Poul Christi…, Home Seller in 34990

Lease/purchase option

Asked by Poul Christiansen, 34990 Fri Dec 12, 2008

I have a property for sale by owner. I have also advertised that I would consider a lease/purchase option. A realtor contacted me with a potential "buyer" who wanted to do a lease/purchase deal. I agreed to pay a commission of 3% if I sold to the agent's buyer. However, they would not provide me with a purchase offer, only a rental contract, which had a clause stating, "The tenant has the option to purchase anytime within the lease period or at lease end." The agent refused to provide a purchase agreement stating a sales price could not be determined for the price of the home at a time in the future, given the state of the market. I thought that a vague clause like that might legally prevent me from putting a deal together with some other potential buyer for the next year while the tenants were renting from me. I thought it would be foolish to tie my hands when all I really have is a renter who may want to buy... or not. Was I off base?

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Thank you all for your answers. I explained to the realtor that I would be willing to do a lease/purchase deal or strictly a rental, but not rent with option to buy under their terms. It just didn't seem like a good or smart deal to me. There was no initial option payment or earnest money; no extra monthly payment towards the option (in fact, they were offering $100 less than my rental asking price); the realtor refused to provide a credit report (only offering to read it to me over the phone); realtor initially said they were closing on their old home on Monday, but it turned out to be a short sale; tenants were new to area and their jobs; their combined income wouldn't qualify for a mortgage anywhere near my asking price; failed business last year was still being "cleared up." I offered to put a clause in the lease stating they could terminate the lease any time during the lease period by purchasing the house, but that neither party was obliged to buy or sell. Needless to say we could not come to an agreement and the deal fell through. Thanks again.
0 votes Thank Flag Link Fri Dec 12, 2008
The good part about rent with option for the seller, is you get to keep any monies that went toward the option payment, in the case the rent to buyer backs out. In some cases there is a initial option payment (like a down payment) and then monthly addition to the downpayment. The bigger this initial payment is, the more your rent to buyers will want to follow through with the purchase. All the dollars they put in, above rent, they do not get back, if they back out.
0 votes Thank Flag Link Fri Dec 12, 2008
Poul,
I think you are on base and have revealed the problem with a lease/option contract. Its just that...an option to buy. A lease/purchase is a different contract wherein the buyer agrees to purchase the home at the end of the lease period. Usually part of the rent is used for downpayment. Basically, its just a delayed closing. However, in the years and years that my broker and other experienced agents have worked these contracts almost never work. There are too many ways for both buyer and seller to get out of the deal. And, think about how many things can happen in a year to your buyer. A lost job, job transfer, death in the family, etc. My advice would be to either rent it and look at the property as a rental, if you can. Or, sell it outright and be done it.

Best of luck!

Trey Miller
Prudential Tropical Realty
Web Reference: http://www.Tampat
0 votes Thank Flag Link Fri Dec 12, 2008
Poul, it can be very confusing--one reason why we recommend using a realtor to assist you in navigating the way. You could also have a real estate attorney draw up a lease purchase agreement for you. There is a standard real estate lease option and lease purchase agreeement that all Florida realtors use. You should consult this document. Pretty easy, because you just fill in the blanks.

A lease option is this: a person leases a home with a rental agreement and somewhere out there if he chooses to enact a purchase of the home, you then come to sale agreement w/price at that time, based on market conditions at the time.

A lease purchase is a situation where you reach an agreement on a sales contract ahead of time, for a purchase sometime within the time frame of the agreement. Some of your monthly payment can be contributed toward the down payment (purchase) of the home.

Of course, many of the items in a sales contract can be negotiated, so don't be shy about asking for what you would like to have, and you and the Purchaser/tenant can have a very beneficial relationship.

This is a situation that helps to sell a home and helps the buyer especially in a situation where they buyer starts a new job, and when credit is tight, that can hurt the buyer (employment history counts on credit score), making it hard to both sides to put together a satisfactory agreement.

Good Luck!!, feel free to contact me if I can be of any further assistance.

Myke
Web Reference: http://www.MykeTriebold.com
0 votes Thank Flag Link Fri Dec 12, 2008
Sounds like "First Right Of Refusal"...As long as you can still market your home AND have showings. If you found another buyer the renters would again get the option to buy, before the new offer. However this agent, with the rental offer should not get 3%, maybe half month's rent, or something you'd negotiate.
0 votes Thank Flag Link Fri Dec 12, 2008
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