Can You Explain Rent To Own? And Other Buyer Questions

Betty Buyer (believe it or not, that isn’t her real name!) is in the process of buying one of the rent to own homes in the Atlanta metro area.

She has found a home she loves, and she closes in a week.

I love finding buyers like Betty, and I thought it might be instructive to let her tell you about her purchase.

Betty, by the way, refuses to let me use her real name, because she is pretty sure she’s paying a lot more for the house than I would have. (Like I said, Betty is just the kind of buyer I’m always looking for!)

But here – let’s let Betty tell you:

• ME: So, you say you’re paying too much for the house?

• BETTY: Well, I didn’t exactly say that. It’s a fair price, but it’s definitely retail. I started out looking for a bargain, but this house has a lot going for it. So it’s worth it to me to pay some extra.

• ME: How did you find the house?

• BETTY: Well, I didn’t think I could qualify for a loan, so initially I looked on Craigslist at a rent to own homes listing and saw a listing for ‘Owner Finance or Rent to Own. Just Like the Banks, with No Credit Check.’

• ME: So you were looking to buy, but weren’t sure if you could?

• BETTY: I don’t exactly have bad credit, but I had stumbled a bit with a job loss. Now that I have a good, stable job with a steady income, I wanted to find out whether I could buy outright or whether I would have to rent to own. But at that point, I didn’t completely understand how rent to own worked. You know – how much of my monthly payment would go toward the purchase price or the down payment. How soon could I buy? How would I qualify? etc.

• ME: And what did you work out with the seller?

• BETTY: The seller was very flexible. I really like the terms. Given my current job situation, he was willing to sell or rent to own, whichever I wanted. We agreed on seller financing, so I don’t have to mess with a bank, and he’s giving down-payment assistance. So that’s why I am paying retail, but since it works with my budget, it’s good for me.

• ME: I always tell my students – negotiate on price or terms. So you got the terms that worked for you.

• BETTY: Yes, and he made it really easy to look at the house, too – he gave me the lockbox code, so I could look by myself and not have to coordinate schedules with him.

• ME: What specifically appealed to you about the house?

• BETTY: Well, there were a few things that did it for me. First, it’s in a good neighborhood, and my daughter won’t have to change schools. Next, the house is brick, which I like, and it has a lot of curb appeal. The minute I saw it, I liked it.

• ME: What else did you like about the house itself?

• BETTY: Well, the house has been completely renovated. On the inside, it’s like a new house: new kitchen, new bathroom, new air conditioner, new floors, and new paint. New roof, too.  It’s even going to have new stainless steel appliances. I don’t have to do a single thing but move in, and I won’t have to worry too much about repairs.

• ME: But when you buy on owner finance, as opposed to rent to own, you take care of the home and repairs, don’t you?

• BETTY: Yes, that brings me to the last point. I had looked at the different home warranty companies and he agreed to put an Old Republic Home Warranty on it, too. With everything new in the house, it seemed like overkill. But I am NOT a fixer-upper, and I don’t have a lot of discretionary income after the house payment.
  

• ME: So the home warranty helped seal the deal for you.

• BETTY: It took some of the hesitation away about owning my own place. I didn’t want to have to worry about garage door openers, water heaters or my washer/dryer going out on me. So I just pay the co-pay if there is a problem with any of the systems – which is kind of like having the comfort of renting where the landlord takes care of most things.

Spotting a trend? Our friend Betty wants a house with easy finance terms, and she wants it to be move-in ready. It’s worth it to her to pay significantly more for a house that fills those requirements. She’s willing to pay you, the seller, to take care of the details.

We’ll continue our conversation in my next post.

You can find out more about how to sell a house quickly in a buyers market in Sell Your House Fast. And if you have any comments or experience with this , please leave a comment below.