the agreed to price.
The landlord/Seller benefits because they know that they have someone who has a vested interest in the property.
Port Jefferson real estate attorney, Margot Garant has structured “purchase option” leases many times for clients. She says, she most often sees the request made if the purchaser has had credit issues in the past or undisclosed income . The transaction is most successful for the parties if the property is vacant.
If you are considering a purchase option in or around the Port Jefferson Area, Amanda Eckart and The Celebrate Your Home Group make it easy for you to search for your new Long Island home. This FREE, NO-OBLIGATION service can help you find the home of your dreams! Simply Click Here to receive new listings, or fill out the Contact Us form to start your home search today! It’s just that easy! The Celebrate Your Home Group is always willing to help.