Selling your Atlanta house can be simple when using a rent to own contract! There are several excellent benefits to selling this way that homeowners don’t always realize. Please keep reading the rest of the blog to learn more about some of these great benefits in our latest post!
The Benefits of Selling A House Rent To Own Are Substantial
The benefits to home sellers can be very profitable. The first benefit is that you’ll reach a larger pool of homebuyers who are highly motivated, and you will have a better opportunity to get your asking price. Your property will go from demanding money out of your pocket each and every month to one that, if the agreement is structured right, will become an investment that pays you monthly. If you are considering selling your house in Atlanta, in this market, it would be wise to consider selling your home rent to own. It might be the solution that pays you money.
Ask For A Solid Down Payment
It is common when entering into a rent to own or rent with option to buy agreement that the prospective buyer will contribute a down payment. The seller should be realistic and realize if the reason the buyer is going the route of rent to own because they cannot raise the down payment, then how they will come up with the down payment for you?
You should make an option fee mandatory but be reasonable and make it attainable for the tenant-buyer.
Compose Comprehensive Agreement
What should be included in a Rent To Own Agreement?
It is essential to have a detailed contract that covers everyday situations buyers and sellers face. Using a thorough agreement at the beginning helps to mitigate any disagreeable moments later on during the tenancy. We at Fresh Start Home Sales prefer full transparency and urge both parties to have all their expectations spelled out in writing in the contract. If it’s not in the contract, no matter what is agreed to, it will not be enforceable easily. We are not attorneys but recommend that both parties consult an attorney before finalizing an agreement.
Here are some things we believe should make it into any contract for rent to own homes or lease options.
Repairs & Maintenance –
When it comes to each person’s maintenance responsibilities, it is important to be very specific in laying out who is responsible for what during the course of the agreement. The worst thing to find out that an issue comes up, and both parties are pointing to the other to take care of those problems. That can make for a few uncomfortable conversations. Customarily the tenant-buyers are responsible for minor repairs of everyday maintenance. The seller should be responsible for major repairs and damages. It is helpful to have a specific dollar threshold for when the seller’s responsibility kicks in, along with how that cost is determined. It seems like an unnecessary nick picking to be so detailed until something happens, and you will wish that was all in writing. An attorney accustomed to the rent to own agreements will be helpful in directing the contract.
The on-time payment of taxes is the responsibility of the owner of the house. Some agreements will allow the buyer to pay the taxes and reimburse the seller at a later date. It is our opinion that you would avoid that kind of arrangement when possible.
Lease Terms –
The length of the contract is also negotiable. We have seen contracts for as little as 6 months while other for 3 years or more. We believe most people can become bank mortgage ready to purchase within 18 months, and 3 years is more than enough to get things together. At the same time, some sellers don’t mind waiting because they are cash flow positive that is not the norm. Buyers should prepare themselves to work diligently to buy that house or find that at the end of the agreement, they are out the months of rent paid and the deposit because they did not close before the contract expired.
Another good idea to include in the agreement is to offer contingencies for the buyer and the seller. It would be considered unreasonable for the buyer to have to buy a property when there was a material defect in that property that was not disclosed during the negotiations of the contract. That doesn’t necessarily mean the seller knew of the defect, but when the buyer becomes aware of the defect that may preclude them from buying the house, there must be the remedy in writing. If the buyer becomes aware that they will not be able to buy the house due to no fault of the seller, the seller should have the right to exit the agreement and find another tenant-buyer. If the tenant-buyer defaults and is unable to keep up with the monthly payments, accommodations must be made for the buyer to leave and surrender the property to the seller. In most cases, the buyer will also forfeit the deposit.
Foreclosure Process – What happens if the tenant defaults? The foreclosure procedures if the buyer defaults on the agreement like everything else must be in writing and in the contract. No one, not the seller or the tenant-buyers, wants to be involved with the expensive court system. If you have it clearly in writing, then you are halfway there.
Miscellaneous Situations –
A comprehensive rent to own agreement is not the be-all and end-all of the tenanting process of a home. The seller is still obligated to do a background check and to check the potential tenant buyer’s references. You must still know who you are renting to and can they afford the home they wish to live in. There are many services that do a good job providing you with the information you need to make a sound decision. A nice person with a good smile is not how you screen for a tenant in real estate. In addition to customary Tennant, checks make sure to have the potential buyer sit down with a mortgage broker. The purpose of the mortgage broker is to see if the tenant-buyer and reasonably buy the house in the time allotted by the agreement.
References and Background Checks
While you are opening the house up to many more buyers, you can just go into an agreement with just anyone. You will need to do some research on your potential buyer by checking references and running background checks. You will want to make sure that the people you enter into a rent to own agreement with are able to pay you each month until they qualify for a mortgage.
Consult A Pro
Hiring a professional such as Fresh Start Home Sales to consult with you about all aspects of the rent to own process. We are not realtors, so we cannot get you a buyer for your house, but our years of being in this business will prove invaluable to you. That way, you can sell your house rent to own with fewer hassles.