Marketplace Homes might be able to help. The company’s guaranteed lease program helps make it possible for qualified homeowners to carry two mortgages by providing the homeowners a guaranteed lease on the original home, which in many cases will be rented out. Marketplace Homes manages the rents, handles utilities and repairs and guarantees monthly lease payments to the homeowners.  

“The homeowner has to qualify for both homes; and if they have a guaranteed lease, the underwriters appear to give more credit to that than if the homeowner didn’t have a guaranteed lease,” said David Hausfeld, division president of Drees Homes, one of five preferred builders for Marketplace Homes.

“This isn’t a concept I’d heard about, but it makes sense given the strength of the rental market and my expectation that prices will recover in any desirable area over the next few years,” said Nicholas J. Tennyson, executive vice president of the Home Builders Association of Durham, Orange and Chatham Counties. “Builders are looking for creative ways for people to unlock the chains from their former home to allow them to buy a new one — and this sure looks like it offers that key.”

“It is ideal for folks who’ve had a home on the market and can’t sell it or are upside down on house (mortgage) and are gambling the market will rebound in a couple of years and are hoping they can resell their home when it does,” Hausfeld said.

“Yes, it is designed for people who want to move and can’t sell,” said Chintan Pathak, vice president of marketing for Marketplace Homes.

Marketplace Homes was started in a Detroit-area town, Plymouth, Michigan, in 2002 by two men, who were buying homes from homeowners who wanted to move and selling those homes to investors, Pathak said. After the market collapsed in 2007, managing partner Mike Kalis decided the old real estate paradigm would no longer work, Pathak said. Regular property managers are never going to guarantee a lease payment to the homeowner, so Kalis decided that Marketplace Homes would provide the guarantee, albeit with an annual market analysis to adjust the payment, Pathak said.

Kalis’s idea was to turn the original home into a rental property with a lease guaranteed up to six years and sell the house when the market is better, Pathak said, and to provide this service only to homeowners who will buy a new home from a list of preferred builders. These builders pay a commission to Marketplace Homes’ “solution specialists,” whose jobs are a combination of managing properties and selling new homes built by preferred builders.

“All of our solution specialists have a background in new construction,” Pathak said. “They work hand-in-hand with the builder in the respective market. They will also rent (lease) the ‘old’ home to someone. When possible the solution specialist will find a lease-to-own buyer for the ‘old’ home. After a couple of years, the solution specialist will sell that home and not take a commission from that person.

In that way, Marketplace Homes’ guaranteed lease program helps people who want to buy but can’t because they are having credit problems and cannot qualify to buy a home, so they are doing a lease-to-own through Marketplace Homes, which gives them time to restore damaged credit and purchase the home they are leasing.

 In 2011 Drees Homes sold 10 homes to buyers who partnered with Marketplace Homes. So far in 2012 Drees Homes has sold two homes to buyers partnering with Marketplace Homes and has three more on the path to write with this program any day now. Drees is on track to do same amount this year, Hausfeld said.

“We look at this as additional incremental business that we would not have been able to get otherwise,” Hausfeld said.

How it works

Marketplace Homes takes a not insubstantial commission off the top of each new home sold and renegotiates annually the guaranteed leasing program with the new home owner.

The lessee of the original home may have a guaranteed monthly payment to Marketplace Homes, even if the lease is for two years. But the new homebuyer will renegotiate annually what Marketplace Homes pays them.

Chris and Michelle Riggan partnered with Marketplace Homes to buy a new Drees-built home in Stoneridge in Franklinton, about 15 miles from their old home in Rogers Pointe in Creedmore.

“At the end of this year (May 2013), Marketplace renegotiates the price they are paying me,” Chris said. “Hopefully it will stay the same, but I won’t know until next May. As I understand it, the lessee’s price will stay the same, but market conditions may make our monthly payment from Marketplace go up or down, regardless of the contract we signed.”

Pathak confirmed this, saying, “We do a fair market value analysis and pull comparables in the area to determine what offer we can provide to our homeowners. With the rental market only getting stronger, it allows the homeowner to potentially receive more guaranteed money in the later years. We are also in the business of finding highly qualified tenants because we guarantee our payments to the homeowner.”

Pathak said that at the end of each year, Marketplace Homes goes through the same value analysis process with the home.

“Everything is positive right now, but if worse comes to worst, then I’ll have to deal with that then,” Chris said. “It is definitely a risk, but it is a risk that we decided to take, and so far it has been working for us.”

A local relocation

Becky and Troy Ebron partnered with Marketplace Homes to switch from a golf course community in southeast Raleigh to one in Knightdale. Their situation is somewhat atypical in that they found their own tenant to lease their southeast Raleigh home.

“When I investigated Marketplace Homes I found that the number of homes they have sold is about 1 percent,” Becky said. “They are into the rental and lease-to-own to help buyers get the landlord stuff off of our backs. I didn’t want them finding my tenants, so I found my own tenants by listing on Craigslist and showing the old house myself. And then Marketplace approved them.”

Pathak said that Marketplace Homes currently is selling between one and three percent.

“The only way we are ‘selling’ the home is with lease-to-own contracts where the house will be sold in two years,” Pathak said. “It varies by two, three or four years. We are willing to stand behind our guarantee of providing a payment to our home owners for up to six years, but we make sure we are staying on top of comparables yearly and finding good tenants and making sure the homeowner is paid.”

Call (800) 331-0646 or go online to www.marketplacehomes.com to find out more about Marketplace Homes guaranteed six-year lease program.

Sally Keeney can be reached at 
shkeeney@yahoo.com or 919-932-0879.