Renting-To-Own Gaining Popularity
SPOKANE — For people struggling through tough economic times, renting-to-own a home may seem like a good idea, but it could end up costing the buyer more.
Renting-to-own a home is one of the fastest real estate transactions in the Inland Northwest, and many people are looking to this idea as a means to get more out of their money.
One homeowner has had their home on the market for the past three weeks, so realtor Todd Sullivan approached them with the renting idea.
“They didn’t honestly understand what I was talking about at first,” Sullivan said.
The idea works by first listing a home for sale, and then offering a rent to own option as well.
“If a regular buyer buys, fantastic, if a lease option opportunity comes along, we’ll do that as well,” Sullivan said.
It’s designed to help people with credit blemishes get into a house.
“I just get calls from people who say, â??I just talked to my bank. I have credit issues, can’t get approval for a home loan,” Sullivan said.
Most people who approve of the rent to own idea sign a lease for a short length of time, usually 12 months, and for that period of time you are a renter. However, in addition to the rent, the buyer would also have to give a down payment.
At the end of your lease, most of your down payment, and $50 of your monthly rent go toward the purchase of that home at a price that is a few thousand higher than the original listing.
Also, for the 12 months you rent, they’ll provide a professional to help you get your credit score up.
“We’re definitely not looking for a longtime rental, definitely want people to purchase home at the end of the term,” Sullivan said. “We want to see them qualify for a good loan, not just any loan.”
Even Sullivan admits that this is not for everyone. If you can buy traditionally you should, but renting-to-own is growing. For some local realtors, this idea makes up 40% of their business.
“The beauty of it is, we can tell people who’ve been turned down time and time again, we can help you,” Sullivan said.
Not only is this idea becoming more popular, but most realtors say their popularity will only increase as the lending industry continues to change.