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Bill, Other/Just Looking in Pensacola, FL

Moving to Pensacola FL next year and would like information on how the Lease with Option to buy works.

Asked by Bill, Pensacola, FL Mon Nov 17, 2008

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Hi Bill,

Barbara did a great job explaining to you how a lease/option contract works; however, I would like to reiterate that the "option" money is NON-REFUNDABLE. Although the buyer and seller can agree on ANY upfront amount as the "option," it has been my experience as a Realtor in the Pensacola area that this typically costs the potential buyer around $5,000 for the "option to purchase." This is perceived as a reasonable amount since the seller must take their property "off the market" until the lease expires, and there's no guarantee that the buyer will purchase the property. In which case, the seller would have wasted a significant amount of time in trying to sell their property.

Unless the potential buyer has a significant amount of cash, a lease/option purchase contract is basically useless to a potential buyer if the individual is not "serious" about purchasing the subject property at the end of the lease term. Essentially, the "option" money could be better utilized as a down payment or for closing costs when the buyer's personal situation is more conducive to purchasing.
0 votes Thank Flag Link Wed Nov 19, 2008
All contracts are written differently and having a good real estate attorney on your team is important for both buyers and sellers, but in general, a "Lease with Option to Buy" contract is one where the seller takes a down payment (in this case, the "option") and the prospective purchaser (tenant) signs a contract to lease the property for a particular period of the end of which the tenant may purchase the property at an agreed upon price...or else forfeit the option money and either continue to rent (with a new lease agreement) or move on to the next property. Be sure that the Realtor you are working with helps you understand the process, so that this transaction is a win/win for everyone concerned. Lease Options can be great tools for both buyers and sellers, but there are potential pitfalls, so proceed with caution.
0 votes Thank Flag Link Tue Nov 18, 2008
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