Rent to Own? A "silent" cry for help?

Ah, what a day when you look at Craigslist.

In my over 26 year career in real estate, sometimes I get asked about homes that are advertised as "Rent to Own". I usually "cringe"... I don't know how receptively they're looked upon in YOUR market area; in my area I don't think they are a great option.

As a matter of fact, they're most likely just plain awful, Why would someone want to do "rent to own"? What type of buyers and sellers do you attract with "rent to own"?

Desperate, mostly...

Let's talk the truth here. For a seller to open themselves up to all the potential headaches of "rent to own", they probably can't sell their house, but HAVE TO MOVE. They HAVE to move. Either they won't lower the price, can't lower the price, or won't qualify or consider a short sale. So they pick off the "last resort". They venture in the world of "rent to own".,.

For buyers, in THIS market? They'd had to most likely be slightly delusional. Unless they get the property for a steal, and I mean A STEAL, why would they do this? In a declining market, it almost won't happen anyway. It may not appraise for the agreed upon price, unless there is a clause written to address this.

So, before I continue, let me review the "rent to own" scenario, The seller has a home and they advertise it as "rent to own. They usually mean, the buyer is a tenant and is entering the transaction AS A TENANT. THey sign a lease for a year or more, and the landlord MAY agree to put aside a certain percentage of the rent towards the purchase price, usually the downpayment. If the buyer doesn't go through at the end of the lease or at the agreed time, they generally LOSE that money and the seller - owner keeps it as part of the rent. Unless the buyer MUST have that property and doesn't have a deposit for financing, rent to own usually attracts buyers who can't buy... maybe for a long long time. They hope their credit gets better. Maybe yes, maybe no.

What types of sellers go for this? Either the ones that are doing the buyer a favor, like parents, friends, etc... OR... sellers who are so desperate they decide THIS is their ticket. But if it's overpriced to begin with, it may, and I EMPHASIZE "MAY", it may take years for the overpriced figure to catch up with the market. With more and more people doing short sales, some of them ask me, brusied credit and all, "Jim, let's look for rent to own"? And now, the landlords of these homes, found far and few, won't rent to tenants like these, unless THEY are ridiclously overpriced, and will pretty much take any live body the minute they walk in the front door. Problem is, some of these "buyers" got burned before. Even if they don't qualify now they won't go near anything that they consider overpriced.

And the cycle never ends...

What are YOUR thoughts?