Problems with realtor: Is this typical?? (tenants, 5%, negotiating, agent)

[CaliDreaming01]

My hubby and I are attempting to "rent to own" through a program through HomePartners. Through this program, prospective tenants select a home for sale on the market, Homepartners buys homes for cash, and then leases to the tenant, who has the option to buy the house at the end of the lease. It is a little different than the typical rent-to-own program, particular in that we pay market rates for the rent based on the home purchase price and there is no obligation to buy. The monthly rent is determined according to the purchase price of the home and Homepartners provides a calculator for prospective renters to determine what they can expect their rent to be. It has some aspects of a traditional purchase because of the option to buy and so we have to use a local realtor to participate.

We are having a problem with the realtor we are using pushing us into properties that are higher than the max price we want to pay in monthly rent. We have told our realtor that we are paying down debt so that we can qualify for a mortgage in a little over than two years and that the home is just a temporary place to stay. We point blank told her that we are not going to exercise our right to buy and that although we qualify for better homes with more expensive rent, we'd like to stay within a certain range. I have researched the homes in the area where we want to rent, and I know that although inventory is tight right now, many homes do sell for well within the range we are looking for with the features we are looking for. I am on sites like Redfin every day religiously, so I know what homes have been going for in the area. In fact, I knew more facts about the area and the homes that we were interested in than she did, which surprised me.

We've also told her that we don't have to move right away so we don't have to rush. We have up to a year before we *have* to be in a home so we can wait for something good to open up

So why is our realtor trying to convince us that we are being unrealistic in wanting to stay in our price range and that we need to go higher?? For instance, we wanted to try to negotiate on a home that had been sitting on the market for four months. The home had been purchased for 200K just two years ago, but the seller was offering $305K. The seller had done some modest updating, but nothing spectacular. Other homes in the area with much better features have sold recently in the $250K-low $300K range. The realtor is telling us despite all of this that she thinks that the seller is going to get close to what they're asking for and that we probably won't have much success in negotiating??? We mentioned what houses had sold for the past summer, but she claimed that we could not use that as a guide (home prices appreciate for 5% or less in our area). She is pushing us to have Homepartners buy a bigger, nicer house that costs $10K more instead based on this since it is nicer and according to her, the purchase prices will end up being about the same.

We held firm and told her that we are want to negotiate on the less expensive, overpriced house and if that fell through that we would wait for something in our range to open up. We think of ourselves as very informed consumers and don't trust this realtor. We have to use her though to utilize the Home Partners program. If worse comes to worse we will just get a traditional rental.

So are we being pushed into a more expensive home because of the rent-to-own program through Home Partners, or do realtors do this even for traditional buyers? Is this is what we can expect when we go to qualify for a mortgage on our own?? I was pretty shocked at the realtor's lack of basic knowledge and her willingness to tell stuff that we knew not to be true from our own research. I wasn't sure if we are being treated like "second class citizens" because we're doing the rent-to-own thing or not.

[Mimidae]

Feel free to skip over this - I have no advice, and am really just wondering aloud here.

"We point blank told her that we are not going to exercise our right to buy"

I'm wondering - since there is no intent to buy one of these homes, what is the benefit to doing rent-to-own as opposed to just renting a house? Do you get more house for less rent? Otherwise, it seems like a very complicated way of obtaining a temporary place to live.

[399083453]

Your not being pushed into anything, simply say "no".

[johnrex62]

My guess would be that the realtor has heard the max price/max payment line so many times and the client so often ends up buying higher because they do not find what they want at the price they want. It is very common.

It seems your agent is trying to save time by showing you the features you want right off the bat, even if they are above your target price because those features are not available in a desirable neighborhood at your desired price point.

The next most common complaint they hear after "why aren't you showing me houses I can afford?" is "why cant you find this house in that neighborhood?". It is not that they dont want you to have the house you are asking for, it is that it does not exist at this moment in that place at that price.

[Cape Cod Todd]

It is easy for an agent to get caught up in the house and forget about the price. She probably thinks why not pay a bit more for a better house ?

