Читать книгу Rent-to-Own: How to Find Rent-to-Own Homes NOW While Rebuilding Your Credit - Wendy Patton - Страница 22

The amount the buyer will pay for the home once he exercises the right to purchase. This final amount will determine the buyer’s new mortgage payments. Here are some factors you should consider when deciding what to offer for the house.

•It’s a rent-to-own - Some rent-to-own sales may command a slightly higher purchase price; possibly as much as 5 to 10% more, depending on the strength of the real estate market in that area. As the buyer, of course, you don’t want to pay more than market value; you really want to get a deal on your new home.

•Items that are included in the sale - Items such as appliances, furnishings, pool tables and other properties all have monetary value. If you include the refrigerator, stove, dishwasher, washer and dryer in the purchase, you can be adding thousands of dollars worth of value. Don’t overlook the value of these items when determining the purchase price you will be offering.

•Who will make repairs - Who will be responsible for repairs during the rental period? Every repair costs money. If the home ends up needing a big-ticket item such as a roof or a furnace, it will be expensive. This is a point you can negotiate with the seller. This will be discussed in detail later in the book.

•Closing costs - The costs associated with the sale of the home, such as title insurance, mortgage origination or points, payment to the closing agent, etc. can be quite expensive. It is fairly common to include part of these costs in the mortgage to help reduce the amount of money the buyer has to pay out-of-pocket at the closing. When you talk to a lender (before you rent-to-own), get an estimate on how much you’ll need to close on the home. See if any of these costs are negotiable.

•Homeowner’s Association (HOA) or yearly fees - Lawn service, home security systems, etc. are all monthly and yearly maintenance fees and dues associated with the home. Other examples of these are pool service, lawn sprinkler maintenance and even country club fees. Many homes won’t have these or at least not all of them. Assigning responsibility for payment of these fees should be part of the negotiations.

Example: Let’s take a look at a sample transaction to help you understand the process.

John and Joan Homebuyers were told by their loan officer that they couldn’t qualify for a mortgage. “You must improve your credit score first.” They live in a “down” real estate market and know that now is a good time to buy. They have always dreamed of home ownership and want a home NOW. They enlist the help of Sally Agent, a local Realtor®, who understands how to do rent-to-own home transactions.

From talking with their loan officer, John and Joan have determined that once they qualify for a mortgage, they can afford the payments on a $220,000 home. So they begin to look in that price range. Alan and Ashley Homeseller live in the same market. A few months ago, Alan received a promotion at work that requires them to relocate to another city. Alan and Ashley know the real estate market is down, but they have no choice but to sell their home now. They have it listed with Realtor® Thomas Broker (and yes, I do go to great lengths to come up with these names).

Alan and Ashley have had their home listed for 4 months at $225,000 without any offers. The need to get their home sold is getting urgent. Their agent, Thomas, recommends Alan and Ashley reduce the asking price to $215,000. After Thomas explains to them how it works, Alan and Ashley agree to add the rent-to-own to their listing.

Soon, Sally Agent shows the house to John and Joan, who decide to make an offer on it. Their initial offer is $205,000 for the purchase price. They agree to the asking rent amount of $1,400 per month and ask for a $500 per month option credit. For their option fee, John and Joan offer 1%, or $2,050, and a $250 security deposit. They also ask that all appliances in the house (refrigerator, stove, dishwasher, washer and dryer) be included. After receiving the offer through Thomas, Alan and Ashley make a counter-offer of $210,000 for the purchase price, $200 per month option credit and an option fee of 2.5%, or $5,250, with a $750 security deposit. They agree to all of the appliances, except for the refrigerator which is brand new and they want to take it with them.

Getting closer to an agreement, John and Joan counter back accepting the $210,000 purchase price, but ask for a $350 per month option credit and an option fee of 2%, or $4,200, with a $500 security deposit. They agree to let Alan and Ashley take the refrigerator, but they ask for an 18-month lease and option period instead of 12 months to give them extra time to get their credit in order. (By the way, most tenant-buyers will require 18 months or longer. Very few buyers can repair their credit in less time with the current mortgage climate. Make sure you ask for enough time. The longer, the better it is for you, even if you don’t need it all. If you can get three to five years, I recommend you ask for it.)

Happy to have finally found a new home, John and Joan make plans to move in two weeks. Alan and Ashley are happy to have found buyers for their home and all agree to sign the paperwork in two weeks, giving Alan and Ashley time to move out.

When they meet to finalize the deal, they sign the Lease Agreement, the Option Agreement and the Sales Contract. Because the home was built after 1978, the home will not have lead in the paint. They must still sign a Lead Based Paint Disclosure (this is Federal law), as well as the Seller’s Disclosure form (property condition) as mandated in their state. Additionally, as part of a smart practice for rentals, they complete a Property Inventory/Check-in Check-out form (unit condition form), which simply details any issues or problems with the home at time of possession.

Here is a breakdown of the money that John and Joan need to bring the day of the paperwork signing:

Option Fee - $4,200

Security Deposit - $500

First Month’s Rent - $1,400

For a total of = $6,100

From this total, any deposit already paid at the time of initial offer in the form of earnest money would be deducted.

Once John and Joan sign the paperwork and give the money to Alan and Ashley, they can move in immediately, only 2 weeks after they reached an agreement!

During the rental period, John and Joan take steps to improve their credit score. They didn’t have enough money left to buy a new refrigerator, but were able to get financing on one. They were very careful to make all of the payments when due and pay it off in one year. In addition, they paid off two smaller credit cards. They diligently made all utility and other payments on time.

After 15 months in the home, John and Joan notify Alan and Ashley that they want to purchase the house. From the day they moved in, they took steps toward improving their credit and to work with their loan officer and apply for a mortgage. By making on-time payments and paying off debts, their loan officer is able to get them approved for the mortgage amount they need to buy this home. Home ownership is now within their reach.