If you cannot find a buyer for your house but need to move out of it, you may want to sell your house through an alternative type of sale. One of the options you have for this is selling through a lease-to-own deal. A lease-to-own deal is a great option that offers a lot of protection for you, the seller, and here are some of the top features of lease-to-own sales.
The Buyer Puts Non-Refundable Money Down
The first thing to understand about selling with this method is that the person who buys your house must put a non-refundable deposit down. This deposit proves that the person is serious about purchasing your home, and the person will lose this deposit if he or she decides not to follow through with buying your house. The amount the buyer puts down is negotiable, but you, the seller, can determine what amount you want. You should try to get as much as possible, such as 5% to 10% of the selling price of the home.
The Buyer Pays You Rent Every Month, and You Keep the Current Loan
The second aspect of selling through a lease-to-own option is that you agree on a selling price and a monthly rental amount. The monthly rental amount is the amount the buyer will pay you every month during the deal. This amount should be enough to cover the mortgage loan you have as well as the property taxes on the house and house insurance. These are the only expenses you will have to pay during the deal, and you will have to keep the current loan you have on the house. It will be your responsibility to pay the mortgage payment on the house during this contract.
You Pay the Mortgage and Taxes, and the Buyer Pays Everything Else
One of the nice parts about selling in this way is that the buyer is responsible to pay for everything else the house needs. This includes all repairs and maintenance on the house. If the furnace breaks, the buyer has to pay to get it repaired. The buyer must also purchase insurance on the house in the form of renter's insurance. You will also need to purchase insurance on the house, and this is often called a rental house insurance policy. The buyer will have to put all the utilities in his or her name before moving into the house too.
The Deal Lasts for a Specified Amount of Time
Finally, a lease-to-own deal should have a specified amount of time listed on the contract. This could be as short as a few months or as long as a few years. When you reach the end of the contract, the buyer will have to get a mortgage loan to buy your house. If the buyer cannot get a loan, he or she will lose the house and you can evict him or her, because the buyer is considered a tenant in these deals. Because of the way this works, the person buying your house has a huge incentive to make sure he or she can get a loan by the time the contract ends. If the buyer cannot, you get the house back and you get to keep the down payment.
If this sounds like a good way for you to sell your house, you could advertise that you are offering a lease-to-own sale. This often attracts a lot of people who want their own homes but do not currently qualify for mortgage loans. If you decide to use this option to sell your home, hire a residential real estate lawyer to draw up the contract for you.