No matter the climate of the housing market in Delaware, there may always be those who desire to be homeowners but are not ready for one reason or another. Perhaps their credit has taken a hit or they do not have enough down payment. One option for such buyers is renting to own. While this real estate transaction may seem attractive to both sellers and buyers, there are pitfalls that both sides should be aware of.
The principle of renting to own is that the tenant pays the owner rent plus a little extra that the owner applies toward the purchase of the property. The renter has the option to buy at a later date when his or her finances may be more secure. The renter benefits by locking in a price on the property and buying time to build credit and equity. The seller benefits from having a steady income, a motivated buyer and a renter who is invested in taking care of the property.
Unfortunately, if the renter changes his or her mind about the purchase, all the money paid into the house is lost. Additionally, as long as the seller still owns the property, he or she can lose it in foreclosure or legal judgement. For a seller, the slow process of earning money may make it difficult if he or she wants to buy another home. Of course, at any time, the buyers may back out.
Whether one is selling or renting to own, the most critical part of this real estate transaction is a solid lease option contract that protects one’s rights. There are too many risks and complications involved in a rent-to-own deal to move forward without sound legal advice. Delaware buyers and sellers can obtain answers from an experienced attorney.