House Offering Guidelines
Understanding Lease Options When Selling A Home
Lease option sales were very popular during the mid to later part of the 20th century. They were commonly used to get around alienation clauses that were written into mortgages. Proponents of these types of sales claim that these were not really sales, they were really leases. However, the judicial system did not agree.
Today's system uses several financing instruments in the leasing and selling of a property. These options are:
Lease purchase agreements
These documents are all subject to state laws, and each state has its own individual laws.
Before the buyer and seller enter into an agreement, the buyer should seek the advice of a reputable real estate lawyer. The following information is a brief overview and should not be considered legal advice.
Options - The Basics
In this type of real estate transaction, the buyer gives the seller what is known as option money. This money is to be used to give the buyer the right to purchase the property at a later date. The amount of the option money can be as little as one dollar.
The seller and the buyer may then decide on a purchase price, or the buyer may offer the seller the market value of the property at the time the option money was accepted by the seller.
Option agreements are typically negotiable, but generally lasts between one and three years. It is also important to note that option money is typically non-refundable, and the buyer can sell the option to another party.
Lease Option �" The Basics
With this type of real estate purchase, the buyer gives the seller option money to purchase the property at a later time. The money for the lease option could be very substantial.
The buyer and the seller may here decide on a purchase price during this time, or the buyer may choose to pay the market price for the value when the option is exercised. This can be negotiable, but most buyers will prefer to lock the future purchase Sellmyhousefast2 price during the inception of the lease option.
The terms read more of the lease option will state that the buyer agrees Sellmyhousefast2 to rent (lease) the property from the seller for a here predetermined time. The option fee is not commonly used towards the down payment, and a portion of the monthly rental payment is applied towards the purchase price.
During the lease term period, no one else can buy the property. The buyer is not obligated to purchase the property after the term of the lease agreement is over, and the option expires.
The Advantages Of A Lease Purchase
Lease purchase agreements are typically offered for properties that have been deemed 'difficult to sell'. It seem logical because if the property was easy to sell, the seller would work with a conventional buyer and get paid in cash upfront.
However, the advantage from a seller's perspective is that they still get market value for the property. They also no longer have to pay a mortgage on a property that is vacant.
Buyers can make a smaller down payment, and there are less qualifying restrictions. This makes lease purchase an attractive option for those looking to buy a home.