Selling your house without an agent my not seem all that uncommon. After all, everyone knows you can slap up a For Sale By Owner sign in your yard, put up a listing in Craigslist and the local paper, and wait for a buyer to bring a check to the title office. Simple enough right?
Well, not always.
In today’s market, cash in hand buyers aren’t really interested in paying retail for property. After all, they have the cash meaning they have the negotiating advantage. And what about the first time home buyer? The bad news is, mortgage applications are at a 5 year low, meaning those that want to purchase a property conventionally are not getting their loans approved.
With the pool of buyers shrinking lower and lower, how can you sell your house, without agents or without having to sell for pennies on the dollars to cash buyer?
This is where the uncommon part comes in. There’s a little niche strategy of creative real estate called lease purchasing, or more commonly known as „rent-to-own.“
Selling this way is nothing more than setting a lease agreement for a term, which can range anywhere from 6 months to 10 years, and having an option to purchase within the lease term for a set price… usually the full retail price or the mortgage balance, whichever is higher.
Why should you even consider selling this way?
Maybe you shouldn’t.
If you have the time and equity to list your home and wait for a qualified buyer to purchase your house and cash you out… you’re probably better off doing it that way. However, if you don’t have the equity to take a discount or pay for fees and commissions, and you need immediate mortgage payment relief… this can be a great strategy.
First of all, this is not simply renting your house out to a typical renter. You will be dealing with tenant/buyers, people who want to purchase a home for them and their families, but just can’t seem to get their loan to approve. They have the income, the background, the character to be home buyers. They are just having trouble getting a conventional mortgage in this market. And this market is huge.
And unlike your usual renter, they take care of all the day-to-day maintenance as well as all the repairs and are working with their mortgage broker every month to get their loan to close. They just need some time for their paperwork to make it pass all the hurdles lenders have attached these days.
When their loan does approve, they will cash you out for the full retail price of your house or mortgage balance and you keep it all since their are no fees or commissions to pay when selling this way. And in the event they can’t get their loan to close during the lease period, you have the choice of either extending their lease giving them more time or sell it to another buyer. Either way, you get immediate mortgage relief and full price when the tenant/buyer cashes you out.
Selling in this uncommon and creative way might not be the best solution for you. And that’s OK. It’s another strategy you keep in your arsenal in case your situation changes and you need a way out of a property quickly.
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