Rent to Own – Bright Forecast as Home Sales Remain Gloomy

Housing remains the weakest part of the US economy, analysts tell us, and we shouldn’t expect much improvement in the coming months. “These numbers are at their lowest point by historical standards,” said IHS Global Insight US economist Patrick Newport. This report comes at a time of year when home sales should be at their peak. However, while traditional home sales reports have been bleak, the rent-to-own market is on the rise because, for many, it has become the only way they can buy or sell a home.

Getting definitive numbers for these types of purchases is difficult as they are private lease-to-purchase contracts until then recorded as a home sale when the transaction is complete, often 2-3 years depending on the terms of the contract. But indicators of increased online searches, book and document sales, as well as general inquiries in the real estate and mortgage industry show that interest is strong and many rent-to-own transactions are taking place.

For many home sellers who have had homes on the market for many months with little or no activity, the immediate interest generated by a rent-to-own listing can be overwhelming. Today’s market is awash with above-average venture buyers whose credit problems are recent due to current market and economic circumstances, but who were previously responsible and on time with their obligations.

With a bankruptcy or foreclosure, prospective buyers are unlikely to qualify for a home loan for some time, and with the surge in homeowners-turned-renters, rental prices continue to rise. A rental agreement with a home option locks in the cost of rent for the specific period of the agreement, giving buyers another incentive to buy.

On Wednesday, June 22, Federal Reserve Chairman Ben Bernanke said that the housing market was a strong and persistent factor hurting the broader economy. With traditional lending continuing to crack down and the rent-to-own trend on the rise, it would not be surprising if the federal government at some point identified this trend as a viable way to increase home 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 benefit real estate agents and brokers to be willing to facilitate these types of sales, although it would mean a delay of 2-3 years of their main commission. Real estate professionals will often provide property management services during the lease term, as most property managers are real estate brokers. They may charge an up-front fee for providing initial services; paperwork, background and credit checks, attracting a buyer or seller, etc., and if they wish, they can manage the monthly payments for additional monthly income until the sale closes in 2-5 years.

Rent-to-own, when properly managed, could help put people back to work, stop the housing drag on the economy, and pay off mortgages that could otherwise be foreclosed on. Those seeking this option for themselves need to do their homework and be aware of any potential pitfalls to avoid, but selling a rent-to-own home can not only be a good option for buyers and sellers, but which can potentially be a good trend. for the US economy.