How can you pay way too much up front?
We get calls everyday from people searching for answers to questions about rent to own homes. The most common questions are how much upfront and how much per month.
These are very reasonable questions because they are the most immediate concerns a rent to own tenant/buyer would have!
One of the most important questions for purchasing the home is simply, “what is the purchase/option price.”
If the option price isn’t competitive at TODAY’S prices, then you could be setting yourself up for disappointment once you are qualified to purchase the home.
Make sure to check with a local real estate professional about the current value of the home you are interested in.
When determining what is fair for your upfront costs on a rent to own home, keep in mind you are not buying the home now.
You are simply paying an option fee to give yourself the exclusive option to buy the house over a certain time period(option term).
What is Common
In today’s market, in our area, 3-5% is a common fee that most consider “fair.” Keep in mind this is a “soft” real estate market.
In a sellers market, paying 8-10% to secure an option on a house is not uncommon!
If you are considering doing a rent to own on a house and the seller wants 10% or more toward the option fee, you may want to consider negotiating the fee or researching other homes.