What are the differences between 'rent to own' and 'for sale by owner?

When purchasing a house?What are the differences between 'rent to own' and 'for sale by owner?
To add to what the others have said.





Rent to own - You are renting. Another term for this is lease/option. You are a tenant and have some defined rights to buy the property in the future if you meet the conditions. The landlord is still the landlord and the landlord remains legally responsible for the major services. Heat, hot water, protection from the elements, etc. Note some landlords want the tenant to cover these items. It would be illegal no matter what agreements are signed.





There is a different strategy called a land contract, contract for difference or something similar in specific states. This is a legal sale where the economic title is transfered to the buyer. The seller retains the legal title as you are agreeing to pay monthly. When you have paid the agreed amount then you get the legal title transferred to you. Almost similar to a car loan where the title to the car is held by the lender until you pay off the debt. In this case the seller hold the legal title.





FSBO - The present owner wants to sell and they want to do so with out hiring an agent to represent them. They likely will entertain offers from buyer with or without agents. If the buyer has an agent then the agent can verify that the seller will cover their commission.





The FSBO seller can be open to a rent to own or lease option contract. Or they might not be if they need to be cashed out now (more common when they are buying another property).What are the differences between 'rent to own' and 'for sale by owner?
Rent to own means you have an option to buy the house. The rent you pay may apply toward the purchase or may not if you exercise the option and elect to buy at a later date. For sale by owner simply means the owner is not using an estate agent to execute the sale and acting as his own agent for the transaction of the sale.





Just remember, rent to own does not mean the payments you make while renting will be applied to the purchase price. Make sure you know if the rent payments defray the cost of purchase or not before you enter into this kind agreement, and I suggest you do not accept the ones which do not apply the payments toward a later purchase.
RTO - a portion of your rent goes toward your downpayment.


FSBO - the owner is not using a realtor.
';Rent to own'; you are renting a house but you make the agreement that the payments will count as payment to buy the house. Kind of lay a way.





';For sale by owner'; means that the house is being sold by the owner of the house instead of a Real State Office. You will make the deal directly with the owner.
And just a clarification, just because you may purchase a home that is ';for sale by owner'; and the seller is not using a real estate agent does not mean you can't use a real estate agent. Many times the idea behind FSBO is to cut out the commission paid to the realtor, but if you need the service of an agent (which you may need if you are asking the above question), don't let the seller force you to work without an agent.
That rent to own, you will rent your way into owning the house, and for sale by owner means that the owner himself is selling and maybe even financing with no middle man like a real estate agent.