HOMEOWNERS: wondering if it’s a good idea to do a rent-to-own arrangement with your buyers?
While there are some benefits to rent-to-own — such as having a bigger pool of buyers, earning rental income, and selling for a higher price-point — there are also some little-known pitfalls.
At RIDE Property Solutions, we’ve been working in real estate in Utah County for quite some time now.
Along the way, we’ve seen home sellers make rent-to-own arrangements to both beneficial and disastrous results.
So we thought it’d be helpful to bring awareness to some of the most common pitfalls of rent-to-own for sellers.
No Guarantee Of Purchase — Remember, the buyers can back out of a rent-to-own agreement whenever they want (and often do). Indeed, sometimes living in the home as a rental makes buying the home less exciting and so the buyers decide not to. You’ll still get to keep the extra money they paid you, but it’s not ideal if you’re in a hurry to sell.
Unexpected Market Fluctuations — If you rent-to-own and then the market fluctuates in your favor, you’ll miss out on that appreciation. Similarly, if the market takes a downturn and then the renters back out, you’ll be stuck with the property in a less profitable market. Those are risks you should be aware of.
Discovering Problems — Having tenants in the home you intend to sell adds a lot of extra risks. Not only might the “buyers” discover new problems that you have to fix while they’re renting, but they also might damage the home while they’re in it, and then back out of the agreement altogether. With diligence, rent-to-own can work in some cases. But not always. If you want to sell your home as-is for cash, give us a call at (801) 790-4888. We’ll offer you a fair cash price and we can close in as little as two weeks!