Today’s real estate market is experiencing a cyclical flux. We are seeing more homes on the market, longer days on the market, and fewer sales. This could be considered as typical for the time of year when you consider the seasonal spring rush is done and the summer slow down is here. This is a historical trend and is not alarming or uncommon. Conversations with area REALTORS® have indicated a general slow down overall in all price ranges and neighbourhoods. What makes this year’s slow down somewhat unusual is that it is coupled with tighter mortgage application rules and increasing interest rates.
Increasingly we are being asked about rent to own as options for Purchasers. We are being asked this not because the potential Purchaser has bad credit, no credit or no down payment. These Purchasers typically do have good credit, a good income and a healthy down payment. The issue quite often is that the Purchaser has a job considered casual or part-time, or has been working in their field of employment for less than two years. Self-employed or commission sales individuals will face even more difficulties in qualifying for mortgage financing.
If a Seller is considering renting out their property to cover expenses because of a lengthy time on the market, the rent to own scenario may suit them. The rent to own can provide a level of security for the Seller in that the tenant is also the Purchaser who will have a vested, financial interest in the property.
Arranging a rent to own purchase must be done correctly to protect both the Buyer and the Seller. It is important to include specific contract terms and register appropriate notifications on the property’s title. As REALTORS®, we know how to prepare appropriate, binding contracts including rent-to-own contracts. If this is something you want to consider, as either a Seller or Purchaser, call or send us an email.
By Shae Webber
The opinions in this article are those of the author and not those of Pemberton Holmes Ltd.
Information is from sources deemed reliable but should not be relied upon without independent verification.