How to Sell Your House / Home "Rent to Own" Without A Lawyer or Realtor

Tips on a Do It Yourself Sale

A Rent to Own option on a property you can no longer afford is a fast and easy win/ win situation for you and for the person who "buys" your home. If you need to get rid of your home immediately without the long wait of finding an approved buyer and a formal sale and cannot afford the upkeep on your home by turning it into a rental property, selling your home as a "Rent to Own" can be done without the expense of a lawyer and the responsibility of financially maintaining the home will go to the "buyer." This option is an excellent opportunity to avoid foreclosure.


The Potential Buyer

Many displaced families with damaged credit and moderate income in today's uncertain economy would prefer to buy a home rather than rent. Most do not have the option of obtaining a traditional mortgage and are denied financing. To ascertain the buyer's credentials, income, and credit history, it is important that any person interested in your home complete a buyer's application.

After you determine the value or pay off on your home and the monthly rental payment you wish to collect, you are ready to advertise your home and put the process in action.


Advertising Your Home

When listing your home as a rent to buy property, expect to be inundated with calls from interested buyers. If you do not want drop in visitors who wish to inspect the property on the spot, it is highly recommended that you do not put a sign in your front yard. Confidential listings for sales can be placed on:

  • Craigslist in the major city closest to you
  • Your local newspaper, shopper, and trader magazines
  • Facebook friends and For Sale pages in your town

Which ever method you choose to advertise your home, it is imperative to avoid any correspondence that can be misconstrued as discriminatory. Housing discrimination in any form is illegal and fines upon conviction can be $10,000 for the first offense depending on the state in which you live.

The Most Important Step: The Rental Application

The most important step in selling your home as a Rent to Buy property is utilizing the Rental Application. This crucial tool will assist you in carefully screening prospective applicants who are interested in Renting to Own your home. It is vital that you collect information on all members of the family over the age over 18 if you plan to run credit and background checks on those coming into your home. Make sure to acquire social security numbers and driver's license and tag numbers of each adult living in the home in the event that the renter/ buyer abandons the property and the contract.

If you are not versed in legal forms, there are many web sites that will create a customized rental application for you in accordance with your state laws for as low as $19.99. Ensure your form includes the potential renters full name, phone numbers of previous landlords, and contact information for his or her employer, and references.

Important Tip:

If the potential renter leaves important questions blank, call them and ask them if they are interested in finishing their application. Do not accept verbal information that belongs on the rental application from a potential renter over the phone or in person. By signing the contents of the rental application, the potential tenant signs a disclaimer of truthfulness and gives the landlord written permission to obtain information from a reference. If a number for a reference, landlord, or employer is not on the rental application, do not make the call based on information given to you verbally.


The Rent to Own Contract

Rent to Own Contracts can be customized for your state and purchased online for a minimal fee. It is important to read and understand any form you may purchase. A rent to own contract can include any terms you wish to include as the seller.

Before choosing and finalizing a rent to own contract, check with your insurance agent to see if you have to upgrade your insurance policy for additional coverage on your “renters.” Make sure to include the stipulations of your insurance company on your rental contract. For example, if your home insurance policy forbids trampolines or pools on the property, you will want to include that in your lease as a stipulation.

Consider having a home inspection done before a renter moves into your home. This will allow you know of any pre-existing conditions in your home that you may not be aware of. This will give you as the seller the option to fix the issues or selling the home "as is." This will prevent your from having to pay for the costs at the closing of the sale.

If you are still making payments on the home, you will need to accurately calculate the remaining balance and interest on the home and determine what to request in rent payments. It is best to use an amortization calculator to make sure the payments you collect will satisfy the amount of the remaining loan before closing.

When creating the contract, you can specify any terms you wish whether it be a requirement for a down payment, a payment schedule, and the terms of sale once the contract is fulfilled. Most contracts specify the amount of people that can live in the home, notates who is responsible for maintenance and repairs, and sets rules for changes to be made to the property. Buyers prefer a longer period to make smaller payments. If you are including an option to buy the property outright at anytime, many renters will need at least seven years to repair their credit to qualify for a loan.

