Keys Now, Sale Later

Teresa Cunningham, 51, of Springfield, learned this the hard way. Twice she entered a rent-to-own contract with the same couple for two separate homes in Woodbridge, beginning in 2004. During this time, she paid $200 a month into an escrow account on top of rent. And both times, the homes went into foreclosure.

"I found out about the [first] foreclosure with a notice tacked to the door. It was from the sheriff's office. It gave a date of lock-out," she said.

Cunningham never recovered her money, and she is now in a third rent-to-own home, which she found through http://RentToOwnMarket.com. She said she is confident that she will ultimately be able to own the property she is living in now, a split-level brick home with a big back yard inhabited by foxes, flying squirrels and other critters. This time she had a lawyer review the terms of the deal before she signed it -- but she said she learned from her past experiences.

"As a purchaser, don't be afraid to ask questions," she said. "And don't be afraid to walk away if you have that gut feeling that says 'no.' "

Because rent-to-own agreements often put buyers on the line, only those truly willing to purchase a home should consider them, said Todd Huettner, president of the Colorado-based real estate brokerage firm Huettner Capital.

"Assume you are buying the property," he said. "Don't just do it on a whim. Be serious."

If a buyer is entering a rent-to-own agreement because he or she needs time to repair his or her credit, then working with a counselor and devising a plan on how to improve that score is wise, Huettner said. Buyers also need to keep abreast of any developments in lending standards and adjust their strategy accordingly if things change, he said.

There are risks involved for a seller, too. A depreciating market could mean that a bank will not make a loan against an agreed-upon purchase price. A rising market could mean that a home will be worth more than what was initially agreed to. A potential buyer might not be able to get his or her credit together during the time of the agreement. The sputtering economy could hand either side job losses or reduced hours, making it harder to abide by any deal.

A key thing for a seller to know about a buyer, Huettner said, is why that buyer cannot purchase the property now.

"I truly want to understand where this guy coming is coming from. Why is he a good buyer? Why is he going to qualify in two to three years?" he said.

Sprinzen said he understood these risks when he put his Capitol Hill property on Craigslist. He said he is willing to negotiate with any potential buyer, but he said he will ask for a deposit of about $5,000 to $6,000 to ensure that he gets somebody who is committed. He said he wants to devise a method of settling a purchase price at the end of the term, not at the start, to avoid the complications of price swings. And he also hopes to strike an agreement whereby someone will buy within six months to two years, not in the hazy future.

"I want somebody who is really serious," he said. "I am not just looking for a renter."