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Sell Your Properties Using Lease Options
Monday, November 26, 2012
Ask any home seller to name one creative way to overcome a slow market, yet stick with a firm price when the sellers’ only concern is to “sell my property
no lower than x amount of dollars,” and most people will tell you to be flexible and be ready to negotiate the sales price. Not if you lease with options.
Everyone is familiar with the concept of leasing an automobile. One party pays a monthly fee for the use of the car, and at the end of the rental agreement there is a choice of giving the vehicle up or purchasing it. It is the same concept with selling a home. You enter into a contract with a tenant that explains they can pay monthly rent for “x” number of months, and at the end of that contract they agree to purchase the home. A stand-out feature of lease options is that the seller can lock into a firm price.
Sales in today’s real estate market, especially resale homes, are either slow or very slow. This is especially true for the more expensive homes. Lease with the option-to-buy became even more popular since the spiraling of the realty market. Buyers who have been unable to qualify for traditional mortgages are enticed by the lease options. Rental with option-to-buy place the buyer in the driver’s seat. Selling a home with options means the buyer can still earn an income on the home with the idea of allowing the tenant to build up escrow to purchase.
Benefits for Sellers
Lease options always work out for the seller for a number of reasons:
The home continues to accumulate monthly rental income
The home is still a tax write-off
The buyer is locked into a purchase contract, and funds are non-refundable
The contract for purchase is agreed upon in advance, and the selling price is locked-in
Even if the market is slow, this concept is a win-win situation
Let’s not forget that sellers are able to depreciate rental property while still benefiting from mortgage interest deductions.
Lease-purchase agreements have become a great marketing tool for sellers who have not been receiving a large pool of interested home buyers. Lease options also open up a wide range of opportunities for buyers.
Today’s real estate market calls for excellent credit, and unfortunately the majority of interested home buyers cannot meet credit guidelines.
Lastly, for all those property owners whose only concern is to “sell my property
for what it is worth,” should consider lease options.