Home > Blogs > Todd Clark - Retired > Expect More

The Lease Option Home Question in Beaverton, Oregon

By Todd Clark - Retired

Real Estate Agent with eXp Realty LLC 200311024

September 26, 2007 08:27 AM

The number one question I get from my buyers of lease option properties is how do I get paid? I get usually between $50-$100 from your monthly rent and the remaining when you exercise the option to purchase the property.

I tell them this is why, despite me telling them they can get a house with no credit check, I still want a copy of their credit report. What I do during the terms of the lease, is I help them work on their credit issues at no cost to them! I tell them that it is in my best interest to help them, because if they don't buy the house, I don't get paid!

The also pleases my sellers because they know at the first sign of trouble I'm going to be there, my check is on the line!

I also tell them that during any portion of the lease that they stop paying, I have an agreement with the seller, that the seller will stop paying me also. So you see, my helping you the buyer guarantees that I'm going to get paid. Unlike these companies that say they will fix your credit, but they want $5,000 up front, once they get your check, what incentive do they have to continue helping you? - NONE, they have already been paid.

So, for more information on buying or selling on a lease option call or e-mail me anytime.

Comments(17)

Comment

Show All Comments

Sort:

Andrew Scherer

Approved Mortgage Group - Doylestown, PA

Real Estate Representation At It's Finest

Todd, that's a pretty decent way of going about these rent-to-own properties. I have been seeing a lot more of these in the market, and I definitely think they are a good thing...everyone wins in the end (as long as everything goes smoothly)

Sep 26, 2007 08:33 AM

Sam Miller

RE/MAX Stars Realty - Howard, OH

Knox County Ohio Real Estate Specialist

Todd, Your topic interests me because there have not been many cases in my market where the lease option transactions have actually turned into a a closed sale with happy sellers. I personally have not done these transactions as a Lease Option but have done a few lease purchases with success. Are you having any problem with the due on sale clause or are you truly treating it as a lease until the buyer actually closes the transaction?

Sep 26, 2007 08:55 AM

Linda Scanlan

A Fan of AR - Burleson, TX

Todd - I'm getting smarter every day hanging out here on AR and reading such informative posts like yours! Great idea!

Sep 26, 2007 10:37 AM

Jim Little

Ken Meade Realty - Sun City, AZ

Your Sun City Arizona Realtor

Todd, are you acting as leasing agent/ property manager? Does your broker allow this?

Sep 26, 2007 01:56 PM

Loretta Buckner

Real World Properties, Inc.| Your Real Estate Consultant for Life - Palm Harbor, FL

Your GREEN Real Estate Consultant For Life!

I, too have turned to lease options as a way to get some of the excessive inventory off the market--it's a great way to give a not-quite-ready buyer an opportunity to at least have a chance of his money working for him, and it benefits the seller becasue the house is occupied and the rent pays the mortgage. How do you handle the property management issue, btw? In Florida you have to be a licensed Realtor.

Great post!

Sep 26, 2007 02:14 PM

. .

no thanks - Harlem, MT

Todd, I love your posts about Lease-Options. In the next day or two I am expecting an offer in the form of a Lease-Option on a property that I have listed. I have not handled a transaction like this before but I am very open to thinking outside of the box. I am excited to see how it all plays out.

Sep 26, 2007 03:09 PM

Karen Anne Stone

New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX

Fort Worth Real Estate

Todd: It appears to me that you might be getting a bit too close to practicing law rather than selling real estate. I would hate to have this come back to haunt you later on. As for me... anything sounding like this... I would refer to an attorney as far as putting together what you describe.

If, however, you have approved contracts providing for lease/options... then that makes it totally ok. I am just reacting to what we have been told to do in Texas. Things vary so much from state to state, so if this is taken to be accusatory, that was in no way my intent.

Sep 26, 2007 05:42 PM

Todd Clark - Retired

eXp Realty LLC - Tigard, OR

Principle Broker Oregon

Andrew - It has been working great and sellers and buyers do love it!

Michael - Thank you!

Jim - I don't fill out or work with the rental agreement between the seller and the buyer, but I do suggest they set up all payments through an escrow account to make sure payments are applied properly.

