If your landlord wants you to buy the property, you can consider it an opportunity to own your home. However, you should follow the correct process to avoid unpleasant experiences. Keep reading for a step-by-step guide on what you should do.
1. Consider Whether You Want to Buy
Since you have been living in the property for a while, you already know whether it’s a great place to call your home. The landlord also most likely considers that you are economically stable and can afford the property. Moreover, both of you most likely have a cordial relationship. However, that’s not enough. You need to consider other factors such as your long-term goals carefully before deciding whether you need to acquire the property.
Take some time to reflect on:
- Amount of equity you will be able to have in the property
- Availability of a large rental market
- The rising value of homes in the local housing market
- Weather patterns
If you consider that you can buy the property, proceed to the next step. Nonetheless, before moving on, you should set aside the amount you are willing to spend on the property.
Alternatively, get preapproved for the right mortgage.
- Note: We shall see a little later what you can do if you are not in a financial position but are still interested in the property and want a fair chance to purchase it before other potential buyers.
2. Create Your Purchase Team
If you are ready to proceed, contact your real estate attorney. You may also need to get in touch with your bank. They might require an appraisal. If so, they will bring an expert appraiser.
- Note: The property won’t be listed in the housing market. So, you don’t need a real estate agent.
3. Negotiate the Price
Your idea of an affordable property can be different from that of your landlord. So, it’s best to avoid offering significantly more than the landlord expects. The best way out here is:
- Allow the landlord to make the first offer.
- Use agency listing sources and your knowledge of the property’s value to figure out the best offer.
- If your bank has brought an appraiser, you can rely on their report.
- You can still ask for a discount. Since there are quality homes in the housing market and you already established a positive relationship with the seller, this strategy can work in your favor.
4. Write the Proper Acquisition Agreement Letter
After agreeing on the price, your attorney should write up the property acquisition agreement. Here are what you should do:
- Allow the seller’s attorney to review the documentation.
- Ensure the landlord is satisfied and ready to sign
- Ensure the buyer and seller appropriately sign the agreement.
5. Close the Sale
Your bank will order an inspection before the closing. This is necessary for ensuring it can successfully finance the transaction. Once this is done, you can consider the acquisition process complete and close the sale.
What Should I do if I am not in a Financial Position?
Here are two optional things you can do if you are not financially ready to purchase the property:
1. Enter into a Rent-to-Own Agreement
Ask the landlord to allow you to enter into this agreement. If they do, you’ll pay an additional sum every month unto your regular rent that will be used as a down payment. Ensure this agreement is done in writing and you understand the risks involved.
2. Enter into a Lease-Option Agreement
This type of agreement is the same as the above, except that you are not under any obligation to buy the home. Nonetheless, you have the legal right to purchase it at an agreed-upon price after a specific duration.
As you can see, if your landlord wants you to buy the property, you have three main options. You can purchase it immediately, enter into a rent-to-own agreement, or enter into a lease-option agreement. Finally, please remember you can reject the offer if you don’t need it.