Rent-to-own arrangement can be ideal for current market

Q: I'm looking into selling my current home. It's a three-bedroom, two-bath, single-story house in Henderson. It has about 1,400 square feet of space. I was considering a rent-to-own arrangement, where part of my tenant's rent would be applied to the purchase of the home. What do you think of this idea, especially in today's housing market?

-- Melody C., Henderson

A: I'm pleased to have such a useful question to answer in this, my first column.

Every situation is unique. But, generally, I think your plan makes sense, especially in our current housing market.

Monthly statistics from the Greater Las Vegas Association of Realtors show homes in Southern Nevada are staying on the market longer than they were in past years.

And, as everyone has probably heard by now, local home prices are declining for the first time in many years.

At the same time, the second half of 2007 saw a record number of homes listed for sale here. Fortunately for sellers, prices appear to be stabilizing and the housing inventory has begun dropping in recent months.

I don't see any of this as cause for alarm. Still, there's no denying we're living in a buyer's market.

With so many choices out there and buyers being more selective than ever, selling a home like yours can take longer and be more challenging than it has been in years.

This is especially true when you compare today to the housing boom we experienced here in 2003 through 2005, when buyers were waging bidding wars for a limited supply of homes.

As a result, I know many homeowners who have chosen to rent their properties, rather than sell them, until the demand for housing once again catches up with the current supply of homes on the market.

Assuming you're not in a hurry to sell your home, this may work for you.

If you have someone who is both qualified and willing to rent your home for now with the intent of buying it later, I'd say you're ahead of the game.

You should consult a qualified Realtor, who can help you negotiate an agreement that includes terms of the lease and option to buy and may also offer your tenant the right of first refusal when you're ready to sell your home.

Depending on their goals and financial situation, I also think this could benefit your prospective buyer. Your buyer will benefit from having part of the rent applied to the purchase of your home.

Your buyer may also appreciate having the time to build up the savings needed to purchase your home.

Even though local home prices have declined slightly, lending standards have tightened nationwide, making it harder for people with average incomes to get a home loan.

Here in Southern Nevada, home ownership is still a stretch for a good percentage of our population.

Many locals would love to buy a home, but lack the savings needed for a down payment. Others are simply confused and concerned about the constant and sometimes exaggerated news coverage of these issues.

I firmly believe that buyers would be wise to act quickly because there has rarely been a better time in the history of Las Vegas to buy a home here.

Through 2008, I see the number of homes listed on the market continuing to decline.

A year or two after that, I expect to see home prices climbing again. I agree with other local experts and studies like the one that local research firm Applied Analysis produced for the Southern Nevada Home Builders Association, which predicts a potential housing shortage by late 2009 or 2010. This would logically cause home prices to appreciate, favoring sellers.

So, if you can rent your home for a year or so, you should be in a good position to sell it faster and at a higher price to your tenant - or even to another buyer if your tenant's plans change.

Patty Kelley is president of the Greater Las Vegas Association of Realtors and has worked in the real estate industry for more than 30 years. GLVAR has nearly 16,000 members. To ask Kelley a question, e-mail her at ask@glvar.org. For more information, visit lasvegasrealtor.com.