Housing sales slump revives rent-to-own
It’s a sprawling Arts and Crafts house on Milwaukee’s east side, with a brand- new kitchen, a brand-new master suite and vintage details like leaded glass windows in the built-in china cabinet.
Last fall, David and Elizabeth Rubin put it on the market for $475,000. Now, they’re asking $439,000 — a price that reflects a loss on the $100,000 they’ve spent on remodeling.
With no offers, they’re now offering the house for sale a month at a time: If a qualified buyer is amenable, the Rubins will consider offering the house on a rent-to-own basis.
They’d rather do that than drop the price. “It’s like the stock market: You don’t sell at the bottom,” says Elizabeth Rubin.
As houses sit, and sit, and sit on the market, some fed-up sellers are turning to rent-to-own, a tactic that all but disappeared from the market when home loans were easier to get. Also called lease-to-own, the arrangement appeals to would- be buyers who are stuck because of the same market dynamics: They want to buy, but their down payment is locked up in their own house that won’t sell.
Rent-to-own is fraught with pitfalls, say lawyers and real estate brokers. It’s harder than it looks to construct a fair contract, and sellers don’t always get what they want: an easy, automatic sale.
The Rubins bought their circa 1925 house when the market was hot and resale hassles were far from homeowners’ minds. As re cently as 2005, according to statistics compiled by the Metro MLS, which records sales through brokers, the average time to sell a City of Milwaukee house was 59 days.
Now, it takes an average of 100 days.
When buyers are scarce, sellers get creative.