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Old 06-04-2012, 07:15 PM
Wesley Clark is offline
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Is it common to rent a home before you buy it


Does this happen very often? If I was going to buy a home I think I'd rather rent it for 2-3 months before buying it just to make sure there weren't any problems that I wasn't aware of at the time of purchase.

I don't think I've heard of people doing this though. I'm assuming in part because the house is usually being lived in by the family selling it at the time. Or because if someone buys it you'd have to move out rapidly.

Are there realtors or sellers who make it a policy to allow a potential buyer to live in a home for a period of time before deciding to buy it?
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Old 06-04-2012, 07:24 PM
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No. Not really. Either the owner is selling the house or renting the house. No home owner wants to carry two mortgages for a while to see how things work out for the other guy.

"I'd really like to buy this car, but I think I'll just lease it for 3 months to see if I like it, OK?"

Times 100.
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Old 06-04-2012, 07:25 PM
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Sometimes it happens if the only reason the owners have it for rent is because they have been unable to find a buyer. This is uncommon in my experience.

Last edited by Ruken; 06-04-2012 at 07:25 PM.
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Old 06-04-2012, 07:31 PM
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We rented our house for 2 months before buying it but only because the sale of the condo went through and we had to get out but the purchase of the house was being delayed by the mortgage company being a pest. The estate of the previous owner allowed us to rent from right before Thanksgiving until the end of January when the paperwork was finally finalized.


The lawyers and our realtor told us that it's very uncommon to do what we did but in the case of a motivated seller and a very motivated buyer, it does happen. In our case, there was no doubt we were going to buy. The mortgage company just wanted some things fixed before they finalized the paperwork. The estate was willing to do the fixes. So everyone was on the same page and wanted the same end result. I can't imagine it working in any other situation.
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Old 06-04-2012, 08:33 PM
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There is such a thing as a lease option in purchasing a home. The contract is typically 6-24 months, so, longer than what you may have in mind. It is done for financial reasons as much as anything else, so the potential buyer can accumulate a down payment.
If the main concern is "problems" with a house - well, that is what home inspections are for, really.
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Old 06-04-2012, 09:08 PM
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We rented a house until the lender refused to make the loan on it because it didn't pass the inspection - see mrAru got transferred from the USS Spadefish stationed in Norfolk VA, taking the shore duty spot of the guy they were transferring down to the Spadefish to take his spot. Silly if you ask me but WTF. He mentioned needing to sell his house, and let us stay in it when we went up on leave to househunt, and we decided we liked the house and location so we told him we would rent it for what he was paying on the mortgage while the paperwork churned through. We were both pretty miffed that the *previous to him* owner managed to reroof it with the beams more than 16" on center, support the floor [single level house over a half basement, half crawlspace] on a temp post thingy instead of a real post and something else. mrAru and I surmise that somehow the inspector was bribed or something. Luckily the place we have now hit the market and the listing agent was also our agent and we looked at this place the morning it hit the market and we snapped it up within an hour of it listing. The guy we were renting the other place from basically used the military transfer and need to get rid of the mortgage clause to ditch the mortgage without prejudice.
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Old 06-04-2012, 10:01 PM
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Quote:
Originally Posted by troubledwater View Post
There is such a thing as a lease option in purchasing a home. The contract is typically 6-24 months, so, longer than what you may have in mind. It is done for financial reasons as much as anything else, so the potential buyer can accumulate a down payment.
If the main concern is "problems" with a house - well, that is what home inspections are for, really.
It isn't just problems with the house it is the neighborhood, the neighbors, determining if the house and commute are a good match, etc.
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Old 06-04-2012, 10:04 PM
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Originally Posted by Wesley Clark View Post
It isn't just problems with the house it is the neighborhood, the neighbors, determining if the house and commute are a good match, etc.
Unless the seller is really having a problem attracting buyers this is unlikely to appeal to them. Why tie up the house for several months with no promise of a sale at the end?
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Old 06-04-2012, 10:06 PM
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Quote:
Originally Posted by Wesley Clark View Post
It isn't just problems with the house it is the neighborhood, the neighbors, determining if the house and commute are a good match, etc.
OK, I get what you mean about this. For me, the concern was barking dogs. (None so far!)
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Old 06-04-2012, 10:12 PM
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Unless the seller is really having a problem attracting buyers this is unlikely to appeal to them. Why tie up the house for several months with no promise of a sale at the end?
Which is exactly why no one is familiar with this scenario anymore - we haven't seen market conditions where this makes sense.

