Cassandra M Bickel

Dana,
Over the years I have done a number of Lease Purchase/Lease Options and have an unusually high success rate. However, another answer was quite correct. Very few close.

The best thing about L/P is that the terms are so flexible. The advantage to the buyer/tenant of doing a lease purchase is that you dont have to move again in 12-24 months. You generally do have to come up with a decent sized down payment. This in my market place could be as little as $3,000 and up. I actually have an investor that buyers houses for L/P buyers and only charges 1st months rent and 1 month security.
In every situation I have had, the seller keeps the "option money", it has never gone into an escrow account. Part of this pays for the Realtor's Transaction Fee, the rest goes to the seller to cover any damages if you dont close and the risk for renting their property. For my buyers, I always put in the contract that if the transaction doesnt close due to the seller's fault, you get your option money back. If you close, it gets applied as your down payment. Any other situation, the seller keeps the option money.

My biggest suggestion is if you are considering this option, select a professional Realtor that is familar with the L/P process. Ask them how many they have done. Any Realtor/Seller is going to request some type of application/credit report. They understand that there are issues there, they just want to make sure that you can realistically close in the time frame stated. (I typically do mine for 24 months to give the buyers enough time and follow up with them about every 2 months to remind them to stay on track). If you are able to close early, that is a bonus for everyone.
Remember, at least in my market place, that even though you are renting, most contracts will put you fully responsible for the property. It isnt like a rental situation. If the pipes burst, you have to fix them. It may be different in other areas, so check with the Realtor.

Good Luck and Let me know if I can be of any assistance - answering any questions or helping you find a local Realtor.

~Cassandra Bickel - Fri Aug 1 2008, 20:30

I agree with many of the answers. The big thing is when is the right time for you. It is true that many programs are either going away or are changing their requirements. If you have 10-20% to put down, this is not going to affect you as much. If you are trying to put very little down, you might want to consider moving before Oct 1. Also, some predict that interest rates will be going up after the election.
But the most important is finding something that you like for the price you are willing to pay. I had a client look for a year before she found her price in the school district she wanted, and she found it after she gave up looking. Make sure the house you buy is something you will be able to live with for at least 2-3 years.

Good Luck! And speak with a local lender and Realtor.

~Cassandra - Fri Aug 1 2008, 19:38

William,
Congrats on trying to buy a home. If you are a vet, you may qualify for a VA loan. They offer a true 100% Loan, but check around as they usually have a little bit higher fees up front.

Another government loan is FHA. Although they require a 3% down payment, it is possible to do a down payment program where you would need minimal money out of pocket.

The best thing you can do is check with a REPUTABLE lender in your area, have them review your credit as well as debt and income. They will be able to give you a realistic view of what you would qualify for.

Not all lenders/banks offer VA loans, but I recommend checking first with your credit union or bank. Suntrust is one that I recomment (they are not in all states) and I have worked with some good lenders with Bank of America and Chase. Also check with a Realtor. They usually are a good resource.

Good luck!

~Cassandra Bickel, Realtor - Thu May 8 2008, 15:39

Wilsonia,
Congrats on using your VA Loan to purchase a home. With the changes in the mortgage industry, a lot of companies are going out of business. Make sure that who select is a qualified and ethical lender. If you are consistently hearing the same thing from lenders but one offers you a significantly better deal, be very cautious.
Also, if you do not already have your eligibility certificate, order it right away. On many of my VA loans that is the thing that has held us up the most. It could take as much as 8 weeks (sometimes longer) to receive that.

Good Luck and Congrats!

~Cassandra Bickel, Realtor - Thu May 8 2008, 13:34

I agree with Michael. Let them know what your plans are with the property and the things that you told us. If this is a sentimental family home, they may love the idea of someone starting a family there and restoring it to it's former glory.

Becareful not to offend them by accusing them of neglecting the property, but emphase that you see so much potential and want to put love and memories of your own into it. While still letting them know that there is a budget and you cant over pay for the house....

~Cassandra Bickel, Realtor - Thu May 8 2008, 12:52

It seems like you have done some of your home work already. When you go in with your offer, wether you do it on your own or use a Realtor, the best thing to do is go in as strong as you can.

Are you paying cash or are you getting financing? If you are financing, do you have a large down payment? Is it contingent on you selling your current place? Are you able to close quickly?

A lot of times these can make the difference of getting the offer accepted or loosing out to someone else - or even just distancing them.

Also, go in with all of your research documented. If you are going to put in a low offer, tell the sellers in writing, why. Let them know that you are offering what you feel is a fair offer, what repairs are needed and what other homes in the area are selling for (sometimes farms are hard to judge which is where a professional comes in handy).

They may not be aware of all the repairs that are needed in the house. With you explaining the offer, they may be more open to considering and negotiating your offer rather than just throwing it out the window. And remember, you may not know their true motivation. If it was built as a family farm and they grew up there, even though he is unable to keep it, it may be diffcult letting go of the memories that are with the house.

Good luck!

~Cassandra Bickel, Realtor - Thu May 8 2008, 12:01