What are the benefits of Selling Your House with a Rent to Own Agreement in Wilmington?
Do you have a property you want to sell in the Wilmington area? For many homeowners, using a rent to own agreement will be the most profitable way to sell their home quickly.
Many sellers don’t consider the benefits of a rent to own agreement for their Wilmington house. While the terms of every contract are different, there are some great perks that you will see across the board.
If you don’t need the cash from the sale immediately and are comfortable renting out the house for an above average amount each month, selling your house via a rent to own agreement might be the best way to sell your Wilmington house!
Learn more about how it works and what you need to do to sell your house using a rent to own agreement!
#1 – Cash Upfront
With most rent to own agreements, the tenant is required to make a downpayment to the seller. While this may be much less than with a standard loan, it should be enough to ensure the tenant won’t back out of their debt.
You can also utilize an option fee, which is non-refundable and provides the tenant with the option to buy. This is usually about 1% of the sale price. In most cases, this option fee and a portion of the monthly rent will go toward the tenants down payment when the official sale occurs.
#2 – Generate Passive Income
So long as you have a tenant in the home, you will be generating income on the property. Many times, a tenant will pay above average rent, with a portion of the funds going toward the eventual down payment to the bank.
Your tenant isn’t going to want to risk default, losing their deposit and option to buy. Knowing this you can almost rely on a continued tenancy from your tenant for as long as you own the property.
#3 – Get The Price You Want
Tenants using a rent to own agreement typically aren’t able to qualify for a conventional loan. Whether they don’t have the down payment, the income to qualify, or the credit score required, buying via a rent to own agreement will allow people to purchase who may not have been able to in the past.
As such, by having the opportunity to buy, these folks will likely be willing to pay your asking price for the property, as long as it’s fair.
Keep in mind that the value of the house could go up or down while the agreement is in place. The negotiated sale price will remain the same.
#4 – No Risk If The Tenant Defaults
With most agreements, if the tenant defaults, the seller is able to keep all monies paid. Sure, you will be back at square one, but you will likely be ahead financially and have the option to sell outright or find a new rent to own tenant.
The amount you can profit here may be in the thousands when you include the raised rent and down payment.
#5 – Increase The Number of Potential Buyers
There are kinds of wonderful people out there who could afford to buy your house, people who would never default on their loan.
However, they may have a blemish on their credit report or insufficient down payment, making them unable to buy a house at the moment. They want to buy but are being held back due to something on paper.
With a rent to own agreement, you will be able to open the door for many people who may not have been able to buy otherwise.
Legal Considerations When Selling Your House with a Rent to Own Agreement
Rent to own agreements can be a great way to sell your home in Wilmington, NC, but it’s crucial to understand the legal aspects before committing to this arrangement. Ensuring a well-structured contract can protect both you and the buyer while making the process as smooth as possible.
How Rent to Own Agreements Work
A rent to own agreement typically includes a lease period in which the tenant rents the property with the option to buy at a later date. The contract will specify the monthly rent amount, option fee, and portion of the rent that contributes toward the purchase price. While this setup benefits both parties, it’s important to structure the agreement correctly to avoid potential legal pitfalls.
Key Legal Elements to Include in a Rent to Own Contract
When drafting a rent to own agreement, make sure to include the following:
- Option Fee & Purchase Price – Clearly outline the non-refundable option fee that grants the tenant the right to purchase. Define the agreed-upon sale price and whether it is fixed or subject to market changes.
- Rental Terms – Detail the monthly rent, including how much (if any) will be credited toward the purchase price.
- Maintenance Responsibilities – Specify which party is responsible for repairs and upkeep. Many agreements place the burden on the tenant, ensuring they treat the home as their own.
- Default and Termination Conditions – Outline what happens if the tenant fails to make payments, decides not to buy, or violates any contract terms.
- Legal Compliance – Ensure that the contract follows North Carolina’s landlord-tenant laws and real estate regulations.
Pros and Cons of Rent to Own Agreements for Sellers
| Pros | Cons |
|---|---|
| Steady rental income while waiting for the sale | Risk of tenant default |
| Higher potential selling price | Legal complexities requiring attorney review |
| Attracts buyers who may not qualify for traditional loans | House value may increase, but the sale price is locked in |
| Upfront option fee provides immediate cash flow | Property remains under your ownership until the sale closes |
Sell Your House Fast with Jonathan Swanson, Broker @ Sea Gate Realty, Inc.
Ready to explore a smarter way to sell your house? Contact our team today to learn more about how a rent-to-own agreement can work for you! We’re here to answer your questions and help you navigate the process. Call us now at (910) 538-7737.
