With the competition of ridiculously under-priced short-sales, foreclosures and bank-owned homes driving down prices in the Chico area, normal ‘undistressed’ homes are languishing on the market as sellers continue to try to get a reasonable value for their homes. Likewise, buyers with anything other than platinum credit are having trouble getting loans. It might just be time again to consider lease-with-an-option-to-buy, otherwise known as lease option.
For example, a couple from Durham that I just me at an open house are interested in buying their first home, but they recently had a credit problem that stemmed from an auto accident they were involved in. They are looking for a starter home around $200,000. They asked me if I was aware of any lease options? While they are often not advertised as such, certain home-sellers might just be interested in such a scenario. Here’s how it works:
Seller’s home has been on the market for an extended period of time because seller does not want to drop price to the level that foreclosed homes are selling for. If seller owns another home that they can move into, or can buy without needing immediate cash from the sale of their home, or if the home they are selling is not their primary residence (in other words it’s a rental or vacation home) they could possibly get closer to their price if willing to take a lease option.
Using a standardized contract specifically for Lease Options, a Realtor will help a buyer (optionee) craft an offer that includes the following parts: 1. Option Consideration – how much upfront money is being offered to start the agreement? 2. Lease – how much and how long? 3. Purchase Agreement – what is the agreed upon price if option is consummated, how much of the option consideration and lease payments will be applied to the purchase price? (be advised: the full amount of the option consideration applied toward any down payment MAY not be counted by a lender for financing purposes).
If there is agreement on all of these points a lease option may be a win-win for seller and buyer.
For example, a couple from Durham that I just me at an open house are interested in buying their first home, but they recently had a credit problem that stemmed from an auto accident they were involved in. They are looking for a starter home around $200,000. They asked me if I was aware of any lease options? While they are often not advertised as such, certain home-sellers might just be interested in such a scenario. Here’s how it works:
Seller’s home has been on the market for an extended period of time because seller does not want to drop price to the level that foreclosed homes are selling for. If seller owns another home that they can move into, or can buy without needing immediate cash from the sale of their home, or if the home they are selling is not their primary residence (in other words it’s a rental or vacation home) they could possibly get closer to their price if willing to take a lease option.
Using a standardized contract specifically for Lease Options, a Realtor will help a buyer (optionee) craft an offer that includes the following parts: 1. Option Consideration – how much upfront money is being offered to start the agreement? 2. Lease – how much and how long? 3. Purchase Agreement – what is the agreed upon price if option is consummated, how much of the option consideration and lease payments will be applied to the purchase price? (be advised: the full amount of the option consideration applied toward any down payment MAY not be counted by a lender for financing purposes).
If there is agreement on all of these points a lease option may be a win-win for seller and buyer.
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