Buyer Beware When You Rent To Own

This article is to inform home buyers that there can be some risks when buying a Rent to Own home through a lease purchase agreement, and how they can diminish those potential risks.

Below is a checklist of some basic safety tips to follow so you can avoid experiencing any of the risks when you Rent to Own your home.

o   Work with an experienced and reputable real estate broker. Keep in mind that real estate agents and real estate brokers charge the same fee (and it is paid by the seller). Find an agent that knows the area you are interested in moving to, knows the people in the neighborhood, and has a plenty of experience. You don’t want to take any chances by being an inexperienced agent’s first Rent to Own home deal.

o   Request that the property owner (seller) provide evidence that the mortgage is current. Reviewing the monthly mortgage account statement from the property owner (seller) is the most accurate way of being sure because it would contain the recent payment history. You need to be absolutely positive that the property owner (seller) has a timely payment sequence.

o   Necessitate, in writing, that the property owner (seller) provide a monthly payment receipt or proof of payment to the lender. This could be a copy of the check sent to the lender. Keep in mind that it needs be something that keeps the buyer (tenant) informed as to the status of the existing loan.

o   Require that the sales deposit remain in escrow until settlement or termination of the agreement between seller and buyer. If the money is tendered to the property owner at occupancy, it will be lost in the case of a default. This is a negotiable point that a buyer may have to concede in order to get the property owner (seller) to agree to the overall Rent to Own agreement.

o   Thoroughly check the list of Rent to Own homes with your broker and if possible select more than one home to purchase. Multiple home options offer the buyer (tenant) the luxury of less temptation to be strong-armed by a property owner (seller).

In conclusion, you cannot protect against the crooked property owner who plans a calculated plan to default, but now you know enough and what steps to take so you can do a good job of safeguarding against working with this type of property owner (seller). Be sure to closely follow the tips above, specifically the one about working with a highly knowledgeable real estate broker, and you will find yourself enjoying a great Rent to Own home.