Expert: liznarr - 1/8/2007

Question
We have a home in wisconsin, built in Oct 05, wife does not like the ranch, wants to sell, we have a new place we like.  We have a sign "FSB". No bites.
How hard is it to do a rent to own?  Should we sell outright?  
Any other help would be great.  

Answer
Hi David,

Have you considered working with a Realtor to try and sell your property?  They have access to many, many buyers through a Multiple Listing Service and have access to lenders who can pre-qualify people and run credit reports.

Doing a rent to own can be risky, even for a Realtor.  I have done only a handful of rent-to-owns in my 24-year career, and none of them resulted in “ownership.”  They all defaulted before ever getting close to the ownership phase, and the homes were left “trashed.”

Generally speaking, people who cannot obtain financing and are interested in a rent to own have bad credit.  Bad credit speaks, many times, of character.  Those who run up bills, knowing that they have no means to repay, and those who live beyond their means, would not be a good prospect for a rent to own.

In the case of a person who had an illness or accident, however (leaving them in an unenviable position of not being able to make enough money to pay bills), this would be an entirely different situation.

A rent-to-own contract is actually two contracts:  A Contract for the sale of the property, and another for the “rent” portion, spelling out who is responsible for what (repairs, taxes, maintenance, etc.).

It’s a matter of personal preference, but unless you come across someone willing to put up a SUBSTANTIAL down payment, NON-REFUNDABLE in the event of a non-closing for any reason, my suggestion would be to stay clear of such a situation.  My opinion is that you would be better off to sell outright.

I hope the above is helpful to you and points you in the right direction.

Good luck to you, and feel to write again if you have additional questions.

Regards,
Elizabeth