Rent to Own (Frisco, West: real estate, renter, credit issues) - Dallas - Texas (TX) - City-Data Forum

skrappile · 01-12-2007, 09:02 PM

Hi, was wondering if anyone had any opinions about renting/leasing to own - there seem to be a lot of them in the area...
is it a good idea for people who don't have the traditional 20% down or does it depend on who's offering it, etc.?

Thanks!

CharlotteAgent · 01-12-2007, 09:06 PM

Quote:

Originally Posted by skrappile

Hi, was wondering if anyone had any opinions about renting/leasing to own - there seem to be a lot of them in the area...
is it a good idea for people who don't have the traditional 20% down or does it depend on who's offering it, etc.?

Thanks!

Make sure your working with someone with a good reputation. There have been some issues with "snakes" here in NC.

This is typically good for people who need 6-12months to clean up credit issues

socketz · 01-12-2007, 09:41 PM

Typically with a lease to own you agree upon a purchase price and put a fixed amount of money down (like 3%) . You then sign a rental agreement for a few years. During that time the owner then takes a % of the rent your paying and adds it to the downpayment. At the end of the contract, you can purchase the home and apply all the money saved to the downpayment.

It's actually a grat tool for first time buyers.

momof2dfw · 01-12-2007, 10:00 PM

Check the laws currently for the state. Sadly in very few instances in the rent/lease to own do the potential "buyers" ever end up actually buying the home. If a seller REALLY wants to sell their house and be done w/ it they don't offer such. In areas where you are seeing an abundance of these types of homes, I'd tread lightly and investigate the area a little closer. They are not really that popular and most of the more reputable agents/brokers & real estate companies frown on taking on these offers. Supposedly Ebby has told all of their agents they are not to list such. Too many legalities that can come out of such. If you have the 20% down I would skip these types of homes/listings and find something in a more stable area of the metroplex.

socketz · 01-13-2007, 04:56 AM

I agree with Mom in that you typically see these 'Lease to Own' deals in areas that were bought up by investors. I can think of 2-3 areas in both East and West Frisco that have alot of these deals because investors purchased blocks of homes and now they can't sell them. This is also becoming a tool in places like CA to move homes that are not selling. Your basically buying an option to buy the home at a later date based on an up front agreed upon price. So in theory it's a good deal for the first time buyer.

cdelena · 01-13-2007, 10:46 AM

Do a complete financial analysis... In every one I have looked at over the years the advantage was clearly for the seller. Since in most of these deals the landlord is recovering the purchase option in higher rent you are most often better off just renting at a lower rate and saving the difference for a purchase. Most sellers will peg the purchase price high enough to cover themselves in an escalating market and obviously do extremely well in a declining market.

socketz · 01-13-2007, 11:23 AM

The office where I hung my license in CA did some rent to owns and we never went about it this way. Typically the rent is higher, but that extra money is kept in a separate fund for the renter to use as a downpayment. You can't touch it. Since rent to owns are typically only seen in slow markets, the agreed upon price is normally market value plus an agreed upon annual growth rate if any at all.

The only thing that works against the renter is that they lose money in a downward market, or if they pull out of the deal down the road.

But the seller can lose money as well if they agree upon a price that is less than the annual growth, then have to sell at the end for less than market.

Not sure why these are viewed as so bad out here....like an Auto Lease, there is some research you need to do before getting into one of these. Personally, I'd pay a laywer to handle/review the transaction for me.

momof2dfw · 01-13-2007, 12:50 PM

When we were selling our other home we had two offers that wanted us to do the rent to own. We refused both. Both potential buyers stated they needed the time to get the money to afford the house. My view was, "I do not want to be a landlord. I put the house on the market to SELL IT". Then with their financial situations being pretty shakey I had to consider that what makes them think they can save money to buy the house in a few years if they can not now. Afterall the house is much larger than where they are coming from in the area therefore the utilities are going to be much higher. This of course is coming from the sellers side of view. My mother (our listing agent) told us that of every single "lease to own" that an agent had done in her office not one single one ever ended up closing to actually buy the house. I did not want to be stuck w/ a house in 2-3 years that I had to come in and clean up and put back on the market. The market at the time was good and we were able to sell the house at full price w/ it only being on the market 2 months. Funny thing is for the majority of the time the house was listed we had it below market value and received some horrible offers. We raised the price to just above market value and w/in a week had a full price offer. LOL!!!

socketz · 01-13-2007, 01:29 PM

" Funny thing is for the majority of the time the house was listed we had it below market value and received some horrible offers. We raised the price to just above market value and w/in a week had a full price offer"

I wonder if that is perception at work again. People see that the home is listed at a lower than market price and assume something is wrong with it, so it never makes their short list. To be honest, I've done that.....why....because when something is too good to be true, it usually is.

momof2dfw · 01-13-2007, 01:50 PM

Quote:

Originally Posted by socketz

" Funny thing is for the majority of the time the house was listed we had it below market value and received some horrible offers. We raised the price to just above market value and w/in a week had a full price offer"

I wonder if that is perception at work again. People see that the home is listed at a lower than market price and assume something is wrong with it, so it never makes their short list. To be honest, I've done that.....why....because when something is too good to be true, it usually is.

Sad thing is it was not that low below market value, not even $10K below market value. Strange. It was empty so that I also think played a part in it. Even some of the buyers realtors told my mom they thought we were "desperate to sell" and told their people to make a really LOW offer. Okay. So we raised it above market value by about $15K and got a full offer in days. Sad, really sad. But hey, I came out of the deal on the better end

. In cases like this I think the buyers realtor did them a huge disservice. They could have easily have called the listing agent and gotten the real scoop on the house first and then given their clients a clearer picture. Just goes to show again you really need an agent that knows what is going on. The agent that ended up representing the buyers we actually know. She knew when we were going to list it and for what and even said we were putting it at the right price just so we could sell it and not worry about it being on the market too long.

We are being plagued somewhat by this in our area though. We have a realtor in the area that claims to be the "specialist" here in this immediate area. She comes in and lists the homes well below market and if they don't have an offer w/in 2 weeks she wants to lower the price again. If you dare bring her name up to people around here you will get dirty looks. A LOT of people DO NOT like her. She is only hurting the market and going to hang herself eventually too. My mom had a realtor in her main area years ago that did the same thing. Where is that realtor now? No longer in business as she could no longer sell in any homes after awhile. People (buyers) get scared and think something is wrong with the area when in reality there is nothing. Just a realtor that sees a pretty good, strong market in an area that is desireable and wants to sell as many homes as fast as possible there not realizing the harm they are doing to the market. Thankfully right now she only has 3 listings in the area. I'm hoping those that need/want to sell are seeing she is not doing the others that have sold any justice.