If I understand correctly, the lease option contracts are typically written so that the potential seller gets to keep some chunk of money from the potential buyer, if the buyer backs out. The buyer puts up some sum of money to purchase the option. If the buyer goes through with the sale, it becomes part of the down payment. If not, it goes to the seller to compensate him for his trouble. I think.
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Old 06-05-2012, 10:19 AM
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I think the most common way that might happen is if the renter rents a house then convinces the owner to sell it. But that is more of a "it worked out that way" as opposed to "planning it that way."
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Old 06-05-2012, 10:36 AM
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Actually, my GF is planning on renting her house and just yesterday someone expressed interest in leasing for 6 months and then buying when her house closes. She's talking to her RE Agent about if it's possible to structure this as a 1 year lease with an out clause if she buys the house at a certain point. But she has no intention of going forward unless the renter/buyer is tied in to a one year long lease.
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Old 06-05-2012, 10:49 AM
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OK, I get what you mean about this. For me, the concern was barking dogs. (None so far!)
Thing is, sometime in the 30 years of your mortgage, new ones move in.
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Old 06-05-2012, 11:33 AM
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Quote:
Originally Posted by Wesley Clark View Post
Does this happen very often? If I was going to buy a home I think I'd rather rent it for 2-3 months before buying it just to make sure there weren't any problems that I wasn't aware of at the time of purchase.

I don't think I've heard of people doing this though. I'm assuming in part because the house is usually being lived in by the family selling it at the time. Or because if someone buys it you'd have to move out rapidly.

Are there realtors or sellers who make it a policy to allow a potential buyer to live in a home for a period of time before deciding to buy it?
Isn't that called a contract for deed? Not many people do those any more.

Quote:
Originally Posted by Ruken View Post
Sometimes it happens if the only reason the owners have it for rent is because they have been unable to find a buyer. This is uncommon in my experience.
Two houses on my block are doing this right now, so I wouldn't say it's 'uncommon'.
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Old 06-05-2012, 12:23 PM
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When we had a house on the market two years ago, two of the four offers we received had an initial period of renting before they'd commit to buy. They were both cases of "we'd love to live in your house but we don't have the cash or the credit to buy it. Want to let us trash the place while we keep applying to banks?"

We turned both down.
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Old 06-05-2012, 12:35 PM
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Rent to Own offers seem to be gaining in popularity around here. It seems to be a combination of sucky credit on the part of the renter/buyer and a desire to bring in some sort of income on a home that's otherwise not selling. A portion of the "rent" goes to the owner, same as any rental, and a portion goes to the "sale" - I'm guessing it's put in some sort of escrow account - and can be used as all or part of a down payment.

This site also mentions credit counseling as part of the process, presumably so the renter/buyer can repair his credit score before the actual mortgage part happens.
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Old 06-05-2012, 12:54 PM
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When my house was on the market (and the market was not good) I had a couple of people who were interested in renting while they gathered a down payment. All the horrible landlord/tenant possibilities and the eviction possibility made me say no way. The market recovered and I got my asking price.
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Old 06-05-2012, 12:58 PM
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When we were looking for rental houses in the 3-4 bedroom range late last year, we saw quite a few houses that were both for sale or for rent. The house we ended up with was supposedly only for rent, but our landlord has been dropping none-too-subtle clues that we should just buy it.

