Renting a home is a great alternative to buying for people who are tight on finances or haven’t decided on where they want to plant their roots. But when the time is right to buy a home, many people find themselves wishing they could buy the place they are living in right now. If you are contemplating buying the home you’re currently renting, read these 5 steps to make sure you’re prepared for the challenges of home buying.
1. Perform a CMA.
A CMA, or comparative market analysis, will tell you how much the home you’re renting is worth in the current market. Knowing that is your first step to providing your landlord with a reasonable offer for the home. Getting a CMA done properly is key to finding a correct price range for your home. From there you can decide what is a reasonable offer, or if you can afford to buy the home you’re renting.
2. Get Pre-approved.
It may seem like this isn’t an important part of this type of purchase since you’ll be dealing directly with your landlord. But, a landlord is still a seller, and getting your home purchase financed isn’t any easier because of the nature of the deal. Find out how much you will be able to borrow. Once you’re pre-approved, you can approach your landlord confidently and with something backing up your proposition.
3. Talk to Your Landlord.
Are they willing to sell? Maybe, maybe not. Once you have decided if you can afford the home and have a pre-approval letter in hand, approach your landlord about your desire to buy the home. You may have to negotiate a little if the landlord is hesitant or has concerns. If you’re landlord is adamantly against selling the home, it may be time to accept that to own, you will have to move and learn to love somewhere else.
4. Is rent-to-own right for you?
Maybe your landlord isn’t ready to sell the home just yet and maybe you aren’t able to get approved for a loan as large as you’d like. In either case, entering into a rent-to-own agreement may or may not be the right track for you. This is a tricky process with a variety of possible contracts so make sure you educate yourself on the matter. Click here to read more about whether rent-to-own is a good investment.
Due to the unpredictable nature of rent-to-own agreements, it’s extremely important you are aware of the risks. Talk to your landlord about this possibility. Bring a real estate agent and lawyer into the mix to make sure the deal is fair and reasonable.
5. Hire a Real Estate Agent.
It may seem unnecessary because you and your landlord have a good landlord-tenant relationship, but buying a home is a different realm. The paperwork is detailed, the consequences of mistakes are large, and sometimes it really helps to just have another person in the room who knows what they’re talking about. If neither you nor your landlord is experienced in real estate transactions, call a First Team real estate agent to help you iron out the details. Your agent will also do all the paperwork in less than half the time it will take you. Remember, she does this for a living and you will be trying to figure out the importance of each line.
Buying a home in the current market with buyers competing for the small number of homes on the market is intimidating for first time home buyers. If you are renting and you love the home you are already living in, don’t be afraid to ask for what you want. Reach out and we’ll connect you with a real estate agent to help you make it happen.