Selling on a Lease Option

Real estate markets across the country are suffering right now. Sellers can't sell their homes and buyers can't get mortgages. Real estate agents are having a harder time earning a living. Gone are the days of putting a home up for sale and expecting it to sell with minimal effort. It's time to get creative!

What is a lease option?
Lease options are a way to buy and sell homes without an immediate conventional mortgage. It gives your buyers who can't qualify for a mortgage right now the opportunity to get into a home right away while they improve their credit and build up a down payment while living in the home. It gives the seller the ability to beat their competition, which there is a whole lot of these days. Sellers can reach a far greater pool of potential buyers. They will likely be able to sell their home quicker and for a better price. For some sellers it may be the ONLY way they can sell their home in this real estate market.

How does selling on a lease option work?
A lease option works like this: The buyer and seller agree to an option which gives the buyer the right to purchase the home during a set period of time. During this option period the buyer leases the home from the seller. By the end of the option the buyer must either purchase the home or forfeit their option fee. While the option is valid the seller may not sell their home to anyone else.

Advantages for the Seller
Here are some of the advantages to home sellers when selling on a lease option:
1. Allows them to beat their competition.
2. The seller can collect rent on their home while it would otherwise site vacant
3. The can often receive a higher purchase price
4. The can sell their home in a down market when they otherwise might not have been able to sell at all
5. Allows the seller to actually sell their home instead of just renting it.

Advatanges for the real estate agent
While selling on a lease option isn't as ideal as a conventional sale where you get your entire commission up front it is a whole lot better than:
1. Turning away a potential buyer who can't currently qualify for a mortgage
2. Having your seller just rent their home because it won't sell and you only get a tiny rental commission
3. Losing a listing because the seller blames you for their home not selling.

When selling on a lease option you still get your full commission - part of it upfront out of the tenant-buyer's option fee and the remainder when they purchase the home.

Obviously selling on a lease option is not the first choice for home sellers and real estate agents. Whenever possible we want to sell to conventional buyers. But when that isn't working this is a great alternative.