There are certain situations where it isn’t possible to wait several months to sell a home. Many times, homeowners in the Raleigh NC area can’t invest the time to stage, prep, show, negotiate, sell, survive due-diligence, and wait to get a check. Selling a home in any part of the country is an emotionally draining process.
I’ve met with many homeowners in the Wake County area that needed to sell their house fast, and they simply didn’t have the time and resources needed to sell a home on the open market.
In this situation all hope is not lost! Below are 4 reasons to sell your home with Rent-to-Own:
4 Reasons To Sell Your Home With Rent-to-Own
#1. You Have No Equity In Your House
During the mid-2000’s, many people in the Raleigh NC area, and all over the U.S., decided to get a piece of the American dream by owning their own home. Many used 100% financing options which left them with no equity.
Starting around 2008, it became increasingly difficult to sell property so price appreciation became stagnant. For many, the mortgage balance wasen’t far enough below market value to pay the costs of selling a home.
If you find yourself in this type of a situation you may have to write a check at closing. All the expenses can easily add up to 10% of the purchase price of the house. If your house is worth $150,000 then it can cost you as much as $15,000 to sell it!
Selling with rent-to-own will allow your mortgage balance to pay down over time, while the property value increases, so you will be able to sell it at a profit in the future.
#2. Your House Is Underwater
“Underwater” means that your mortgage balance is more than the market value of the home. For example, if your mortgage balance is $160,000 and your home will only sell for $150,000, this would mean the home is $10,000 “underwater”.
The same strategy applies as with scenario #1 above. The only exception would be that it will take longer for you to sell at a profit if you’re starting with negative equity. It would not be possible to sell an underwater house fast in without losing money, or damaging your credit.
Selling with rent-to-own can cure this situation by letting the natural amortization of the loan, and regular price appreciation create the equity needed to sell at a profit. If your home is currently underwater, it will take much longer, but it can still be done.
#3. It’s About To Become Vacant
Some home owners may have bought or rented a house in another state. If the current home sits vacant, this will result in huge holding costs!
Holding costs can include the mortgage payments, which includes principle, interest, taxes and insurance “PITI”. HOA dues will need to be paid if the home is in a subdivision. Utilities such as electricity, gas, water, and sewer, need to be kept on so the property can be “shown” to potential buyers or even renters.
The yard will have to be maintained which will result in landscaping fees. These costs add up very quickly. If enough money is not put in reserve to maintain the property your money can run out quickly! This becomes a vicious circle; money gets tight so the lawn becomes over-grown which results in fines from the HOA, the city, or both.
By selling with rent-to-own, you begin collecting rent to pay the mortgage as soon as they move in. Provided tenants are screened properly, they will maintain the lawn, and utilities which leaves the homeowner with much less anxiety.
#4. No Money For Repairs
This occurs when the property falls into disrepair because of money problems. Usually, overgrown lawns filled with weeds, stained carpet and flooring, heavy amounts of mold and mildew in the wet areas, vinyl flooring curling at the edges, worn and crooked cabinetry in the kitchen, outdated and dirty plumbing fixtures, tubs, shower stalls, etc.
The biggest expense would be a leaking roof or broken air-conditioning unit. These two are the most costly. A new roof can cost between $4,000 and $10,000 depending on the roof and how much of it needs repair. These types of repairs will scare off almost all retail buyers. Remember, buyers are picky!
This is a perfect scenario to rent the home to a professional investor and let them run it as a rental property.
I hope these quick tips will help empower you to make an informed decision on whether my rent to own program is right for you.
If you have a house in the Wake County area then do not hesitate! Call me right away at 919-473-6885. Please keep in mind that the process of a rent-to-own is complex and should be completed by an experienced professional only!