Newbie Investor Question on Lease to Own and Getting Financing

[NA NA]

I’m new to this so I hope this doesn’t sound stupid. Two years ago I rehabbed a house and started renting it out with a rent to own contract. We agreed upon a sale price for when the buyer is ready to buy. The reason they wanted to rent is because their credit score was on the borderline of being able to get a decent interest rate and they wanted to improve their score before buying. Anyway, the sale price we agreed on is now somewhere between 10-20k over market value of the home. My question is this, if my renters are ready to buy, will a bank give them a home loan for a price that much above market value? Or do will banks only give loans for prices closer to the appraisal value?

Thanks for the help, sorry again if I'm clueless.

[Jon Holdman]

A bank will do an appraisal. For the loan, they will use the value from that appraisal or the purchase price, whichever is lower. If you insist on the agreed upon price, your buyer's will have to come up with the difference out of pocket.

Appraisals are also MUCH tighter than they were two years ago. The appraisal will very likely come in closer to the low end of comps. Your biggest worry is not whether or not the appraiser will use the higher comps (they won't) but whether or not they will end up using bank owned properties or short sales as comps.