LEASE OPTION IN TODAYS MARKET
Lease Option is becoming an increasingly popular vehicle to sell and purchase real estate here in Michigan. I am seeing more and more listings for lease option homes or more commonly known as, "Rent To Own". My company represents Builders who offer this program, which is a relatively new concept for builders. Builders are becoming very creative these days and some are offering Lease Option Homes to help move their new construction inventory. With this program, they are asking and getting market price for the homes. Both sellers and buyers can benefit from a well written Lease Option Agreement. (Have an attorney review all documents before entering into a Lease Option Agreement).
Some of the benefits to each party in the agreement are;
The seller can cover the mortgage for the term of the lease with the rental payments by getting market price or more for the rental amount and market price for the pre-determined purchase price. The seller can also require a Non-Refundable Option Fee, not a Security Deposit. Credit this back at closing to the buyer. This will be a great incentive for the renter to exercise their Option at the end of the lease.
The renter can live in the home they want to purchase, have time to improve their credit, save for their down payment and receive a rent credit every month towards the down payment and/or closing cost or they may decide not to exercise their option and move on. If they purchase, they will also receive the non-refundable option fee back at closing, depending on how the agreement is written. The credits can be substantial to the buyer.
Lease Option may not work for everyone, but I believe it is a very creative solution for some in this crazy housing market!
Filed under: Real Estate, Market Conditions, For Sale, For Rent/Lease, Announcements, Industry, Finances, Buyer Information, Seller Information, lease option, buying, rent to own, selling, solutions, 1st time buyer