sell an rentback

Wouldn’t it be great if you could buy or sell any home rent to own within a month or two tops? Well, it is possible and even probable if you know the right strategies and plan your moves carefully. Of course it is always a good idea to consult legal advice when buying or selling a home.

With the housing bubble bursting, it is currently a difficult time to sell a pre-existing home. Interest rates are rising, housing prices are falling and with so many people in debt foreclosures are increasing. There’s currently something of a glut of homes on the market. If you are stuck in a variable-interest rate sub-prime home loan you may feel like you are caught in the grips of a very large trap.

There may be a way out. By selling your home rent to own you could help both yourself and the cash-strapped buyer who may have poor credit. Once you are out of your current mortgage you could rent, or now would be an excellent time to buy a home. There are tremendous deals out there currently with all the home foreclosures.

Here’s how rent to own works. The buyer makes an agreement with the owner that part or all of the rent money will go towards the down payment of the home, after a length of time, usually 2-5 years, the renter will buy the home, using the extra rent money that was set aside as the down payment.

There is usually not much money put down initially, outside of the normal renter’s deposit for a rental home, so this is a good way for a strapped individual to get into a home for little or no down payment.

Another advantage of rent to own for the buyer is that if you compare how much rent money is applied monthly to the home price, even if it is only 20-40%, it is basically all applied to principle in the form of an eventual down payment. This is very unlike a traditional loan where all the initial payments go up in smoke as interest. It is important for the buyer to note that if he cannot purchase the home in the agreed time period, he may have to move out and lose the extra rent money paid - planning is important.

Many real estate agents and established mortgage companies will advise home owners to not try to sell or buy homes via for-sale-by-owner or FISBO, but they have obvious interest in giving such advice - they won’t make as much money if more people buy and sell their homes without the middle-men. If however, the seller is willing to take the time to learn the ropes, plans carefully, and consults legal advice - it can be done.

I have included two links to resources that can arm the buyer and seller with inside, minimally circulated information that can give them the knowledge to successfully profit from the current housing situation in the author’s section below. Currently there exits great money saving and even profit potential in rent to own and foreclosure properties.

Home leasing is similar to rent to own, some money is paid up front in a lease agreement. The buy must plan to have good credit to purchase the home after the agreed time period. There are other strategies for the home seller to use in today’s housing environment; rent to own, wholesales, pre-foreclosures, rehabs, lease Options, used private money, commercial money and the list goes on. If you are interested in buying or selling a home, now would be a great time to learn about all possible options, especially those used by the professionals and not normally offered to consumers as viable options.



Repossession

1. How long can I stay living in my property?

This is probably the most important question for you to ask any Sale and Rent Back Company. If you want to stay in your property indefinitely it is important to make sure that it is also the intention of the company you are dealing with to keep you there indefinitely. They should provide this in writing, in both letters of intent and legally binding tenancy agreements.

2. Do I have the option to Buy Back and what will the Buy Back price/formula be?

Even if you can not foresee a time when you would be in a position to buy back your property it is worth asking this question and getting it put in writing. You never know when your circumstances might change and you may want and be in a position to buy your property back. Whether a company is prepared to offer you the option to buy back is also a good indicator of their intentions. If they are not willing to give you a buy back option you may want to question how concerned they are about keeping you in your home long term. An important part of the buy back option is what the price or formula will be for this. Some Companies offer a set buy back price for a certain number of years, others offer a percentage of market value and others a “premium” which is a set amount they expect you to pay above what they have paid you for the property. Whichever of these options is used for the buy back price or formula, you need to make sure you understand and are happy with it, and get it in writing. It is also worth doing the calculations and making sure that you do not end up paying more than the market value for your property when buying it back.

3. Will there be a Tenancy Agreement in place?

It is absolutely vital that there is a legally binding tenancy agreement in place for your property, otherwise you will have absolutely no protection and could be asked to leave the property at any time.

4. Does the Tenancy Agreement have the option to renew at the end of each period?

An Assured Shorthold Tenancy Agreement (AST) will be for a fixed term, typically 6 months, 1 year or 2 years. If it is your intention to stay longer than this then make sure the AST includes the Right to Renew, meaning at the end of each term as long as you have abided by the terms of the agreement you would have the legal right to renew for another (and consecutive) terms.

5. How long is the rent fixed for and how is it reviewed?

When accepting an offer for Sale and Rent Back make sure you ask (and get in writing) how long the agreed rental will be fixed for. It should be for the length of the initial tenancy, so make sure there are no break clauses in the tenancy agreement that would allow for rent increases before the term is up. Make sure you understand and get in writing how future rent increases will be calculated. This may be every 1 or 2 years which is normal, but it is important you know how this will be calculated and that the company is not free to suddenly increase the rental to an unaffordable level.

6. Do you intend to sell my property in the future (what are your intentions)?

Just asking this question should give you some understanding of the person or company’s intentions towards you and your home. If you are in any doubt about their intentions or their honesty think very carefully before entering into a Sale and Rent Back arrangement with them.

7. Who looks after repairs?

This should be clearly stated in the tenancy agreement. Make sure you understand exactly what the Sale and Rent Back company (your new landlord) will look after, and what will be your responsibility.

8. Will I have independent legal representation throughout the sale?

It is important to make sure you have legal representation independent from that of the company you are dealing with. Most Sale and Rent Back companies will offer to appoint a solicitor for you and pay the legal fees, however this should be separate from their legal representation. This way you can be assured you are receiving impartial legal advice.

9. Are there any fees? Do I have to pay anything upfront?

You shouldn’t ever have to pay any fees when selling and renting back your home. If a company asks you for an upfront valuation fee, run! Some less reputable companies are in the business of taking the valuation fee, making you a ridiculously low offer, and then keeping your valuation fee when you don’t accept their offer. A reputable Rent Back company should be able to provide you with a quotation or offer without asking for a valuation fee. You shouldn’t pay any fees at all for the sale process, all good Rent Back companies will pay all costs including your solicitors fees as part of their service.

10. Can I see references from people who have used your service?

Any good, reputable company should be able to provide you with testimonials from current clients. Make sure you read these carefully, and are sure that they are genuine.



Sell and Rent Back