A great way to get your asking price for your Chicago house, is by selling via rent to own agreement. Many sellers don’t realize just how beneficial the process can be. Learn more about how it works and how it will benefit you in our latest post!
If you have had trouble selling your house in Chicago or if you haven’t been able to get an offer reflective of your asking price, a rent to own sale might be an incredible option for you. If you don’t need the cash from the sale immediately, a rent to own scenario can be one of the most lucrative ways to sell your house.
How A Rent To Own Agreement Works
A rent to own agreement is entered into between a buyer and seller and can provide benefits to both parties. The buyer will agree to rent the property for a specific period of time before they purchase outright with the help of a conventional loan. During the rental period, the rent will likely be higher than the market average and there will usually be a down payment made upfront. This helps to ensure the tenant won’t simply walk away once the rental period has elapsed. The tenant is given 1-3 years before the purchase will need to be made. The sale price can be negotiated up from or be based on market data at the time of the sale. By agreeing on a price today, you’ll be able to get your asking price, plan for the future, and continue to make a passive income over the next couple of years.
Perks for the buyer:
- The ability to buy without a down payment
- The ability to buy with poor credit
- The ability to lock in a price for the home at today’s rates
- The ability to try a home before committing to buy it
Perks for the seller:
- Get their asking price
- Guaranteed income for the duration of the lease
- Cash up front
- Ending some holding costs for things like taxes and maintenance
How To Set One Up
There are many standard boilerplate agreements you can use to cover the basics. Additional terms and any other details should be added to the contract as a layer of protection. You will want to make sure you are covered if something goes awry. Before executing the final agreement, have your lawyer look it over to make sure all bases have been covered.
Some specifics you will want to include are:
- The amount paid in rent each month
- The amount of the down payment to be made upfront
- The amount of the option fee
- The length of the lease before the sale needs to be completed
- Penalties for late payments
- Penalties for defaulting on the agreement
- Tenant and landlord responsibilities for repairs, taxes, utilities, and other ownership costs
- Contingencies for canceling the sale
- The final sale price
There are many other things you can include in your rent to own agreement, but the above items should be at the top of the list. Ask your lawyer, agent, or consultant about anything you may have overlooked in your agreement.
How To Get Your Asking Price
When you enter into a rent to own agreement with a buyer, the sale price is typically determined at this time. Doing so will allow you to get your asking price for the home as well as locking in the sale price for the buyer. Prices could rise dramatically, but they will still be able to buy at the agreed upon price.