Rent vs Buy in Rhode Island>Question Details

Deborah, Home Buyer in 02860

lease options!!

Asked by Deborah, 02860 Wed Dec 24, 2008

who do you all trust as far as corparations and ajencies, when it come to lease with options to buy? will be moving to cape coral. what should and should not be done? also is there a down side from refianacing when switching from lease to buy?

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Leasing with an option should always be done formally with a lawyer (your lawyer) writing up the contract, or at least reading the contract, so trust issues will not be a problem. As a buyer, the problem with lease options are usually, if you are unable to buy the home at the end of the lease option term, then you lose the money you put into it. You may be better off renting and putting money aside for when you will be able to buy. Unless you can find someone who is willing to hold the actual mortgage. Lease options are a way for people to get into homes, but not always the best way. They are good for the sellers, who are able to not only rent their home, but keep the excess rent at the end or sell the house. Its win/win for the seller.
1 vote Thank Flag Link Wed Dec 24, 2008
Like Karen says, many times it's a win/win for the seller.

The first question that comes to mind is "why would a buyer lease option?" It's probably a stretch to advise buyers that that is a prudent move. More often the home owner (landlord) receives a heck of a lot more benefit than the tenant/leasee. Generally, a property is rented at an above market rate with the premium being applied to downpayment if the purchase option is excercised. Statistically few tenants move forward with purchase and, therefore, forfeit any rent premium. Seller/owner just made out great.

Consider the market swing we're in. Which way are prices headed? Many lease option agreements lock in today's price. 12 months later you could potentially purchase a similar property for significantly less. Again, seller locks in today's price and hedges himself against further property value decrease if sale goes through. Also, keep in mind that rarely are Realtors involved and that's big $$ in the seller's pocket. When gathering comparable sales data from surrounding properties keep in mind that 99% of these include a 5-6% Realtor commission (I don't exactly know what numbers are for your area). If there's no agent involved look at comps minus 5-6% as market value. Most buyers/sellers overlook this!!

Attorneys or Realtors typically write up these agreements. Check the local BBB, real estate agency, or state bar is my suggestion... if there's really a benefit to you going through with this. Best of luck whichever direction you choose!
0 votes Thank Flag Link Fri Dec 26, 2008
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