Loretta - As I told Jim, I have an escrow service collect the monthly rent, but if payments should stop the owner is responsible to give the 30 day notice to the buyer.

Bridgette - I wish you the best of luck, make sure a lawyer does review all documents to protect your seller and the buyer!

Karen - How do you figure? We are setting up a sale of a home, just at a future date. In my state we even have an option agreement as one of our standard forms. I would also like to know how you would consider this outside the law. It has been done for years and even our company attorney who used to work for the Oregon Real Estate Agency lawyer said what we are doing is perfectly fine. Just thought I would ask, what you see as illegal about it.

Sep 26, 2007 05:59 PM

Lenn Harley

Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA

Real Estate Broker - Virginia & Maryland

I used to do a number of installment contracts in MD when folks had enough money to pay me up front, but, sadly, folks don't have that kind of cash these days. I don't plan to get in the lease-option business this go round. The last one I did, the buyers had a big dog that did a lot of damage. Fortunately, they had a $35K earnest money that was forfeited when they slinked out.

Bad real estate markets create opportunities for the lease option business but I'm not sure this is the type of market that makes it a good deal for the buyers. Our prices are still falling and in a year or two of leasing, the house they planned to buy, assuming they were able, is going to be worth a lot less than when they signed the contract.

I admire your hard work and ambition.

Sep 26, 2007 11:43 PM

Rick Grand

nowhere - Eugene, OR

I am afraid when a client tells me that they are hiring an agency and they are going to pay them $3000 for their services. I'm like "Ummm, you only owe $7000 in collections, you could probably negotiate them for the $3000 and be done with it"

Sep 27, 2007 04:13 AM

Jeff R. Geoghan

Coldwell Banker Realty - Lancaster, PA

REALTOR, Marketing Manager

Todd, do you use an association form for a LP agreement?

Sep 27, 2007 05:43 AM

Todd Clark - Retired

eXp Realty LLC - Tigard, OR

Principle Broker Oregon

Lenn - In our area prices are still rising so it works out well for both buyer and seller. You just have to make sure you do back groung checks the same as you do with a rental.

Rick - That is what scares me when people are told that they can have perfect credit after paying that amount and then get worse credit in the end!

Jeff - I do use the agency one for just the numbers and then have a rental agreement done by lawyers for the rental agreement that spells every thing out that both parties must do.

Sep 27, 2007 08:23 AM

Jeff R. Geoghan

Coldwell Banker Realty - Lancaster, PA

REALTOR, Marketing Manager

So the rental agreement is custom by you?

Sep 28, 2007 01:15 AM

Todd Clark - Retired

eXp Realty LLC - Tigard, OR

Principle Broker Oregon

Jeff - I got the rental agreement from the landlord association and it is set up different for each deal. Depends what the seller or if it is my property, what I want.

Sep 28, 2007 02:04 AM

Loretta Buckner

Real World Properties, Inc.| Your Real Estate Consultant for Life - Palm Harbor, FL

Your GREEN Real Estate Consultant For Life!

After seeing some of the comments, I just had to throw in another coupla cents (sense?)...'creative financing' does not mean 'do not disclose'--I think that the knowledgable professionals in this business that actually take the time to do a real service to their clients, such as those who will even deal with a lease option, for instance, should be applauded--so I am!

~clap,clap,clap!~

oh, and PS: what was the answer to the lease purchase question? I've not done one of those...it sounds to me like you're doing a straight 'lease option' contract, though.

Sep 28, 2007 11:31 AM

Doug Beaver

Century 21 Olde Tyme - Corona, CA

Corona Norco Eastvale Riverside Homes

Todd, Very informative and as mentioned here in Southern Calif. I do not know if it is time yet as the prices are still going down...

Sep 28, 2007 02:30 PM

Todd Clark - Retired

eXp Realty LLC - Tigard, OR

Principle Broker Oregon

Loretta - Thank you and I get paid most of my fee after you purchase the home!

Doug - I wouldn't do a lease option in your area unless I was purchasing a fixer upper and I was leasing it durning the fix up period. Then sell it for full ARV when I'm done, but other than that if I was a first time home buyer and wanted to own down there and didn't have the credit. I would say owner financing would be the way to go, buying from someone who's house is paid off in full!

Sep 28, 2007 02:36 PM