Buyer Considers Lease Purchase As Creative Solution To Housing Problem

By
Real Estate Agent with Joe Manausa Real Estate 8508880888

One of the more popular blog posts that our readers have enjoyed is called “What Sellers Should Know About Lease Purchase Agreements” and it was posted back in March of this year. The reason that I wrote the article about alternative home selling processes is that I suspected that market conditions and the glut of homes would require different solutions in the coming years. Those times are definitely upon us.

Another popular blog post titled “Creative Financing Offers Challenged Home Buyers Potential Solutions.” was also posted in March as a way of explaining methodologies other than traditional bank borrowing to buy a home. It covered a few techniques that home buyers with credit challenges should consider when buying a home.

Today brings us a question from “Joyce” who has the start of a plan for moving to a new home in the Tallahassee real estate market. She wants to know if her “rent with an option to buy” plan has any merit.

Hi Joe,

My husband and I are thinking about renting with an option to buy in Tallahassee next year. We would give a non-refundable deposit of $10,000-$15,000 and rent at fair market value for a year or less. We’re probably looking for a home in the $300,000-$375,000 range. Do you think we will have takers for this? We are probably going to look in the northeast area, though we don’t know the area well.

Thanks. Joyce

First of all, thank you Joyce for a great question that should stimulate some discussion on the Tallahassee Real Estate Blog. I think the easiest way to answer your question is to break it down to “small bites” and go from there.

[click to see full analysis of Renting With An Option To Buy…]

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Rainmaker
1,373,397
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Joe, the non-refundable deposit eludes to a Rent with Option. In this case the large deposit would more than likely prevent them from walking away if and when they would exercise the option. If it is a home they really want, I would recommend the Lease Purchase with a closing day projected in the future. Options don't have to be exercised when a Lease Purchase is really an offer with a delayed settlement.

Sep 29, 2009 12:12 AM #1
Rainmaker
545,096
Toula Rosebrock
Diane Turton, Realtors, Forked River, NJ - Lacey Township, NJ
Broker/Sales Associate, Realtor, Lacey Township,

ToulaRosebrock,com

Hi Joe:

I'm with Michael here...

I've recommended lease-purchase options quite frequently in this case.

Sep 29, 2009 12:17 AM #2
Rainmaker
1,162,433
Joe Manausa
Joe Manausa Real Estate - Tallahassee, FL
Tallahassee Real Estate

Hey Michael, I agree and that is where "Joyce" needs a great agent such as yourself to help her negotiate. On one hand, most sellers do not want to do a lease-purchase/rent with option in this price range, so a non-refundable deposit is enticing. On the other hand, the more she invests, the more committed she is to buying. The final answer will lie in how much she wants the home.

Sep 29, 2009 12:56 AM #3
Rainmaker
1,162,433
Joe Manausa
Joe Manausa Real Estate - Tallahassee, FL
Tallahassee Real Estate

Thanks Toula. In Florida, these are just two separate agreements. A purchase agreement with a delayed closing, contingent upon an executed lease agreement.

Sep 29, 2009 12:57 AM #4
Rainer
37,160
Jim & Cathy Wood Greater Nashville Area Real Estate
Crye-Leike Realtors, Inc. - Mount Juliet, TN

Joe-

 

Thats a lot of money down and at risk for the buyer.  The Buyer should explore a Seller provided second. Then the buyer would at least have tax advantage, which could be contributed to an early pay off of the second.

I'm just trying to be creative. And these times require that.

Sep 29, 2009 04:32 AM #5
Rainmaker
1,162,433
Joe Manausa
Joe Manausa Real Estate - Tallahassee, FL
Tallahassee Real Estate

Hey Jim, I agree. I have not yet met with her and we'll explore all of her options. I think it is neat to see where her mindset is now, she seems to be well-read compared with many that I meet.

Sep 29, 2009 10:39 PM #6
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Rainmaker
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