Home buying arrangement...help???!??!!!!!!?

Question

I have had a property for sale for about 8 months. I had a couple contact my realtor and ask for an arrangement that is summed up below,
1. They will pay me 10,000 up front
2. For 6 months they can reside in the house until one of their credit scores raises (this individual just has no credit, nothing is owed to any creditors etc, its just a low score)
3. If after the 6 months the credit is not established we can either renegotiate or I can terminate them as residents.
4. If credit is established then they purchase the house for 124,000 (Original asking price is 134,000)

Has anyone ever experienced this before? Does this sound like a good option? Any ideas/pointers are greatly appreciated!

Answer 1

It will turn out to be a nightmare. It takes years to build a credit score. Their ability up to now to accomplish

this is pathetic.

At the end of this bad arrangement, they will refuse to move out and you will be burdened with the requirement

by law to apply for a court ruling in order to evict them. During that time they can trash the house and you will

have the cost of repairs.

Do NOT get involved in any dealings of this sort. Instead,, get some advice as to a few inexpensive improvements you could make to the house to secure an offer to purchase. It might also be beneficial to change

realtors if you feel they have not presented or advertised the property in the best way.

Follow this advice from a person with decades of real estate experience.

Answer 2

It is often a bad idea for them and bad for you. I would simply refuse to do it. They do not know if the title to the house will be clear at that time. They do not know if the condition of the house will be fine at that time. They would renting right now- is that ok with your current mortgage and insurance company? Most of these end up not going thru- the credit does not get better and the renter does not want to give up the deposit- they ask for another six months or year- and then again and again. When they do move out they often have torn the place apart and may have found a way to cloud the title to the house so that you can not sell it.

Answer 3

There are draw backs to this arrangement. The only good part of this is that you are getting a non refundable $10k deposit.



The problems that present themselves is



#1. You are not able to improve your credit score in 6 months



#2. In the event they are not able to raise their credit score, you would be require to evict them if they do not go peaceful.



#3. These individuals would normally want to negotiate another agreement after the first one has expired.



#4. You would not be able to show the property or sale the property since you would have a tenant residing there, though you have a ready and willing buyer.



There are many negatives in this arrangement and none of them is of any benefit to you in the selling your house.



These individuals might still be able to purchase the house you are selling and be approved for a mortgage loan. They would not be able to get a low interest rate, but they are able to be approved for a mortgage loan, with the current low credit score or no credit score at all.



I hope this has been of some benefit to you, good luck.



"FIGHT ON"

Answer 4

WEhat they are talking about is a lease option agreement. These are a few things you need that are standard that they seem to not necesarily be including.

They need to provide a non-refundable deposit. ($3000, or so) If they buy the house, this money goes towards the house... Incentive for them to buy the house but also it holds you to not sell to anyone else during that time , so it helps them too. IF they back out for ANY reason, you keep the $3000. They pay fair market rent for the time they are living there. If they fail to pay rent, or are late, they lose the $3000 and they get evitcted asap.

Typically these types of deals get full asking price of the home. YOu as the seller as taking the risk that it may appreciate in the future and you are guaranteeing them to sell for the current price. YOu ned to pmake sure this is on a lease-purchase contraacvt nad is legal in your state.



IF your agent does not have experience in this, make sure she talks to someone that does, She gets her commission when the home is sold, not rented.!!

Answer 5

I have heard of it. It is a bad idea. You may end up having to foreclose on the property and being owed a lot of money. If you have it listed for sale, I would say wait for an actual "buyer", someone who qualifies for a loan and can actually buy the house. I would not agree to the "deal" they hope to get from you. If you do want to go through with it, be sure and see a lawyer. If the contract is written as a sale, you cannot just terminate them as residents. It would have to be a form of a rent to purchase and if you do have to get them out, how it will be done should be spelled out clearly in the agreement. Something that says that you can just terminate them as residents probably means nothing and you will end up with a lot of grief.

Answer 6

I would get a lawyer involved, but it seems like you are taking most of the risk. If they qualify for the loan, you have been carrying the cost of the house (taxes etc) and likely repairs as a landlord and then you get nothing for that time. I would want rent on top of the deposit. And some arrangement on repairs. You need a much more clear contract.

Answer 7

I wouldn't do it. The red flag is their poor credit profiles. Another red flag is the $10k for 6 months. It doesn't make financial sense to me. That's $2000 a month rent. It would be cheaper for them to rent normally until their scores improve (which won't improve that much in 6 months). This sounds too much like a scam. They'll pay you $10k. Then if they can't come up with financing, you'll be asked to extend and extend and extend until they become squatters and nearly impossible to evict.

Answer 8

this is somewhat like a rent to own but you don't explain about the $10K

if this is truly a down payment it does not apply to the rent for 6 months, and if that is their intention it is cheap rent and they can vacate at the end and be all the merrier, without any further obligation

you now have an unsold house again, that you will have to claim rental income and interfere with the possible exclusion you might be eligible for selling your residence

Answer 9

the main problem I could see occuring is if at the end of 6 months they don't go ahead, it can be very difficult to force people to leave where they are residing if they say that they don't have anywhere else to go, and because you have no rental agreement and ongoing payments, you might not get any further rent, and also if they trash the place you haven't got a security bond from them to pay for damages

Answer 10

super bad deal for you - they would be living there rent free for 6 months - forget it and in 6 months the person with NO CREDIT is NOT going to suddenly have a credit score of 700. and they will never qualify for a mortgage - what happens if they don;t get a mortgage? are they expecting their full 510,000 back? that's ripping you off big time - FORGET IT _ RUN AWAY

Answer 11

It is a standard rent to buy, however clearly written by them so they get it cheaper ......... you organise a rental contract, take a deposit, the fact they are paying rent for 6 months will increase the credit score, then they get their mortgage for the 124k plus their 10k and purchase............ you need this legally drawing up

Answer 12

I would not do that. If things go south now you got another 6 months to evict them and expenses to repair damages to the property. Ask your realtor what is being done to promote the property.

Answer 13

bad idea......it's a basic contract for deed....but missing something.....rent!!!!! collect 1500 per month and a thousand deposit......generally, it would go for 2 years instead of 6 months.....in the meantime you collect rent instead of selling it to someone else and keeping it off the market....if they buy the 10 thousand comes off the price of the house...if not, they lose it....that's the contract....it's not the worst idea....on it's face, if you can trust them, after 6 months they still have to pay 134 thousand...maybe not....if it's overpriced anyway, you gotta lower the price...realtor fee will cost you 8 thousand.....if you collect 9000 in rent you can reduce the cost of the house to $129,500........that's a fair deal

Answer 14

I would wait for a real buyer. If they have a bad credit score that means they don't pay their bills. What makes you think they will pay you?

Answer 15

I would not do it unless i was desperate. If they end up not being able to buy and refuse to leave, it will be expensive to evict them and they could trash the place.

Answer 16

this just sounds strange.do they have a plan to raise their score? it sounds like if the score is not up in 6 months you could be making money on it (the 10,000) unless they damage the house.

Answer 17

obviously all of the provisions would need to be in writing and you would need to look at the laws where you live to verify that what is being proposed is legal, AND I would not offer any discount on the sales price; if anything the price should be increased

Answer 18

I wouldn't do it.