Back to Results

Tools

Partner Tools


What is the purpose of renting to buy arrangments?

Profile picture for goddessdiva
close Profile picture for goddessdiva

goddessdiva

Contributions: 1

View full profile

  Flag content
Close
Report a Problem

If you find this content is in violation of our Good Neighbor Policy, please let us know and we will review it.

Close
Content Flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.

0 Yes

August 11 - Saint Paul
RSS

Answers (7)

Profile picture for AshleyTheRealtor
close Profile picture for AshleyTheRealtor

Ashley Lambert, "AshleyTheRealtor"

Real Estate Agent

View my 5 listings
Contributions: 36
Zillow All-Star

Since August 2009

View full profile

I have two downtown listings in my city in which the seller is offering lease-to-own for a Buyer. In this situation he still wants to see that the Buyer is approved to purchase the home and that the only thing holding them back is the down payment, in which he will allow 6 months for the Buyer to save up.  The condos will remain on the market, accepting back-up offers and giving the agent the right to show the condo with a one-day notice.  

An attorney had to draft this contract.

Note: I recently took an update course and the speaker said that 5% of lease-to-owns actually close.  The low percentage is due to either the Buyer making a small, expendable deposit up front and/or finding something better during the time of their lease agreement.  In this case I agree with Tiffany Bond, Seller Financing is a nice alternative.
  Flag content
Close
Report a Problem

If you find this content is in violation of our Good Neighbor Policy, please let us know and we will review it.

Close
Content Flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.

0 Yes

August 19
Profile picture for TiffanyBond
close Profile picture for TiffanyBond

Tiffany Bond, "TiffanyBond"

Real Estate Agent
Contributions: 2110
Zillow All-Star

Since August 2009

View full profile

The only time I have seen these work is between family members. They are attractive to buyers because (in theory) it won't be a hit to their credit and if they don't have good enough credit to get a loan they believe this may be their only way to achieve home ownership. They are a scam artist's dream - right up there with some of the charm that credit card companies have, but with less laws to protect you.

A MUCH safer alternative purchase method is to purchase with seller financing. Have the property legally transferred to you and have the seller carry the mortgage. This keeps the seller from encumbering the property and still gives recourse in the event of non-payment. These are much harder to get though since a huge percentage of rent to own are scams.
  Flag content
Close
Report a Problem

If you find this content is in violation of our Good Neighbor Policy, please let us know and we will review it.

Close
Content Flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.

0 Yes

August 17
Profile picture for Sacramento Investor
close Profile picture for Sacramento Investor

Professional Investor, "Sacramento Investor"

Contributions: 42
Zillow All-Star

Since August 2009

View full profile

In this market there is no reason for a Lease to Own contract.  You can probably buy a home yourself without going that route.  AND in this market you can bet that the home is already upside down with debt.  You don't want to pay higher than market rents and find out that the house is going into foreclosure.  Plus, I've never seen a successful L2O transaction close.

  Flag content
Close
Report a Problem

If you find this content is in violation of our Good Neighbor Policy, please let us know and we will review it.

Close
Content Flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.

0 Yes

August 17
Profile picture for Aldreth
close Profile picture for Aldreth

Aldreth

Contributions: 4233
Zillow All-Star

Since August 2009

View full profile

Randy rocks. :)





www.Aldreth.net
  Flag content
Close
Report a Problem

If you find this content is in violation of our Good Neighbor Policy, please let us know and we will review it.

Close
Content Flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.

0 Yes

August 12
Profile picture for Randy_H
close Profile picture for Randy_H

Randy_H

Contributions: 4390

View full profile

Generally, the purpose of such arrangements is to separate you from your money.  On occasion someone gets lucky and stumbles upon a rent-to-own situation that is legitimate.  Of course, on occasion someone gets lucky and stumbles upon a series of random numbers that entitles them to a free pile of taxpayer cash from their resident state government.  I once landed on "Free Parking" in a game of Monopoly also...
  Flag content
Close
Report a Problem

If you find this content is in violation of our Good Neighbor Policy, please let us know and we will review it.

Close
Content Flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.

2 Yes

August 12
Profile picture for rjon.101
close Profile picture for rjon.101

rjon.101

Contributions: 201

View full profile

Do this google this phrase "scams on rent to own real estate"  and you can spend hours reading a lot of reasons/stories to avoid rent to own.
 most all of the time they are entered into buy an owner who can not sell in in normal sale for the price he wants. typically it is a price far above market value. If he wants to sell it just put it on the market at market value and sell it. If an owner won't just put the house on the market and sell it that should be a signal there is a problem that is not good for you the potential rent to own victum. There is no benifit for a house that can be sold in a normal sale at market value to be sold via a rent to own scheme. Thousands have been had by these in Vegas, NV , Az and Socal during the boom . and the only buyers falling for a rent to own are the ones who cant buy via the normal buy process due to lack of credit and or cash and so hope for and look for the deal that is going to fulful their dream,  making them susceptable to the seller pulling a rent to own scam.
Frederick points out some really good problems that can occur and cost you everything you have put into the scheme and that could also cost credit problems.
Really,  do the google search and enjoy the reading
  Flag content
Close
Report a Problem

If you find this content is in violation of our Good Neighbor Policy, please let us know and we will review it.