When shopping to buy a house we often look at houses that are priced higher than the buyers budget because we can usually negotiate the asking price down but that of course depends on the market.

Still no means no and she should be listening to your wants and needs.

I also wonder why you want to get into a rent to own situation if you have no intention of buying that house?

[LifeIsGood01]

Originally Posted by Hallouise

Feel free to skip over this - I have no advice, and am really just wondering aloud here.

"We point blank told her that we are not going to exercise our right to buy"

I'm wondering - since there is no intent to buy one of these homes, what is the benefit to doing rent-to-own as opposed to just renting a house? Do you get more house for less rent? Otherwise, it seems like a very complicated way of obtaining a temporary place to live.

Good point, what's the point of doing a rent to own if they just want to rent. Sounds like trouble to me. I would think the contract for rent to own is more complicated than a simple lease.

[emm74]

Originally Posted by Hallouise

Feel free to skip over this - I have no advice, and am really just wondering aloud here.

"We point blank told her that we are not going to exercise our right to buy"

I'm wondering - since there is no intent to buy one of these homes, what is the benefit to doing rent-to-own as opposed to just renting a house? Do you get more house for less rent? Otherwise, it seems like a very complicated way of obtaining a temporary place to live.

I'm wondering the same thing.

Also wondering why you are negotiating what sounds like the purchase price, if you are renting it? Normally with rent to own, you pay a little more than a standard rental rate but some of that money goes towards the eventual purchase price. If you aren't purchasing, why pay that?

[CaliDreaming01]

Thanks so much everyone for the comments and yes it is a very good question you all have about why we would "rent-to-own" when we know we don't want to "own". The reason we are going through this program is that there are very few rentals in the area we are trying to get in to. The few that are available are in very bad condition. This program will allow us to rent a better home for the same price as a traditional rental. We need to move soon because our daughter is starting school next year and we're about two years away from qualifying for a traditional mortgage.

So instead of being limited to the few available rentals, we are able to choose from all the homes for sale in the community we want to live in. We are not obligated to buy the house and are obligated only to 12 month lease terms. Some of the lease terms are more slanted in favor of the landlord than a traditional rental (things like being required to make minor repairs), but they are still reasonable all things considered.

[CaliDreaming01]

Originally Posted by emm74

I'm wondering the same thing.

Also wondering why you are negotiating what sounds like the purchase price, if you are renting it? Normally with rent to own, you pay a little more than a standard rental rate but some of that money goes towards the eventual purchase price. If you aren't purchasing, why pay that?

This program is a little bit different than most rent-to-own programs. With this program, there is no obligation to buy. Our only commitment is a 12 month lease. The rent is based on prevailing rental rates for the area. We do have a security deposit but that is to be returned to us as long as we don't damage the property. So for people like us who don't want to buy, it is not much different than a standard lease.

As for the purchase price, Homepartners actually negotiates the purchase price and makes the final decision on what is to be offered with input from the buyer. However, prospective tenants do have to be aware of the price because the rent is based on the purchase price and any necessary/desired renovations. The purchase price also determines what price the house would be sold at if we exercise our option to buy--we would pay 5% appreciation per year. Once we select a house, Homepartners crunches numbers and provides a max price that it will offer, which we have to agree to before they submit it. So even though we are not the ones purchasing the house, we have to be involved in it and aware of what's going on. They are ultimately not going to overpay for a home but it's still to our benefit to be aware of prices so that we know what to expect and can get better deals. Since Homepartners pays cash for the homes, it also makes it easier for them to negotiate.

The benefit to folks like us from this program is that we get a much better rental. Homepartners makes money off of rent and potential sale of the house. The downside to this program is that some of the lease term are more slanted in favor of the landlord. For instance, we are responsible for minor repairs on the home. There's nothing in there that's really outrageous or that you wouldn't find in some leases on the traditional market, but these folks seem to be much more formal than a lot of landlords I've dealt with for houses.

[jojow]

I've been investigating this program for a client I have. I am very interested in your experience with the program. If you have any specific tips or experiences, please post them!