Rent To Own – Forecast Bright As Home Sales Continue To Be Gloomy

Housing remains the weakest part of the American economy, analysts tell us, and we shouldn’t expect much improvement over the next few months. “These numbers are at rock-bottom by historical standards,” said U.S. economist at IHS Global Insight, Patrick Newport. This report comes at a time of the year where home sales should be at its peak. However, while traditional home sales reports have been bleak, the rent to own market is on the rise because, for many, it’s become the only way they are able to buy or sell a home.

Obtaining definitive numbers for these types of purchases is difficult since they are private rental agreements with a purchase option until later recorded as a home sale when the transaction is completed, often 2-3 years depending on the agreement terms. But indicators of increased on-line searches, books and documents sold, as well as general inquiries throughout the real estate and mortgage industry show that interest is strong and many rent to own transactions are being generated.

For many home sellers who’ve had homes on the market for many months with little or no activity, the immediate interest generated from one rent to own advertisement can be overwhelming. Today’s market is flooded with better-than-average risk buyers whose credit issues are recent due to current market and economic circumstances, but previously were responsible and timely with their obligations.

With a bankruptcy or foreclosure would-be buyers are unlikely to qualify for a home loan for some time, and with the great increase of home-owners-turned-renters, the price of rent continues to increase. A rent to own home agreement fixes the cost of rent for the specific period of the agreement, giving buyers another incentive to buy.

Wednesday, June 22, Federal Reserve Chairman Ben Bernanke said the housing market was a strong and persistent factor hurting the broader economy. With the continuing vice-like grip on traditional lending and increase of the rent to own home trend, it would not be surprising if the federal government at some point were to identify this trend as a viable way to increase housing sales, and possibly offer incentives and tax benefits for these types of purchases, and strengthen protective regulations for both buyers and sellers.

It could also be to the benefit of real estate agents and brokers to be willing to facilitate these types of sales, although it would mean a delay of their primary commission for 2-3 years. Frequently real estate professionals will provide property management services during the lease period, since most property managers are real estate brokers. They can charge an up-front fee for providing initial services; paperwork, credit and background checks, bringing in a buyer or seller, etc., and if they choose, they can administrate the monthly payments for an additional monthly income until the sale closes in 2-5 years.

Find Out All About For Sale By Owner Home Sales

For Sale By Owner or FSBO is a word that has been floating around in increasing popularity among the real estate community. In the past, the only way that you could sell your home is by using a real estate professional such as a broker, Realtor, or other real estate professional. However, with a realtor costing a sizable portion of the sales price, more and more people are thinking about putting in the time and work into selling the home themselves. This article will talk about what FSBO means, its advantages and disadvantages, and whether it is right for you.

What is FSBO?

For Sale By Owner is a term that means that someone is selling their house without using a real estate professional. In the US there is nothing that requires you to use a real estate agent when you are buying or selling your home. However some states do require that a real estate lawyer read over the contract and that there is one at the closing table when all of the paperwork is signed. Because of this many people have started to turn towards this method and that number has been increasing in recent years. For many people a FSBO sale means that they put a yard sign up, put some online listings out there, and then conduct all of the showings themselves until someone finally buys their home. However this route can include other things like selling your home at an auction, selling directly to an investor, or even something as unusual as a house swap.

Why, And Why Not, To Use FSBO?

The savings is the biggest reason people usually decide to sell by themselves. Most real estate agents take anywhere from 5-8% of the total price that the home sells for. If you sell your home for $100,000, and even using the 5% fee, you will be paying $5,000 just to the real estate agent in the form of commissions. This is a huge chunk of money that could be used for something like a trip, college, paying off other bills, or even adding to your nest egg. Sometimes sellers think that the best person to market their home is the person that knows it best, which is themselves. Most of the good agents will usually be juggling at least a dozen listings all at one time so the agent might not be able to devote the time and attention to your sale in order for your home to sell quickly.

The biggest disadvantage of selling your home is that it takes a lot of work to accomplish. Even though it is not required it does make the process of selling a home a lot easier to use one. They have all of the contacts that are needed for the various professionals that you need involved with a home sale, plus they will usually do all of the showings. If you don’t have an agent you will have to read about all of the state and local laws to ensure that you are proceeding in the best manner, and you will also have to study what type of marketing is working right now. You will have to list the home yourself and you will have to speak directly with the buyers when it comes time to have showings and for the negotiations.

Who should use FSBO?

If you have full time job and other full time commitments, then FSBO is probably not the right route for you. If you are going through a major life change, the extra work from an FSBO may only lead to more stress. If you are selling a home that is extremely unique or would yield a smaller audience of buyers, then having a real estate professional will help you find the right buyers.

On the other hand if you have the time, and are willing to put in the work, you can save yourself thousands of dollars in the home sale process.