Many people think you need to have equity in order to sell your home, "Rent-to-Own".
The truth is that you do not need any equity.
Here is are the following reasons:
Most often than not, Tenant-Buyers are interested in getting some of the benefits that come along with home ownership without the hassle of qualifying for a bank loan today.
You are not going to be hiring a Realtor, so you do not need to pay any 6% in commissions or fees from your equity.
Selling on terms, and not for cash today
Because of these reasons, you do not need any equity when you sell "Rent-to-Own". In
fact, you may even be "under water" a little bit when it comes to owing more on the
mortgage than the home is even worth. Not to worry, because the solution to this challenge
is to extend out the lease term even longer. Generally, lease terms are 1-3 years, if you
owe more on the home than it's worth, just extend out the lease term to be longer, allowing
the market to correct itself.
Admittedly, markets will not always, "correct" in your favor, but it could. The truth is that
neither you or the buyer has any control over the market regarding your home's market
value when you sell your home, "Rent to Own" (A.K.A Lease with the Option to buy). You
and the your buyer will both be making the best "educated" guesstimate as to what
direction the market will turn towards. Sites such as HousingPredictor.com can assist you in
making this educated decision, remember, the market itself has the the final word on this
matter, not you nor "end" tenant-buyer.
The truth is, most home owners would rather sell their home out right and get paid cash
today, compared to selling their home, "Rent to Own". If a home owner doesn't have any
equity though, and they need "mortgage relief" meaning, they have to:
Find a way to have their mortgage paid each month due to a death in the family
Find a way to avoid becoming a landlord
Move out of state to take a new job
Find a way to get their home sold, because selling, "For Sale By Owner" is not working, so...
...selling, "Rent to Own" can be a wonderful option that will give them the relief they are
Can someone really sell their home in only 7 days, and get a price that is 20% higher
than the market value?
When you sell your home with our "Auction" strategy and with terms, this is all possible.
By selling your home on a Lease-Option ("Rent-to-Own") along with our "Auction" strategy that we use to move our properties within a week or less, you place yourself in a special position of control that most other home sellers never experience.
The "Auction" Strategy That Sells Your Home In Just 7 Days
Here is the breakdown of how it works:
First and foremost, you market your property to tenant-buyers in such a way that appeals to them, and in a way that you gives you the competitive edge over your competition.
By having the tenant-buyer put down a sizable payment (the Option fee), you allow them to qualify for your property without having perfect credit, or other appealing terms such as having less than the bank required time on the job or down payment etc.
Make sure your rental price (the most important part of your pricing) is at market rent value and not above it.
You then invite all interested tenant-buyers to a one hour home showing on one particular day (preferably a Saturday or Sunday)You confirm with all tenant-buyers that they are committing to coming during the same one hour block of time so they all can see each other at the same time. This creates the feel that they are in an "auction" type scenario, causing them to realize that they better decide quickly if they are going to make an offer on the home or not.
Getting Higher-Than-Market Value....For Your Home
If you have implemented the strategy as described above, and priced your property correctly in correlation to it's condition and location, you should have good turn out on the day of your showing ("auction"). When you implement the method that I outlined, you will not have people insulting you with low ball offers for your home. Instead, you will have people bidding upward of your initial asking price.
Let's not forget the fact, from the beginning, you are able to ask for 20% above the market
because in exchange, you are giving leniency for poor credit (assuming they are in strong
financial position today and their poor credit is a thing of the past, of course), and you are
also giving them 1-3 years to fix their credit scores, save up for the bank-required down
payment, and/or fulfill more time on their job, so they can then qualify without a hitch. I usually suggest a longer lease-term period (3 years) the higher in price you go, justifying your higher price, since you maybe higher than the current market pricing.
The Important Points to Remember Before Using Our "Auction" Strategy
Make sure to price your rental amount at market or a little lower to get the most amount of tenant-buyers to attend your home showing (a.k.a auction). Use sites such as RentOMeter.com, Zilpy.com, or Zillow.com to get an idea (not an exact price) on what your rental price should be.
Schedule the showing for a one hour period on one day only.
Extend out your lease term in direct correlation to the amount you are asking for the home over what the current market price says it should be
Don't ask more than 10-20% over what the market price is currently
I want you to know that out of any of the terms and pricing that you will handling and
proposing toyour future tenant-buyers, the most important number is your rental price.
Hands down. Sure, anyreasonable person should and would want to sell your property at
the highest purchase price. Sinceyou are selling as "rent to own" (Lease with the Option to
buy) though, if you are too high on yourrental amount, your property will sit and it will not
matter at all how much you want for your totalpurchase price.
Get this one number wrong and the only thing you will succeed at is attracting nosey neighbors. When my team and I talk to sellers, letting them know that they can get their full asking price while not paying any commissions or fees in the process, some sellers get dollar signs in their eyes and get the crazy idea that they can jack up the rental price to whatever they want-and get it. This is the furthest thing from the truth. With the ease and accessibility of the internet at everyone's finger tips these days, all it takes is a few seconds and key strokes for a home seeker to enter in the area they are interested in living, the criteria they desire and the price point they want to pay. Within seconds, they can quickly shop you along with your competition and see if you are priced right-or over priced.
Take Craigslist for Example:
Yes, you are selling, rent to own, and you are giving great terms that may even justify a higher price, but...that does not mean that the overall tenant-buyer population has any real idea of why they should pay more for your property compared to your competition. You may be justified in charging an extra $100-$200 per month for your rental amount, but charging more and actually succeeding in renting/selling your property to a tenant-buyer is a whole other game.
I highly suggest that you make your money on a higher Option price (the purchase price you will sell your home for) on the back end, compared to raising the rent on the front end (at least in the beginning). Please keep in mind, there are other ways you can be fully compensated in exchange for great terms that you will be extending out to your future tenant-buyer that won't price you out of the market. In order to price your rental amount correctly, here are three sites to easily and freely check how much you should be charging. Please keep in mind, the following list is by no means a comprehensive list. Please feel free to check other sources as well if you desire. 1. Rent-O-Meter.com
You can quickly enter in your address, desired rental amount, and also gives you a "metered" range showing you if you priced your home too high, too low or just right.
Basic free report limit is 10 reports every 30 days
2. Zilpy.com
Shows how the target property rent compares with the neighborhood, zip code and the city
Zilpy Cashflow Report is used by thousands of Landlords, Real Eastate Professionals and Investors across the country
Uses advanced data mining algorithms
3. Zillow.com's "Rent Zestimate"
Zillow's estimator tool called "Rent Zestimate" is Zillow's estimated monthly rent price, calculated using a proprietary formula. It is a starting point in determining the monlth rental price for a specific property.
They key thing to understand with all three of these sites here is that you can plug your property's info in within a few minutes, getting a pretty good idea as to the amount you can charge tenant-buyers for your rental price.
Do not get ambitious and raise your rental price several hundred dollars more than the market rent.
The only thing you will succeed by doing that, is going nowhere fast.
Make your money on your Option price (purchase price), instead of over pricing your rental amount.