There is a lot of misinformation among agents about rent-to-own properties, according to Rachel Oliver, managing partner at Clover Properties – including how the payment structure works.
“The #1 thing that stops agents from moving forward with it is because they think they have to wait until the end of the rent-to-own term in order to get their payout as a Realtor, and that is the farthest thing from the truth,” she told REP. “Basically, what happens is they do their buyer-agent representation, and when our investor takes title on a rent-to-own income property, the realtors get paid the way they normally would: their regular commission on closed-end.”
Oliver said agents are often off put by R2O deals because they just aren’t sure what sort of information they need to know about them.
There is also a lot of misinformation in the market about these types of deals, according to Oliver.
They still require a downpayment of 4% and they can be a good option for clients who may have good credit.
“The realtor helps the home buyer find the property they want, and the whole home buying experience is preserved for the people with blemished credit,” Oliver said. “But their 4 per cent now is equity in that property, and they build up that equity through monthly payments, because a lot of these people have worked really hard to even get to a point of having 4 per cent down payment—and then they find out that even with 5 per cent and blemished credit, they’re not going to be able to qualify, so they get really discouraged and they think that they have to stay out of the home buyer market.”
Many agents may be put off by this one increasingly popular type of deal but here is what you need to know to achieve success, according to one expert in the field.