House buying question please help!!?

Question

There is a really nice house my wife and I like for sale or rent. We told our Realtor that we would like to rent to own it. The house has been on the market for over a year. He asked their Realtor about it and he said they turned down an offer before for the same thing. However with it being on the market for so long now, maybe they will give it more thought.

I am asking for a 10 year rent to own home though I don't mind a 5 year deal. The house is worth $360, they are asking $350, I am offering them $300.

My question is, do you have any ideas on an offer. I was thinking they would come back at maybe $320? Do you think they will even DO THIS RENT TO OWN? What can I offer that might change their minds?

How would YOU DEAL with this?

Answer 1

Regardless of how long the house has been on the market, the seller may just want to sell it and be done with it.  The seller may need to be off the hook, so to speak from this mortgage, so they are in better position to pursue other endeavors whether it is another home loan or to simply cash out.

As far as your deal that you have come up with, I wouldn't even look at it, much less waste time with a counter offer if I was the seller.  You are asking the seller to take 50K less than the asking price and then  you only want to "rent" until some faraway date in the future.   The deal stinks.  

Save your money and when you are in a position to qualify for a home loan, do it.  Get prequalified for how much house you can afford and then go find a house.

Answer 2

People rent to own when they cannot qualify for a loan.  There is simply, no other reason to enter into that type of transaction if you could get a loan.

So, I 100% agree with the guy.  RTO locks up his property and you may or may not ever get your credit/income straightened out enough to buy it.  At the end of the contract, if you can't buy it, all he can do is keep your deposit, he can't even sue you to force you to buy....meanwhile he is ultimately responsible for the property.

And BTW...5-year contracts are unheard of and 10 is out of the question...about 2 to 3 is all most owners will agree to and these are usually FULL asking price offers or even above it with usually a 2% deposit...non refundable.

As a Realtor and investor, sorry, I agree with him.

PS:  Dan, your suggestion of the owner carrying the mortgage is good...but that's assuming that the owner owns the property free and clear.  If he is carrying a mortgage on it, technically, he can't carry it b/c he already has one.

Answer 3

As the owner, a 5 year contract to rent to own is a long time.  I would possibly go 1 year.

Answer 4

I am with the others that say if you can't afford to buy it, you most likely cannot afford to rent it either.

Don't set yourself up.

Answer 5

I don't think they'll budge. If you can't afford to buy it now, you can't afford to rent it now. (I'm not being rude by that, just speaking from the owners perspective)

Plus they're probably selling because they want/need the lump sum money, they won't get that from renting it out.... PLUS, you being a renter IF they did agree to that, your rent would likely be higher than your mortgage. They need additional monies to set aside for possible repairs, damage, taxes, insurance and of course, to cover their mortgage, and monthly profit if they choose to tack that on their too.

you'll spend more renting a house than buying one... look for something else.

Answer 6

If you want them to take you seriously, I would recommend a much shorter span of time. Like 1-5 years max.

Answer 7

Without reading everyone Else's response, going to answer your question. Generally in my market, when a seller is willing to rent to own or owner finance, it is because he or she wants the income stream and does not want to cashed out. You are asking them to do something they are not advertising. Furthermore, you indicate that the home is worth 360K. You are way off base with your offer. You are trying to induce them to do something they are not offering and you are "low balling" them. Not very smart.

You need to offer them full price in order to get this deal to work, that is if you have not already insulted them

Answer 8

A standard term is 1-2 years, not 10.   If they are sane they would not even entertain this "offer", which is very low ball anyway.

Answer 9

You just said that you cannot afford to buy this house now and need 5-10 years. What will change in 5-10 years? If you cannot afford to buy it, you cannot afford to rent it, either, as it costs more to rent than to buy. What gives?....................

I would avoid a rent to own. You throw away some tax advantages by renting and so does the owner of the property. I would try to get the seller to carry the mortgage rather than rent to own. This way, you own the property, pay the mortgage to the seller, and you pay the taxes and insurance and can do what you want to with the house as far as decorating and fixing it up to suit yourself. If the house appraised (determined by an actual licensed appraiser, not a real estate agent guess of value) for $360,000, try an offer of $330,000 with a down payment of $10,000 and a 6% loan (fixed rate) over 30 years. This is called a land contract and is often used by people who can carry a mortgage. You see the seller gets not only the  money for the house, but also the interest that the bank would normally get. If you don't pay the loan, the seller gets the house back and you are out on the street.

Land contracts are a better deal for the seller and the buyer. The losers are the county tax people and the bank or S& L that would have carried the mortgage.

Regards,

Dan

Answer 10

im having the same problem as you

the house that im looking at is 489,000k

its a pre own house

at first we offer 480 but they rejected so we came back and offer 485,000 and they accepted

problem is home owners dont like rent to own

maybe you can offer them $ 330 im sure they will accept

100%

Answer 11

You should find out why they don't want to rent. Maybe they absolutely need the cash now to afford their new home. Or there may be another reason. If they even are thinking of rent-to-own, they will probably want more than the asking price anyway. Have you checked out all your options for financing? There are a lot of flexible loans out there that may suit your needs. Also, if you know you cannot buy right now (which is a very, very good time to buy) you should ask your Realtor to look for houses that are offered on Lease to own or Rent to own terms. There are a lot in my market.

Answer 12

i suggest u look for a less expensive house or condo that u can afford and build equity on it than in those five to ten years sell and buy a bigger one.  you don't want to go above your means.  especially with all the banks closing and houses going into foreclosure. think it through