subject: Selling Real Estate As Lease Options Is Becoming More Common [print this page] One option most home sellers don't consider when selling their home is a lease option. Lease options provide an opportunity for potential buyers to rent a house until they can buy it. Lease option contracts usually require a large down payment, and additional rent that will go towards the purchase of the house.
In most areas there are just too many homes for sale right now. Many of these homes wont be able to sell because there just aren't enough buyers. For many sellers who need to move, its a better option to have a renter pay than it is to have a vacant house. Offering a house as a lease option, opens the door to the number of potential buyers.
Four Reasons Why Lease Options Should Be Considered
1. Cover The Mortgage. Because your house may not be able to sell for more than what you owe, a lease option provides a way to cover the mortgage while you wait for the real estate market to improve. Lease options can net more monthly income than other rentals. In addition, someone who has ownership interest in your property is more likely to take better care of it.
2. Open to Larger Pool of Buyers. It's harder for buyers to get financing. Mortgage loan underwriting standards are still very strict. While some potential buyers may have large savings, good credit, and excellent income, they may be unable to buy a house just because they switched careers or are self employed. These people can make excellent renters, and don't have an option to buy.
3. More People Want the Flexibility offered with Renting. Home ownership isn't as appealing as it once was. Some qualified buyers just don't want to buy right now. They fear that home prices will go down further, or just don't want to commit to a certain house. Some people moving from other areas want to get a better feel for the area before committing where they want to actually buy. For people like this, a lease option is an ideal solution.
4. Higher Purchase Price. Offering your house as a lease option, may help you to net a higher purchase price. Only a small percentage of homes for sale are offered as lease options. People that want to buy, but cant get mortgage financing have no other option. In addition, if prices do continue to drop over the next few years, your contract lease purchase price has already been set. You may be able to get today's market value for the sell of your property when the future market value is actually lower.
Increased number of potential buyers looking for the rent-to-own option increases the probability that you will be able to lease your home out. If you have only had limited showings, or can't drop your home price any more, a lease option might be a good option to help you sell your home.
