October 16, 2018

Selling Rent To Own-Frequently Asked Questions By Heeran Workman In Omaha NE

Selling Rent To Own FAQs

Q: What exactly is a Rent To Own?
A: You rent the property out to a buyer but they have the option to purchase the property within a specific timeframe.  

Q: Why does someone opt to sell rent to own versus an outright sale?  
A: Here are a few reasons I have seen in the past on why sellers to sell rent to own: they are in the business of selling rent to own homes, tax purposes, equity purposes, slower market conditions, sellers wanting to give addtional financing options, etc.

Q: Is there a down payment (option consideration) that is collected?  
A: It will depend on the home, the buyer, and the seller.  The option consideration needs to meet the needs of  both the buyer and the seller but I have typically seen about 1-10% of the sales price upfront.  

Q: What is the criteria sellers typically use to select the Rent To Own buyer?
A: Factors include the amount of upfront option consideration, date of move, income level, situation, and the timeframe for purchase.  

Q: Will the option consideration be counted towards the purchase of the house when the option to purchase is exercised?
A: Typically yes.

Q: How long is a Rent To Own term set for?
A: The option period means that the buyer has an option to purchase the property within the amount of time the option period is set for.  Some sellers will provide a short-term option period and others opt to give many years.  The shortest terms our sellers have given is 6 months.  The longest we have worked with has been 5 years.

Q: Once a seller and buyer agrees to this type of purchase, what is collected upfront?
A: Typically the option consideration, security deposit, and first and/or last month's rent.   

Q: Is the purchase price of the house determined upfront?
A: Some contracts have the price stipulated upfront.  Others choose to determine a fair market value at the time of purchase sometimes through an appraisal or a comparative market analysis.

Q: Why does someone opt to buy rent to own versus an outright purchase?  
A: There are many reasons why a buyer might want to buy rent to own versus a convetional purchase.  Here are a few I have encountered: self-employed and do not have the documentation for a bank financing, prior dings on credit scores, prior bankruptcies, the necessity to sell and close on the buyer's other home before they can purchase a new one, the necessity to save up more down payment money, etc.

Q: How can I get more information about selling rent to own?  
A: Call Heeran Workman for a free consultation.  She started her real estate career as a real estate investor and has extensive experience structuring rent to own transactions for her own portfolio as well as helping other sellers.

Thinking of moving within the next 12 months? Call now for a free home buying or selling consultation at 402-318-SOLD (7653)

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    By: Heeran Workman, MBA, Realtor - REMAX The Producers Omaha NE Real Estate