Home Buying Options:
Rent To Own
With the price of homes in Colorado going up almost on a daily basis, many would-be homeowners can’t afford to buy a home or qualify for a loan. For some of these potential homeowners, there may be a way to become a homeowner without putting down a huge down payment.
Consider contacting an experienced and qualified real estate attorney to negotiate a lease-option-to-buy agreement. Landlords (and tenants) generally don’t think of this option but surprisingly, many landlords are willing and are very agreeable to this arrangement. In today’s market where there are tougher loan qualifications, this type of agreement is good for both the buyer and the seller.
For landlords, it practically ensures your property will be well taken care of. The tenants, knowing they’re in the process of buying, are more likely to install and replace appliances, update heating and air-conditioning, paint and even repair or replace a roof. These are big-ticketed items the landlord knows he would have had to replace or repair soon. The tenant knows the money invested in these improvements will go toward his equity once he owns the property.
The landlord can be comfortable his tenants won’t disappear in the middle of the night owing him rent and is also assured his home will sell instead of paying fees to list the property and possibly waiting months for a buyer, or someone to qualify for a loan.
If you’re already living in a home you would be interested in buying, your real estate attorney can draw up a Lease-Purchase Contract or Lease-Purchase Agreement and negotiate the terms. These agreements are a combination of a traditional rental agreement with an exclusive right of first refusal option and/or right to purchase the home by a specific date. This agreement would mean your landlord cannot sell the property to anyone else during the agreement time. Typically the agreement would be for a period of three years or less. The three years or less provides more time to accumulate savings and pay down the price of a home, time to rebuild credit scores and qualify for a loan.
Most sellers would rather have a cash sale, but having an agreement drawn up correctly by an experienced real estate attorney, this option can be of benefit to the seller.
Your real estate attorney may be able to negotiate a certain portion of your monthly rental payment be applied to the down payment. Other agreements allow the would-be buyer to pay the normal rent plus an additional amount that would be credited toward the purchase price.
When you enter into a lease or rent-to-buy agreement, whether you’re the landlord or the tenant, it’s vitally important to obtain your own attorney to make sure the provisions are to your advantage and do not have any unreasonable conditions. If you already have a contract, have your real estate attorney review the agreement/contract before signing.
A rent to own lease can be beneficial for both the landlord and the tenant. If you are interested in renting to own a home, contact a real estate attorney to draw up your lease contract.
Call 303-618-2122 to schedule a consult.