Picture this, you have identified your dream home, it is perfectly located in a neighborhood that you have always wished to live in, it is the perfect size to accommodate your family, pets and all but you cannot raise the down-payment required for the home. This is a very common scenario especially during tough economic times. Well, you could live in the home by renting it outright but this is something many home buyers are not willing to consider because the rent does not contribute anything to home equity.
The option available in the real estate market for the home buyer who cannot raise the down-payment required is: renting to own or simply lease-options. If for example a home is worth $220,000 with the down-payment required being $20,000 and the monthly rent being $2,000 you could reach an agreement with the home seller that part of your monthly rental is applied towards purchase of the home. Over a period of say two years, you will have funded enough home equity to cover the down-payment.
This is an option that is very beneficial to people who have made recent job transitions and people who need time to strengthen their credit position. It allows you to make a purchase at the right time without much constraint enabling you to own a piece of real estate.
Lease options are designed to meet the needs of both the buyer and the seller. Generally they are similar in the way they work. The purchase plan locks in the market price of the real estate at the time the plan is drawn. The seller agrees to lease the home to the buyer for a pre-determined period of time, say one to three years, during which period the portion of lease payment which is above the market rate goes into a fund which คอนโดมือสอง กรุงเทพ is used to settle the down-payment.
Depending on the agreement, an upfront consideration fee may be required. The rental charge will mostly be elevated over the market rate so as to create a surplus which is accumulated in a fund. However, depending on the prevailing real estate market conditions, the higher rent may or may not be charged.
The most critical factor in getting a lease-option is timing. The market conditions determine the number of sellers who are willing to get into such arrangements. This is especially due to the risk of forfeiture of the funds incase the buyer decides not to exercise the purchase option. Like any other option, renting to own arrangements do not have any obligation of purchase on the buyer's part, they only give the buyer the right to make a purchase over the specified duration.
It is therefore clear that these arrangements will tend to favor the buyer and therefore in high demand markets, you will find very few or no sellers willing to get into these arrangements. As markets experience low demand and for homes which have been sitting for long without purchase, it is very easy to get a lease-option.
Whether you are a buyer or a seller, you need to involve real estate professionals before making the decision to get into a rent to own agreement. A good real estate broker will ensure that the valuation is right and that the lease payments agreed on are actually favorable. You should also consult a real estate attorney whose work is to inspect the contract and assure you that there are no unfavorable clauses. With the services of good professionals and a willing seller, renting to own arrangements can be very useful to the first-time home buyer.
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