I have a house in Ohio for sale and a Realtor is interested in a lease to buy for herself (not as an investmt?

Question

She is in a recent divorce and cannot afford a home at this time. The house has been on the market for 7 months and I live in Atlanta. I would like to understand the details of this option.

Specifically, is the buyer responsible for repairs to the home? This may be something that is negotiable, I don't know, as the seller,I do NOTt want to be responsible for the repairs.

What responsibilities will the seller have?

How can I manage the home if I do not live there, who can I trust to manage the house if I am responsible for repairs? I do not want to rely on friends. Is there a property manger someone may recommend if it's necessary?

What are the details around the payments? If my house is worth $150k and my payments are $1k, is it reasonable to ask for $1k? What if they disagree?

I have a feeling that since this is a Realtor interested in my house, that they must know what they are getting themselves into. I have read about how a lease to buy is more beneficial for the Seller, but I'm not sure.

I definitely will get a lawyer involved if I decide to move forward with this, but I first wanted to understand what I could be getting myself into before proceeding.

THANK YOU!

Answer 1

Don't do it.  Lease-purchase, lease to own, lease with option, contract for deed, silent wrap..... these are all names for what this Realtor is proposing.

YOU are still on the hook for the loan you have taken out.  YOU must make sure to make your payments on time whether or not your new tenant does.

The buyer wants to rent your house, lock you in to a price in today's down market ($150K), and close on it in a few years (at $150K) when it's worth much more by then.

If you do insist on doing it, then do this:

  At least $10,000 non-refundable down payment.

  Charge a lease amount of $100 OVER fair market rent.

At the end of the lease term, the $10,000 and all the EXTRA rent (the $100 per month, not the entire rent amount) gets applied to the sales price.  If they don't close, they lose their deposit.  Make tenant/buyer responsible for all repairs while living there.

Answer 2

Essentially you are renting the place to them and after some amount of time they have the option to buy the place for some amount of money.  For example, you may both agree to rent the house for $1000 per month (or whatever) and that the realtor will then buy they house for $150,000 after a year - or lose the right to buy it.  If they decide not to buy it you can either continue renting it or try to re-sell it, but they are under no obligation to buy it.  Since its like a rental you are responsible for most repairs (not damages they caused but even in this case you may have to make the repair and then get the money from the realtor).  Its also common to give the renter some money to close with (like you may charge $1200 rent even though $1000 is the market rent, but you agree to give the renter $300 per month or $3600 after a year towards their closing costs - this gives them an incentive to buy the place as they lose the $3600 if they do not buy it and it also gives them money for the downpayment so they are more able to buy it).  

I have no problem with this sort of deal but there are lots of pitfalls and it sounds like you really don't want to be a landlord - you just want to sell the place.  Also you clearly don't know the market rent or how to write a contract, or so many other things; so if you do this you may still want to find another realtor (a veteran) to represent you on this (and you'll pay them a commission for doing this).  Anyhow, generally I'd kinda advise against it as it really doesn't sound like something you want to get into (and there are lots of problems that could come up) but with the place having been on the market 7 months, maybe its not such a bad idea.

Best luck whatever you decide.