Is a contract for deed the same as rent-to-own? How is rent-to-own different from contract for deed? What are the pros and cons of each? Which option is better for me and my situation?
These are a few of the questions we hear from both homebuyers and Realtors. We understand the confusion, which is why we’re sharing more about our program and how it differs from rent-to-own programs.
How is Rent-to-Own Different from CD Programs?
Defining Contract for Deed and Rent-to-Own
A contract for deed creates a contract in which the seller of a home (in this case, Slow Flip) provides a buyer with a specified period of time to pay off the contracted home price. This can be done by obtaining a mortgage, paying the contract amount in full, or selling the property.
To learn more about the Slow Flip contract for deed, click here.
In rent-to-own, the prospective buyer rents the home from the owner. The buyer has the option to buy the home at some point in the future. The owner remains on the deed and makes the mortgage payments.
How Are the Programs Different?
The most significant difference between CD and rent-to-own is the time at which the home changes ownership. In a contract for deed, the buyer buys the home from the seller and begins making payments under the contract. To compare, in rent-to-own, the seller owns the home outright until the renter buys it – which may or may not happen.
What Are the Risks of Rent-to-Own?
The primary downfall of rent-to-own programs is that they include no guarantee. Deals often fall through, and the potential buyer may not ever end up buying the home, even if they make rent payments for years. And fees are often higher than standard rents.
There are risks in every real estate transaction, and a CD may not be right for your situation either. Contact us to talk about your options!
The Slow Flip contract for deed program helps families in the Twin Cities metro area of Minneapolis, St. Paul and surrounding suburbs purchase a home using a contract for deed, or CD, when a mortgage is not possible. The Slow Flip contract for deed can be an ideal tool to purchase a home when buyers need time to adjust their income, credit, debts or other financial components so they can eventually qualify for a mortgage.
Are you or your clients interested in learning more about the Slow Flip contract for deed? Contact us at 952-417-0000 today.
This is an updated blog post that was originally published in 2020.