I think there are a lot of people who would love to offload their houses, but can't really afford to take the loss they would selling in today's market, so if they can cover most of the mortgage and taxes with a renter it makes sense to rent it out and hope for improvement. If there's a chance the renter might turn into a buyer down the road, all the better. If nothing else, when the market improves you probably have a bit of a negotiating edge if your renters are already moved in and in love with your house.
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Old 06-05-2012, 02:48 PM
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Quote:
Originally Posted by sachertorte View Post
I think the most common way that might happen is if the renter rents a house then convinces the owner to sell it. But that is more of a "it worked out that way" as opposed to "planning it that way."
That's what happened to me. I rented for 18 months, then decided I wanted to buy somewhere. When I told my landlord, he said he would probably put it up for sale once I was gone as he'd had enough of the hassle of renting. It worked out well for both of us.

I did have one problem with the mortgage though. My bank didn't feel happy lending to someone who was buying a house with a sitting tenant. Even though I was the tenant. I had to pay a solicitor to notarize a form saying I would move out before the new owner completed the sale! I went to work in the morning if that counts?
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Old 06-05-2012, 04:52 PM
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I did have one problem with the mortgage though. My bank didn't feel happy lending to someone who was buying a house with a sitting tenant. Even though I was the tenant. I had to pay a solicitor to notarize a form saying I would move out before the new owner completed the sale! I went to work in the morning if that counts?
Further proof that banks are idiots. Their concern was probably the difference between rates for a primary house (that you'll live in) and a secondary rental property. Since you were buying a rental property, the 'tenant' had to be notified that they were bounced on the settlement day. Talk about dumbos!
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Old 10-09-2019, 08:35 AM
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Rent-to-buy deals are quite common, but I doubt they convert into sales very often.
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Old 10-09-2019, 11:09 AM
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Originally Posted by Wesley Clark View Post
It isn't just problems with the house it is the neighborhood, the neighbors, determining if the house and commute are a good match, etc.
Unfortuntely, when you buy a house you take a great big leap of faith about many things - I've spent longer choosing a perfume in a department store than I spent viewing my current home, purely because there were ten other buyers queueing up to make an offer.

To mitigate some of the other factors you suggest, I have in the past rented a house in a neighbourhood I fancied before choosing to buy. Thank god I did in the last place I rented in London - turns out we HATED the neighbourhood. That would have been a very costly mistake.
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Old 10-09-2019, 11:49 AM
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It happens, but it's pretty unusual. Most people selling a house want to be rid of it; they don't want to be landlords, even for a few months. Sometimes a brief rental period occurs because the buyer was all set to close but there was a last-minute snafu with the financing. A generous seller might allow that person to rent the property for a couple months. Best case, the financing problem gets solved and you close the sale. Worst case, you now have a squatter who stops paying rent and you have to evict them, after you've just spent a ton of money and stress moving (perhaps far away).

So most seller's agents and lawyers would advise their clients not to do this, and instead just find someone who's ready to buy.
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Old 10-09-2019, 12:20 PM
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No. Not really. Either the owner is selling the house or renting the house. No home owner wants to carry two mortgages for a while to see how things work out for the other guy.
Unless, of course, you can afford it. Some friends of mine were on the fence about a house they were looking at. They decided to rent it for a few months to make up their mind. In the end, they decided not to buy it and it only cost them $30,000.
The next year they did pick a new house, but they can't pull the trigger on selling their first house so they own both and flip flop where they stay.

One of them has another business in a different state. He was sick of staying in hotels, so he bought a condo to live in when he's there.

Most people don't rent a house they're planning to buy, but then there's those 'more money than god' people who can afford pretty much whatever they want.
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Old 10-09-2019, 12:23 PM
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My parents have been landlords for the last 20 years or so, with up to 5 condos at a time (now they are winding down).

