SELLING YOUR OWN LEASE-TO-OWN
A lease-to-own purchase is a great alternative for folks who have not been able to sell their houses using traditional methods. Due to location, price, or condition of the house, many sellers are unable to sell their homes when using the "for sale by owner" method. Similarly, using real estate agents can be frustrating when the seller can't wait to move. This is where the lease-to-own option becomes a beneficial route! Simply put, a lease-to-own agreement is when a family agrees to purchase your home, and leases the home for a period of time until they are approved for conventional financing. The basic elements of a lease-to-own agreement are the monthly payment, purchase price, amount of upfront money (lease-option fee), and number of years the tenant/buyer has to exercise the lease-option agreement.
THINGS TO CONSIDER WHEN DECIDING TO LEASE-TO-OWN YOUR HOME
The period of time is agreed upon by the seller and tenant/buyer for a fixed period of time. Usually the agreement is between 12-36 months and may be extended.
You, the seller, with our expertise, establishe a purchase price. Unlike selling your property for cash or to a purchaser who qualifies for conventional financing, the tenant/buyer understands that in exchange for being given extra time to obtain financing, they will pay full market value for your property. Only on rare occasions is the purchase price ever negotiated by the tenant/buyer. You decide on the monthly lease payment by your monthly mortgage payment, location, condition, and size of your home. The lease option fee or upfront money from the tenant/buyer is not a damage deposit. It is non-refundable, and is usually about 3% of the sale price of the property. This fee is how we get paid, so there is no out of pocket money from you when we market your property for lease-to-own.
BENEFITS OF THE LEASE-TO-OWN PURCHASE FOR THE SELLER:
- You will receive the full asking price for your home.
- Depending on the monthly mortgage payment, the tenant/buyer may be putting extra money in your pocket each month.
- The tenant/buyer is responsible for all typical home repairs and maintenance to the home, including excessive damages. The only exceptions are for major issues that exist prior to the time the tenant takes posession of the property.
- Having the pride of ownership speaks volumes for the tenant/buyer who treats your home like it was his/her own.
- If the tenant/buyer does not uphold his/her end of the agreement, you can file an eviction within 5 days of a late monthly payment.
BENEFITS OF THE LEASE-TO-OWN PURCHASE FOR THE TENANT/BUYER:
- Time for the tenant/buyer to restore his/her challenged credit to good or excellent credit.
- The opportunity to save money for a downpayment and closing costs for conventional financing.
- Leasing the property with every intent to purchase the property, eliminating moving again.
- The pride of ownership while leasing to purchase the property.
WORDS OF ADVICE
Prior to entering a lease-option, it is highly recommended that you first consult with one of our recommended credit repair consultants to see what you need to do to get yourself on the road toward a successful loan approval and eventual home purchase. Mortgage professionals can provide lending guidelines including credit scores, debt-to-income ratios, and minimum required down payments. Additionally, credit improvement consultants and advisors can help you to raise your credit score and build up your savings.
All right, I agree that the lease-to-own method sounds good, what do I do next?