It is important that you request a security deposit for damages in the event the renter/ buyer does not complete the sale or you have to evict them for non-payment. In my personal experience, I have collected a security deposit and in the event that they buyer does complete the sale, the security deposit will be returned to the renter/ buyer at closing to cover a portion of the closing costs.

Once you have found an interested buyer and completed a satisfactory credit and background check on all household members, you can then extend to them the option of signing a Rent to Own Contract. At this time, you collect the first months rent, and the down payment (or security deposit) if you choose these options. Do not allow any one to move in until these payments are made in full. Bargaining with renters gives them the impression that you are flexible and they will assume all lease requirements and payment dates are merely guidelines.


Closing on a Rent to Own Contract

When the contract is fulfilled, it is time to initiate the closing process. The seller must have a clear title to the property and the mortgage must be made in full. Both parties can go before a Title Management company to transfer the title. At this point, an inspection must be done. Careful planning in the early steps will ensure this process goes smoothly for the seller. Damages done by the renter/ buyer while living in the home will be covered in the lease and if so deemed in the lease, it will be his or her responsibility to repair. Fees can be split or negotiated.

A Rent to Own Tutorial

Important Tips for New Sellers

  • Anyone wishing to sell home with a Rent to Own Contract but doesn't feel comfortable doing the sale without legal guidance, a lawyer or paralegal to review all self prepared documents before a sale for a small fee.
  • Until the property is sold under this contract, the seller is responsible for making tax payments on the property.
  • If the home is being sold furnished or partially furnished, make sure to add all items to the rental contract and list their current conditions. Do not forget to add fixtures such as ceiling fans, air conditioning units, furnaces, plantation blinds, and even landscape materials.
  • Research Landlord laws thoroughly in your state. Tenants have the Right to Quiet Enjoyment of any rental property. A seller must respect this right as a seller as the seller functions basically as a Landlord.
  • Make sure your contract includes a "right to enter" for inspection clause with in. If you rent property to any tenant, this must be in the contract or you cannot reenter the property for any reason. Also, most states require that you give any tenant 24 hours of notice in WRITING before you enter the property.
  • The most important thing you do as a Seller is to have and keep good evidence of the property's condition before you rent it out to a renter or buyer. It is highly recommended that you take a walking video tour of the entire property and its condition and keep it for your records. It is also recommended that you take photographs of every room in the home to showcase its condition. When creating a rent to own contract. I always include the photos as part of the contract. Having an inspection done prior to renting the home will legally prove the home's condition and ensure the rights of the seller if damages occur.
  • If you are selling property that you consider to be a home, you must emotionally prepare for strangers to be living in it. It can be difficult to experience but if you proceed with the sale, you will have to let go of your attachment and expectations.

Why Rent to Options Work

Rent to Own for Sellers and Buyers

Would you consider selling your home with a rent to own contract?

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Comments 44 comments

alocsin profile image

alocsin 5 years ago from Orange County, CA

I know where to go now if I ever decide to sell my home in this way. Voting this Up and Useful.

RealHousewife profile image

RealHousewife 5 years ago from St. Louis, MO

Very good Tammy! Wow you did your homework!

I was going to say that people who rent to own - may actually want to make sure the title is clear before making all those payments!

I've seen people try to draw up deeds they bought from a office supply and they never evened owned the property to begin with! Ha!

billybuc profile image

billybuc 5 years ago from Olympia, WA

Very useful information stated in a way that the buying and selling public can understand. I was a real estate agent for a couple years and I can see this being invaluable to those out there who are not well-versed in the real estate business....great job as usual.

