RentToOwn-HouseFinder.com - I have a house that i want to sell but the market has been so bad that im going to lease to own?

I have a house that i want to sell but the market has been so bad that im going to lease to own?

The person that want to lease from me has bad credit so she will need to rent from me for a year... unfortunately my mortage is set for 10 yrs so my payment is higher than usual. I pay $1986.00 and im offering to sell them the house for $223,000 but the rent is where im not able to be flexible with because to my understanding if they rent from me for a year all that money is going towards the balance of the mortgage and they are not going to have enough money to set aside for a down payment and pay me rent..... So i guess what what im trying to find out is there any other way for this person to be able to buy this house from me in the same lease to own option? Is there another way to do this that would benefit the both of us? I dont want them to loose money and i dont want to loose money either but i really i want to sell my house and they really want my house......

Public Comments

Anthing you do in this situation, you will both end up losing, because in a year, you will have the same situation. the must have someone cosign for them. They will not have the credit power in one year to get the payment below what they would be paying you right now. especially with rising interest rates. I would say depending on your situation, you should probably stay put and let the market do what it will. good luck. any way you choose to go, know you will be in the same boat in a year from now.
I feel for you, I have had a house on the market for over a year! The house is paid for and we are asking $360,000,00 which is cheap here in California. Good luck.
Just do not get desperate and end up making a decision that could cost you everything in the long run. Selling or leasing a house to someone who has less than perfect credit is a risk. You should not feel bad about the person/s who are going to be leasing to buy. After all, you did not screw up their credit, they did. I got burnt doing this. I ended up never collecting the last '$11,000 of the balance of the payment. It would have cost more to take them to court than to just cut my loss. It is always a risk when you are doing the financing. Prehaps re-financing it to get the payment lower for an longer period of time with a co-signer would be the way to go with this, but I really wouldn't suggest doing this with someone with less the perfect credit.
Hey Tania. Listen, i know that you are looking for options on trying to figure a way to sell your house to an interested party and that this lady might look like a good option in this down real estate market. However, with all honesty, i would strongly advise you against pursuing this person further. The truth is that someone who has bad credit typically shows financial instability and there is chance might not be reliable to making payments which would put you in trouble. take it from someone whose family lost a great deal due to selling to unstable buyers, it is not worth the sleepless night.s Given my avid following of the real estate market, i would advise that if you could hold out till end of year, that would be ideal. Most people believe that by end of this year 2007, the market will rebound and once again will become a sellers market. With the current economy improving, signs point to a recovery. This could result in higher gains on your house in the future. At the end of the day however, it is your decision and no one can question it. I know you wanted answer on how to accommodate this seller, but as a previous seller, just giving you some experienced advice. I wish you all the best.
Ever heard of a contract-for-deed? It's similar to leasing the house except that the money that goes into paying the monthly rent/mortgage (whatever amount the two parties agree to) will be applied toward the total purchase price at the time when the buying party is able to buy the property outright. That way, you (the seller) will have your monthly mortgage paid (or a big portion of it) by the buyer, and the buyer will be paying down the total purchase price by making the monthly payments. They don't lose out on the rent money whatsoever, unless they no longer can afford the payments. In that case, you will kick them out and the house still belongs to you the owner. In the whole process, the owner retains legal title to the property while the buyer only gains equitable title until he pays off the mortgage on the house.
#1: Your lease/purchase does NOT automatically require that all monthly payments will apply fully to the purchase price. If they do not take over responsibility for repairs which usually belong to the house owner, they should not get 100% of lease applied to purchase. Even if they take this responsibility, I don't think it's required to apply all the lease payments 100% to the purchase. You are taking a risk, and should have some kind of profit from agreeing to a lease/purchase. I'm in a similar situation, but my people also want their year's lease or rent to be cut in half if they pay it up front. We did rehabs to the house for them that cost more than half the rent. I think you can set your own requirements for a lease to own and if they do not want to go by your requirements, you either negotiate others that are agreeable to both, or let them go as potential lease/purchasers. You don't say how your purchaser has bad credit, but if this is so, I am amazed that you are willing to do a lease/purchase on a home of this value. You are not a credit agency. You are not a loan agency. If you can't afford to lose the home, you shouldn't be doing a lease/purchase with someone with bad credit. If you can't afford to have them damage the home, not pay the rent / lease $ and then disappear, then you should not do this lease/purchase. It doesn't matter how much they want your house. Do you realize how high the risk is that they will trash the house and disappear when they are several months in arrears on rent/lease payments? Think long and slow and carefully. I just told my people I can't let them rent for half off just because they are willing to prepay. I just told them that, if they can't get a loan for 13 months, that is too long for them to store their belongings in my home, which they have been doing now for 4 months. I have to risk losing them as a buyer to safeguard myself and my home.
One year is not enough to fix anyones credit. It really takes at least 3-4 years. If they can not afford to pay the rent and save money for the house then they really won't be able to afford the house in a year. If you know that you can not be flexible on the rent and that if they skip a payment, you can not make the payment yourself then you will really need to reconsider. The person you are trying to lease should just buy it now and have someone with credit that he/she trust and that trust him/her purchase your home. If you have a 10 year mortgage the payments and they can get a 30 year mortagage for a lower rate that they can manage. You really should not risk it, however its your house and I hope you know the people.
There is a safe way to do a Lease/Option. It protects your equity, gives your tenant the mortgage interest deduction on his taxes and makes his net rental payment less than or equal to fair market rent. E-mail me for more information if you are interested.
Here are some things for you to think about: 1) If the buyer has bad credit and no money, then how will the buyer be able to perform in one year? The sub prime money market is gone now. No lender wants to take a chance with nothing down. A person with bad credit with be even a bigger risk. (And he won't be able to make the large payments probably anyway.) 2) If your payment is $2,400 a month PITI which includes taxes and insurance along with principle and interest, how much would you be able to rent your home for without being negative? To be fair, you wouldn't charge the renter the taxes or insurance, and since you were deducting the interest on your tax return you would need to come up with a fair amount to begin with and then add something to that amount to go as part of the down payment. Let's say after looking at the rental market in your area, you decided that your house could reasonably be rented for $1600.00 a month by joe blow renter. Now you want to give joe an incentive towards purchasing so you say, well if you pay me $2100.00 a month, I will put the $500.00 into a savings account as your down payment and after a year you will have $6000.00 as a down payment to purchase the home. You and I both know that $6000.00 isn't even 5% down without discussing closing costs, escrow fees, or commissions if you are using a broker for this transaction. And a lease option purchase is not a very good thing for a seller because it locks the price of your home to the agreed upon amount no matter what the market does to prices. And if the buyer can't or won't perform, he only loses his $6000.00 if he changes his mind. Or worse, he can't perform and thinks he has been cheated by you so he sues you and you can't sell your home until the lawsuit is resolved. (It will cost you an attorney and who knows how many months to get it resolved, plus he probably stopped paying you rent a long time ago and you are digging money from your own pocket just because you wanted to sell when it really wasn't a good time.) Even if things go better than that, you still may end up with two problems! 1) the house is worse shape then when you occupied it because the tenant couldn't afford to maintain it. So now you have to pay someone to paint and carpet the home and do some other repairs before putting it on the market and it will be empty, so it won't show as well as home with nice things. 2) Also the IRS now says you turned your home into a rental and now you may be liable for capital gains on the sale! Yikes! My advice: Keep the house and wait or Put it on the market at a discount and wait for a buyer with good credit and a down payment. good luck