Should I sell my house lease to own?

[stretchmark]

Here's the deal, we've had our house 5 years. Bought it cheap, remodeled the heck out of it, now selling it for a profit. We took out loans against it and owe a lot on it now but still will walk away with a good chunk.
We had major troubles with our neighbor and I really would love to move on.

The people interested want to give us a chunk down, pay the mortgage for 6 months, then buy it with a loan for the rest and if not, we keep the $.

Our current financial situation is no good. We have about 500$ for food, dh is making a little here and there, I work at a farm for food. We have the 2 mortgages and an annual land payment due in January of 14,000 on our new place. We have no $ to keep buying building materials but luckily most of our house is done and made of mud.

I would need about 26,000 down which is less than 10% of the price to keep paying the 2nd, food, and the land. Ideally more would be better for things like emergencies.

I guess we really can't lose because if they decide to not buy, we get the money. I am just concerned about if they don't want it, then we have to re-list at maybe a not so great time of year.

Is there something I am missing? What if they don't make the house payment?
TIA

[kijip]

If they can't get financing now, what will be different in 6 months?

I would not do it unless you can't get another buyer AND if the down payment you keep is enough to pay the mortgage for 6 months if they flake. If they don't pay, it hurts you and you would have to pay or risk defaulting on your loan and having the home foreclosed on.

Still, it sounds like you need your equity sooner.

[Denvergirlie]

What you are talking about is a land contract. Basically owner finacning, but if they default you get the house back and keep all the payments they have made to you. Not really all that much risk for you. They default, you still have the house and now money as well.

Are you moving to a new house when you sell this one? You mentioned you have land for the future. If you sell this one, where will you live? Could you rent for 6 months? I guess that kinda makes a difference.

What is the likelihood you'll get a more traditional offer for the house?

[karne]

Hi-my advice, having been in this situation, is to have a very clear cut legal contract. This protects everyone, especially if emotions run high , as housing issues often bring this out. Also, be clear about any changes or modifications to your home being approved of by you first.

[SusannahM]

If it counts as them renting it, it can be very difficult to evict someone. And, until they are evicted, you won't have a legal way to get them out of the house, even though they aren't paying rent. Not to mention, there is a big chance they'll trash the house while they're in the eviction process. If you do decide to rent to them, make them give you a hefty deposit, because if they don't have much money, it will be hard to get money from them for any damages they do to the house. I think for just 6 months worth of rent, it's just not worth the headaches of being a landlord.

[SleeplessMommy]

Are you in a slow real estate market?

Rent-to-own can be a good way to sell a house, IF you are protected. Have a lawyer working for you draw up the deal, to make sure you are covered.

When I had a house sale fall through, it was a buyer with a very small down payment .. they did not mind walking away, especially since they got their $500 back. The higher the non-refundable down payment, the better your chances of a sale.

* With rent-to-own, you should get a good resale price. (either negotiated now, or to be negotiated at a future date, if they are crazy enough to sign that)
* Have a security deposit (1-2 mo rent) and check their credit report. If it is bad enough, how will they get a mortgage in 6 mo.?
* It is common to change rent slightly above the going rate, and credit $100/mo toward the future purchase. I assume this will cover your mortgage payments, taxes, etc.
* Typically buyer has 1-2 years to purchase the property.

If you have a choice between a cash buyer and a rent-to-own, dump the rent to own. A family member had a protracted, time-wasting negotiation with a rent-to-own buyer ... he ended up selling to real cash buyer. :

[stretchmark]

Thanks. I wouldn't even consider it without at least 25,000 down but more realistically 30,000.
I'm afraid of the having to evict thing too. I am asking the universe to bring us a cash buyer soon.