Sunshine625 profile image

Sunshine625 5 years ago from Orlando, FL

Excellent hub! You make the process seem so simple that even I could do it! Way to go!!:)

tammyswallow profile image

tammyswallow 5 years ago from North Carolina Author

Thanks so much alocsin! I really appreciate that!

tammyswallow profile image

tammyswallow 5 years ago from North Carolina Author

Hi Realhousewife,

That is terrible! With the economy being so bad there are so many desperate people out there. This is a great argument for being proactive for your rights. That is crazy. Thanks for sharing that warning and thanks for taking the time to read and comment!

tammyswallow profile image

tammyswallow 5 years ago from North Carolina Author

Thanks so much for your kind words billybuc. There are so many options for people out there and hopefully consumers will be driven to research them. We could all do so much more for ourselves if we learned about such things and keep the profit out of the pockets of those who benefit from our lack of knowledge. I appreciate it!

tammyswallow profile image

tammyswallow 5 years ago from North Carolina Author

You CAN do it Sunshine. Thanks so much for stopping by!

wmhseo profile image

wmhseo 5 years ago from Canada

The photo of the house have posted is so very nice.

tammyswallow profile image

tammyswallow 5 years ago from North Carolina Author

Thank you so much!

Ardie profile image

Ardie 5 years ago from Neverland

I considered renting-to-own a house before I got the one Im in now. It was through a family member who needed out from under all the costs and at the time I was looking for a place. But had just gone through a divorce...meaning my credit was a mess. I never thought I'd get approved for a house. This is a great Hub for people on the other side who may want to let someone else into their home to live. I was only thinking from my side and not my aunt's perspective. Great Hub Tammy :)

molometer profile image

molometer 5 years ago

A great resource hub, packed with useful information on the tricky question of whether to rent or buy or in this case 'both'

Voted up and SHARING

pedrn44 profile image

pedrn44 5 years ago from New Berlin Wisconsin

Thanks for all this information. You really did thorough research. It sounds like a good option for me. Now, armed with all the resources, do I have the energy to pursue it? Hmmm

tammyswallow profile image

tammyswallow 5 years ago from North Carolina Author

Thanks so much Ardie! Every American deserves a good home. I appreciate the visit!

tammyswallow profile image

tammyswallow 5 years ago from North Carolina Author

Thanks so much for your response molometer. This is a better option than keeping CEO's wealthy. Thanks for reading!

tammyswallow profile image

tammyswallow 5 years ago from North Carolina Author

I hope it is helful Pedrn44! Thanks for your visit.

Nell Rose profile image

Nell Rose 5 years ago from England

This is so helpful for anyone wishing to rent or sell their home, I went through the selling and buying a few years ago, and obviously certain rules in England are different from America, but the one thing I always will say to anybody is make sure that you have at least 500 pounds/dollars put away for all the odd bits. for example if you do need a solicitor you may not need to pay them straight away as they usually take it from the final sale, but suddenly in the middle of it all they will say something like, oh by the way, you have to get this signed and it will cost 200 dollars etc, I learned that the very hard way! lol! but this is great, and so helpful, cheers nell, rated up!

tammyswallow profile image

tammyswallow 5 years ago from North Carolina Author

Thanks for sharing that Nell. That is good advice for the renter and the seller. I appreciate your ideas and your visit.

Genna East profile image

Genna East 5 years ago from Massachusetts, USA

This is a great hub; and one worthy of a bookmark. So much useful information. I have to agree with Molometer; voted Up and sharing! :-)

tammyswallow profile image

tammyswallow 5 years ago from North Carolina Author

Thanks so much Genna. I appreciate the vote and the share!

KellyPittman profile image

KellyPittman 5 years ago from Walker, LA

Thanks Tammy! This is something I've been trying to research for weeks now. You have a lot of useful information here! Voted Up and Shared.

thougtforce profile image

thougtforce 5 years ago from Sweden

This hub is packed with great information and must be so helpful for those who rent or sell a house in this way. And it is important to get everything right from the beginning! You have done great research and written a very useful hub!