Numerous times tenants have wanted to buy the condo, but they always can’t come up with any significant down payment nor can they qualify for the loan. So they always want my parents to hold the mortgage. My parents aren’t idiots, so they always refuse. This usually leads to the tenants leaving in a huff. They must have had 40-50 tenants over the years, I don’t think a single one has ever moved out because they were buying a house.
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Old 10-09-2019, 12:31 PM
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Renting before buying introduces much uncertainty on all parties. The way to avoid this is to write, in a purchase offer, a contingency that allows a comprehensive inspection. The inspection will uncover items that are of concern, or perhaps need further investigation. No assurance that everything will be covered, but uncertainties are diminished. What, in life, doesn't have uncertainties?
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Old 10-09-2019, 04:57 PM
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Renting your house to a bunch of zombies, just invites all sorts of problems.

But seriously, as a seller, I want to sell my house, and if I rent it to you for 2-3 months on the hopes that you will buy it, well, I've just taken it off the market that someone wanting to buy it outright may miss.
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Old 10-09-2019, 05:10 PM
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Rentals are investment properties. People depend on the long term income.

You won't find many property owners that want to sell the home to their Renter.

Last edited by aceplace57; 10-09-2019 at 05:11 PM.
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Old 10-09-2019, 07:17 PM
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Yeah, it is hard to imagine that the seller would be agreeable to this idea. It sounds awful. So much uncertainty with your house off the market for so long.

We just sold our old house and a quick and less risky closing was a big part of the attractiveness of the offer. They paid cash, waived the inspection contingency, and closed in 2.5 weeks. Done.

There would need to be serious compensation in the case of them "trying it out" and deciding to pass to make it worthwhile for me. Like way more than the market rate rent you'd get for those few months. And it'd need to be sitting in an escrow account with basically no mechanism for them to get it back if they decide not to buy.

Maybe in certain markets that are more buyer friendly that'd fly. But right now in my location any sane seller and seller's agent would be howling with laughter at such an offer ...
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Old 10-10-2019, 12:15 PM
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Where I live the houses sell immediately for over the asking price in most cases. So, there just isn't a market for this. Some investors do buy homes and then rent them out, but no one is trying to do both. It happens in extreme circumstances. I know people who've rented houses for years and then been offered the chance to buy the house before it's listed for sale, but that's an entirely different thing.
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Old 10-11-2019, 01:40 PM
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Quote:
Originally Posted by Telemark View Post
She's talking to her RE Agent about if it's possible to structure this as a 1 year lease with an out clause if she buys the house at a certain point.
I'm not a RE professional, but it would surprise me if you need a special clause for that.

Generally if you sell a property with an existing lease, the lease is still binding on the new owner. But if the new owner is the lessee, that seems like something they'll probably be able to work out for themselves

I know people who have bought houses they were currently renting, and people who have had their landlords offer to sell them houses they were currently renting, but it was always the rental that happened first, and then later the owner decided to sell and figured they might as well offer the house to someone who presumably already liked living there and might want to buy it rather than have to move.
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Old 10-11-2019, 08:35 PM
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Unless, of course, you can afford it. Some friends of mine were on the fence about a house they were looking at. They decided to rent it for a few months to make up their mind. In the end, they decided not to buy it and it only cost them $30,000.
The next year they did pick a new house, but they can't pull the trigger on selling their first house so they own both and flip flop where they stay.

One of them has another business in a different state. He was sick of staying in hotels, so he bought a condo to live in when he's there.

Most people don't rent a house they're planning to buy, but then there's those 'more money than god' people who can afford pretty much whatever they want.
This thread is 7 years old, btw. Just to warn people. I wonder if Welsey rented.

It makes sense for the buyer to rent. If you like the place, you can buy it, and you win - and you can likely reduce the offer since the seller won't have the hassle of making the house ready to show again. If you don't like it you walk, not much lost. The seller on the other hand doesn't have much of an incentive to do it. Many states have laws protecting tenants, which might serve to screw the seller if the buyer/renter is a problem.

When we bought a house we rented it to the seller, since his under-construction house was late. We were living in town in a month-to-month rental. The terms set by our lawyer for our protection were a bit intricate. It worked out fine, though. It helps that our kids were in the same class in school.
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