Close
Content Flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.

2 Yes

August 11
Profile picture for Fred Griffin
close Profile picture for Fred Griffin

Frederick Griffin, "Fred Griffin"

Real Estate Agent
Contributions: 208
Zillow All-Star

Since July 2009

View full profile


A Real Estate Attorney should draft the paperwork, and set up an Escrow Account if necessary.
-----------------------

Is it an OPTION to Buy, or is it a CONTRACT to Buy?

-----------------------

What amount of the Rent, if any, is applying toward a Down Payment?

Many Renter/Buyers assume that all of the rent is applying toward a down payment, when in fact, none of it may apply.  
It all depends on what is written in the Option Agreement, or Contract to Purchase.

------------------------


If some of the money will apply to a Down Payment,
is it being held in escrow by a third party,
to keep the Seller from just running off with it?

-----------------------

Is there an existing Mortgage or Mortgages or Judgment Lien on the Property?

Has the Buyer done a Title Search or Abstract?

What is to prevent the Seller from taking out a Loan after the Fact and damaging the Title?
What happens if the Seller loses a lawsuit and a judgment lien is placed on the house?

------------------------

How does the Buyer know that the Existing Mortgage or Mortgages are being paid?
If the house is Foreclosed on, the Renter may have no rights,
and may be put out of the house (with a few excepted states, including California)

------------------------

Is the Seller going to Finance this, or will the Buyer be getting New Third Party Financing (Bank or Credit Union Loan)?

-------------------------

What about the Existing Mortgage - is there a Due on Sale Clause that might be triggered by the Rent to Buy agreement?  

If the Present Mortgage Holder considers the Option to be a Transfer of Ownership, it may trigger a Due on Sale Clause in the mortgage (the entire Loan Balance is accelerated and due immediately).

Likewise, if the Property Appraiser deems it to be a change of Ownership, there may be Property Transfer Taxes or Intangible Taxes due.

------------------------

Who will insure the house?  Is there Tenant Insurance to cover the Renter / Buyer's private property?

What if the house is severely damaged by a storm or fire - is there a provision for that?

----------------------------

See a Real Estate Attorney before entering into such an agreement.

There are serious consequences involved.

------------------------
Best wishes,
Fred
----------
  Flag content
Close
Report a Problem

If you find this content is in violation of our Good Neighbor Policy, please let us know and we will review it.

Close
Content Flagged

We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

Close
We're Sorry
This service is temporarily unavailable. Please come back later and try again.

4 Yes

August 11
 

Have a question? Ask it here.

What's this?
Close

By starting a discussion, you can expect more of an interactive, back-and-forth experience where the conversation can go in many different directions.

Or start a discussion

 
Active Saint Paul Real Estate Agents
Subscribe via RSS
  1. Profile picture for Mary Hardy Mary Hardy
    22 listings
    Local Expert
  2. Profile picture for Ralph Peterson Team Joyce Peterson
    31 listings
    Local Expert
  3. Profile picture for ckempnet Cheryl Kempenich
    22 listings
    Local Expert
  4. Profile picture for skipthomasremax Skip Thomas
    13 listings
    152 contributions
  5. Profile picture for REO MINNESOTA MARK HEBERT
    12 listings
    131 contributions

See more Saint Paul real estate agents

Related Questions
Profile picture for Ashley Lambert
Question What is the purpose of renting to buy arrangments?
  • Latest answer by Ashley Lambert
  • August 19
Related Articles about Rent vs. Buy
Guide How to do Lease option - by Example
Guide Home Rental Guide
Guide Which is Better? Renting or Buying?
Guide The Buyer's Market versus the Renter's Market
Guide The Advantage of Renting a Home
Current Last Week
Need a Mortgage?

Zillow Mortgage Marketplace

  • Competitive rates
  • Accurate, custom quotes
  • Thousands of lenders

... and, it's free and anonymous

Get instant mortgage quotes
Estimated purchase price Current mortgage balance Desired loan amount
98104

Learn about Zillow Mortgage Marketplace

Zillow Poll:
Suggested by Artie Blume
Lenders are required to disclose YSP like brokers. does this mean they cant be paid YSP?
Next poll
Suggest a poll
Be A Good Neighbor

Zillow® Advice depends on each member to keep it a safe, fun, and positive place. If you see abuse, flag it. More on our Good Neighbor Policy

© 2006-2008 Zillow.com, All Rights Reserved

pageName