Voted up , shared


tammyswallow profile image

tammyswallow 5 years ago from North Carolina Author

Glad you found it useful KellyPittman! Thanks for reading it.

tammyswallow profile image

tammyswallow 5 years ago from North Carolina Author

Thanks thoughtforce! I hope it helps many. Thanks for taking the time to read and comment.

Jackie Lynnley profile image

Jackie Lynnley 5 years ago from The Beautiful South

This is a great idea and I managed to take care of my mom and have money coming in with a small down payment and larger monthly payments coming to me from my house, but then I, in another state; rented to own and got ripped off thousands of dollars so buyer better beware! Some states have laws that let any person renting to back out just claiming hardship which is any reason whatsoever and many people do this in these states over and over and it really should be changed or people should be forewarned. Anything other than rent to own document would probably be better. Meaning the same thing but different wording and legalized, for sure.

Millionaire Tips profile image

Millionaire Tips 5 years ago from USA

Great information here Tammy and thoroughly researched. I have wondered whether a Rent to Own Contract would be something I should consider when I sell my house. It certainly does seem like it would be helpful to those people who have been displaced, but I would worry about whether they would pay up. What happens if they don't?

molometer profile image

molometer 5 years ago

I had to come back and leave another comment.

The UK is like the USA having all kinds of problems economically.

Being able to get out from under a mortgage is really useful advice.

The mobility of renting is the key to success. If we cannot move because we are tied to a property then this limits our employment chances.

Great hub Tammy SHARING again as it is really useful advice.

LucidDreams profile image

LucidDreams 5 years ago from St Petersburg, Florida

This is a grea list of tips. I used to buy and sell homes in Washington State and always used my own contracts without a lawyer so it certainly is not that hard. You provide the right steps to be safe as the seller and that is very helpful

I always used a title company that I planned on closing with to collect payments and keep accurate records until the baloon was due or we offically got paid off.

This is a good paper trail for the buyers and seller as the buyer can show a payment history documented by a trusted third party, and the seller can easily prove a default if one occurs.

tammyswallow profile image

tammyswallow 5 years ago from North Carolina Author

It is a risky market no matter which way you go. When you write up your original contract you specify the terms for payment. You can write that if they are 5 days late, you charge a late fee. For payments 15 days late, you can contract that they will be evicted. However, it will take time to get them out of your house. You must send them a Cure to Default by certified mail outlining the terms according to the lease to bring them current again within 10 days or more. If they do not comply with this you send them a "Quit or Pay notice" and request they either comply with the lease or get out of your home. At this point, you file this at your county courthouse and pay the sheriff's department to serve this notice. You will have a court hearing scheduled where you will present the judge with all the information you have and they will be officially evicted. At this court date you also present your claims for all non-payment, damages, court costs, etc. You will get an official court order and if they don't pay, you refer back to your application for rental and the lease and get their wages attached.(Sometimes these people will leave automatically when they get your notice). It can be tricky and people of all walks of life, no matter how carefully you screen them can be a non-paying tenant. As long as you keep thourough accurate records and stay on top of this situation, you will eventually cut your losses if this occurs.

tammyswallow profile image

tammyswallow 5 years ago from North Carolina Author

Thanks for sharing that molometer. In these times, you are so right. Sometimes it is a real burden being tied to a home. Well said. Thanks for sharing that!

tammyswallow profile image

tammyswallow 5 years ago from North Carolina Author

You hit the nail on the head Lucid Dreams. Anyone using this process MUST keep accurate records, make copies of late payments, late postmarks, and all correspondance. If things ever do go to court you as a seller/ landlord must show that you provided the renters with all necessary tools to pay and sometimes a judge needs to see that you gave the tenant every opportunity to pay the rent before they will evict someone. Some judges are a little soft. Great tips! I really appreciate you sharing these and thanks for reading!

LucidDreams profile image

LucidDreams 5 years ago from St Petersburg, Florida

Awesome Tammy. you know your stuff!

tammyswallow profile image

tammyswallow 5 years ago from North Carolina Author

Thanks LucidDreams! I appreciate you nice comment.

