Home Buying in Sarasota>Question Details

katsartplace, Home Buyer in Sarasota, FL

Interested in a lease-option

Asked by katsartplace, Sarasota, FL Mon Jul 2, 2012

Our years of wonderful credit is damaged due to our short-sale this month in Sarasota. We want to go back into a house and am considering a lease with the option to buy. We're in need of a Realtor to help us. Thank you

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Answers

11
Lease/Option
You are desperate!
Your Credit or Finances, or both, will not allow you to go the conventional route:
You need the Seller to help you out!

The Seller will know it, and you are going to pay dearly for this service:
There aren't too many altruistic Sellers out there.

The terms that can be written into a Lease/Option can be dangerous to you:
How long is the Option period?
How much money are you putting in to the Option?
What happens if you are not able to execute the Option?
How do you know what your financial situation will be 2-5 years from now?
How much is the rent in the meantime?
Who will be responsible for maintenance and repair in the meantime?
What will be the Market Value of the home in 2-5 years?
What will be the Selling price 2-5 years from now?

This is the Ultimate Caveat Emptor!

Good luck and May God bless
1 vote Thank Flag Link Tue Jul 3, 2012
Katsartplace,

Lease options are difficult to find and may not be your best option.

To begin with, there are two documents drawn up, a lease or rental agreement that outlines the use, monthly rent and responsibilities of the tenants / landlord.

The Option is a second document, Typically 18 months to 24 months. The option requires money down, this amount can be a few thousand dollars to 10% or 20% of the agreed purchase price. It may not be refundable, it depends upon the contract.

At the end of 18 or 24 months the Option must be exercise similar to a balloon note and the buyer either buys the property or loses their option money.

During the 18 / 24 months there may be additional money that can / is added to the Option funds. which are funds collected by the Seller above and beyond the monthly rental amount.

Some Lease Options, shift the property repairs and maintenance to the Option holder during the 18 to 24 months. Thus, if the air conditioner breaks down and needs to be replaced then the option holder replaces the air conditioning unit same as if they were an owner.

On the anniversary of the 18 or 24 month Option if the buyer (Option holder) can not obtain financing or chooses not to exercise their Option then. The property is on the fair open market to be sold to another buyer.

Up north, a contract for deed is more typically used, however, here it is not as popular.

Please keep in mind that at the start of the Option, you and the Seller may negotiate a future price. If that price is under current market in 18 to 24 months then good for you, if it is higher then current market conditions then you will over pay for the property and may encounter appraisal issues.

Lastly, as of 1/1/2014, the Dodd Frank law has stepped in and now requires Seller financing regulations to meet the current mortgage lending regulations and laws. This new law carries heavy fine penalties for the Seller if not complied with or the Seller was unaware of it (no excuse). This new law has had a surprise for many Investors that utilize Seller financing. This factor may also complicate your ability to find lease option properties.

Best regards,

Lynn Brock
Broker
941.313.1234
email@brockrealty-inc.com

Visit http://www.brockrealtyinc.com where you can sign up for a FREE account which allows you to search the MLS in real time and receive morning reports on new listings, current pendings and recent solds.
0 votes Thank Flag Link Mon Sep 22, 2014
Normally FHA requires buyers who experienced a short sale to wait 3 years before they can apply for another FHA loan.

However, borrowers who's short sale was the result of a "documented extenuating circumstance" may be eligible for financing in as little as one year from the event.

Someone already posted a number of excellent reasons as to why you should avoid a lease-option purchase, so I won't repeat them.

Your best option, financially speaking, may be to work on your credit scores for the next year and, in the meantime, get in contact with a local lender or mortgage broker who handles a lot of FHA loans and see where you stand regarding FHA financing in the not too far off future.

Regards,

Diane Christner, Realtor, GRI, SFR, CNE
Bright Realty
Sarasota, FL
http://www.DianeChristner.com
0 votes Thank Flag Link Sun Jul 20, 2014
My name is Lynne Dowd I am a real estate agent in Sarasota. Call me at 941-915-5307 or email: anotherHomeSOLD@aol.com
0 votes Thank Flag Link Sun Jul 20, 2014
Give me a call or email and we can discuss your needs. I am sure we can help you.
0 votes Thank Flag Link Fri Jul 27, 2012
I work on lease options and would be glad to talk with you. The process would first involve finding the home you want, then we buy it and lease option it to you. If you are serious about this please contact me and we can discuss all the details. You can contact me at 941-915-5056. David Rothermel, Exit King Realty.
0 votes Thank Flag Link Fri Jul 27, 2012
You'll find very few realtors that know how to convince a seller to do a lease option and even fewer that will know how to structure the L/O so the refi / purchase works out well for you at option time.

I know how to set them up the right way, but I'm not a realtor.

What price range home and how much Option Money can you invest?
0 votes Thank Flag Link Tue Jul 3, 2012
You need to be very careful as a buyer entering into a lease option. I had two separate customers who relayed very similar stories. They entered into a lease option with a large deposit up front, paid rent plus additional monthly monies to go towards agreed upon purchase price. The landlords were not paying the mortgage and the homes went into foreclosure. One of the parties has been wrapped up in a lawsuit for years and the other decided to cut their losses and walk away. If you find a lease option, structure it with an attorney from the start. I think a better option would be to find a good mortgage broker to help you repair your credit, I can recommend a few. Or seller financing. Feel free to contact me if I can be of any assistance.
Kim Kruysman
Michael Saunders & Co.
941-441-6628
KimKruysman@MichaelSaunders.com
0 votes Thank Flag Link Mon Jul 2, 2012
katsartplace, with regard to lease option these are difficult to find. particularly with our real estate inventory so low. the tax benefits of holding a property long term with a tenant and first right of refusal makes this opportunity very limited in Sarasota county. it could work in geographic area with slower sales, unfortunately that is not the Sarasota real estate market today, it is pretty active.

Rather than seek a realtor, look into a mortgage broker and possibly a credit repair company. There are strategies that you can follow that will help you to re build your credit.

Wishing you the best of luck with your endeavor

Lynn Brock
Brock Realty Inc.
941.313.1234
http://www.brockrealty-inc.com
0 votes Thank Flag Link Mon Jul 2, 2012
Lease-Purchase properties seems difficult to find with the lack of inventory here in the Sarasota area. Have you considered private monies? What price range is also important. Some Mortgage Bankers have private funding available, just for your types of needs. Many families are in your same dilema. Good people who pay their bills and have come out of a Short Sale or Foreclosure. I recommend a real estate attorney to complete a lease-purchase agreement. This protects Buyer and Seller. We know of two Mortgage Bankers who provide private monies.
Jim Soda ... TheSodaGroup.com
Keller Williams Realty
Lakewood Ranch-Sarasota Area
0 votes Thank Flag Link Mon Jul 2, 2012
Contact Denny Floden @ 941 928-9337
0 votes Thank Flag Link Mon Jul 2, 2012
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