If you are selling a rent to own home, you will need to draft a rent-to-own contract, also known as a "lease to own" or a "lease purchase" contract is an agreement between a property owner and lessee, or renter, that allows the tenant to purchase the property at the conclusion of a predetermined period, usually three to five years. In the contract, the lessee agrees to pay a higher monthly rent than the market rate. Those funds are held in escrow or trust by the property owner until the end of the lease term, at which time they are applied as a down payment for the property purchase by the tenant.
How to Sell a Rent to Own House in Palm Coast
Prior to selling a home on a rent to own or lease to own purchase contract, you will need to ascertain the market value of the house. Begin by looking through your local newspaper and online at websites that list homes for rent like Realtor.com. Find homes that are in your geographic area, have the same livable square feet and same number of bedrooms and bathrooms. Once you’ve found these homes, try to visit as many as possible to see if they are truly comparable to your property.
...realize that the types of buyers [you] will attract are those who cannot qualify for regular financing. That typically means there is something amiss in their credit histories, a missed payment here or there, perhaps, or even worse, maybe a bankruptcy or foreclosure. Of course, it might just be that the candidate’s credit score just doesn’t measure up to today’s ultra-tight lending standards --MarketWatch.com
Make a list of comparable homes and then add up all of the monthly rent charges and then divide by the number of homes you have visited—this will give you a median average of rental prices.
More Steps for How to Sell a Rent to Own House
You’ll need more than just a lease contract and a list of comparables. You’ll also need a clean place, from top to bottom. This is why it’s a good idea to have a local junk clean out service go through the entire property. Then, do the following:
Obtain a lease contract and a purchase option addendum. These contracts can be downloaded online or bought in office supply stores. If you are unable to locate one, phone a local real estate brokerage or title company and ask where to find these documents.
The rent to own contract is actually two separate documents: a lease and a purchase option. The lease will contain the renter’s full name, social security number, birth date, and a description of the property, the property address, as well as the sellers/lessors full name and residential address, and sets forth the rental terms (e.g. monthly rental amount, security deposit, and term of the lease).
The purchase option is an addendum to the lease agreement and sets forth the selling price, the amount of the down payment, the monthly mortgage payment, and how the extra monies collected over the lease term will be held.
Set up a trust or escrow account. You can use a regular checking account (a separate account should be opened to deposit rent and a security deposit and for purposes of paying contractors or journeymen for repairs or maintenance costs on the house). Collect the security deposit and first and last month’s rent; as you collect the monthly rent, deposit the extra money into one account and the rent principal into another account. Send a copy of your end of the month escrow account statements to the lessee.
For residential junk clean out, simply phone 800-433-1094 or visit AAA Rousse Services.