Pearldiver profile image

Pearldiver 4 years ago from Tomorrow - In Words & NZ Time.

Oh well done Tammy! You certainly have done the yards on this exceptionally informative and well balanced hub. Really appreciate the immense weight of solid tips, that I am sure serious players must consider when entering this market. Good stuff! Up and Awesome. Thanks for sharing your talents.. take care.. PD

tammyswallow profile image

tammyswallow 4 years ago from North Carolina Author

Thank you so much for your kind words and your visit Pearldiver. I appreciate that!

seekingpeace91 profile image

seekingpeace91 4 years ago

Thanks so much for this hub! What are typical lease-to-own terms, or does it vary greatly by region, or individual circumstances? I'm considering this option but don't really want to be a "landlord" for too long... Do buyer/renters typically get approved for a mortgage at some point during the process, or are we basically owner financers for 15 or 30 years? I hope I don't sound too naive- I have a lot of research and learning to do, I know! Thanks again for a well-written and informative hub! Voted up and (very) useful.

tammyswallow profile image

tammyswallow 4 years ago from North Carolina Author

Hi seekingpeace91. You have a lot of options when it comes to rent to own. You don't need to "finance" the whole term of the buying process. You can do it for as low as 5 to 7 years until the renters build up credit and a down payment and then get financing for a loan to pay for the rest of the mortgage amount. This will only happen if the renters are actually responsible with their credit. You could write up a contract with the terms that they pay you for 7 years and then get a loan for the remainder. (If someone has bad credit or bankruptcy, it usually takes 5 to 7 years until their credit improves). If they can't get their own lend you can specify whether they have to leave. You are wise to do lots of research! Thanks for reading and I hope it helps.

Randi 4 years ago

hi! we had to move out of state for my husbands job and have been gone for a year now! we do not have a Realtor (just for sale by owner) we have a lady that wants the house for about 6 months while she builds up her fico score, during that time she just wanted to rent it so she can put her other house on the market and make sure our house does not sale by then! from the research i have came up with the rent to own is the best option for both partys, but can we do a 6 month rent to own or is it only by a year at a time? any other thoughts to the info i gave? any help would be great! thank you

tammyswallow profile image

tammyswallow 4 years ago from North Carolina Author

If you guys are doing your own contract you can write it any way you want. You can write an agreement that she will rent for 6 months with the option to buy at any time after that. If you want to consider her 6 months of rent payments as house payments, you can do a rent to own agreement that establishes monthly terms and add a section that after 6 months the tenant has the option to buy the home by securing a loan. When writing these contracts you don't want to be too specific since it usually takes a lot of time to secure a loan and etc.. By doing a rent to own agreement and then adding the section that the buyer can buy the house outright you will eliminate the need for minute details. Hope this helps.

rajan jolly profile image

rajan jolly 4 years ago from From Mumbai, presently in Jalandhar,INDIA.

Tammy, this is a very interesting hub. Though this type of a sale contract does not exist in my country, I feel this is a great way for both the seller and buyer to go ahead and do their thing given the fact that property prices are hitting the roof here.

Voted up, useful and interesting and shared it.

gregoriom profile image

gregoriom 4 years ago from East Elmhurst, NY


Interesting hub. I always wondered how this actually works. Really very helpful thanks for sharing your knowledge with us.

tammyswallow profile image

tammyswallow 4 years ago from North Carolina Author

Thanks so much for reading Rajan. I think if more people would do this in our country, it would really help more families get more homes, bankers won't get rich off the extremely high interest rates, and there would be more sales. The only down side to this is that seller's don't get the money all in one transaction. I appreciate your visit.

tammyswallow profile image

tammyswallow 4 years ago from North Carolina Author

Thanks for reading gregoriom. It is a great option for those who can sell their homes traditionally but can't make the payments. Thanks for visiting.

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amandap56 3 years ago

Thanks Tammy. Very good read.

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