Home Buying in Fairhope>Question Details

mimi, Home Buyer in 36532

Are there many sellers in todays market who would consider a lease to purchase agreement?

Asked by mimi, 36532 Sun Sep 30, 2012

This question is about this property: http://www.trulia.com/property/3094351426-114-Wedge-Loop-Fai…

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I do not suggest doing lease purchases. There are simply way too many things that can go wrong with one from either side.

Right now, many sellers cannot afford to make their mortgage payments. I have seen where the buyer is making their rent payment, but then the owner is not paying the mortgage. The next thing the buyer knows is that the home is in foreclosure. That means the buyer will generally not get back any of the money they have given as earnest money or security deposits.

It is also a big risk on the buyer. If your credit is not where it needs to be now, there is no possible way of you knowing it will be acceptable in a set amount of time.

Rodney Mason, NMLS #151088
Sr Loan Officer
Prospect Mortgage
825 Juniper St NE, Atlanta, GA 30308
Office: (404) 591-2453
Apply Online at http://www.rodneymason.com
Licensed in Alabama & Georgia

Prospect Mortgage offers a full selection of mortgage programs including:
Conventional | FHA | FHA 580-639 FICO | FHA 203K Renovation (Streamline & Consultant) | HomePath® | HomePath® Renovation | HomeStyle® Renovation | VA | USDA | GA Dream | Jumbo Financing
1 vote Thank Flag Link Mon Oct 1, 2012
I would, but I would require a $10K deposit and purchase within 2 years.

9671 Silverwood Fairhope, AL

0 votes Thank Flag Link Mon Oct 1, 2012
Contact the agent and ask the question. can't hurt
0 votes Thank Flag Link Sun Sep 30, 2012
To answer your question straightforwardly, YES.. There are sellers who would consider a lease with option to purchase. I am just not sure as to the number of sellers who are willing to do it.

Lease with Option to Purchase is more intricate than the traditional sale. You and the sellers have to come into agreement as to the purchase price and the terms and conditions of the lease with option to purchase.

Since the expiration of the lease can be a year or two from the day the contract is executed, you are talking about buying the property in the future with the market value pegged at its current market value or more than its current value.

There are risked involved for both parties. Because the seller is taking a bigger risk, they may ask for a large amount of option money to recoup potential loss from damages that may be incurred if the buyer/lessor do not commit or fail to consummate at the end of the lease.

A lawyer is best equipped in drafting the legal instrument for this type of transaction.

Best of Luck.
0 votes Thank Flag Link Sun Sep 30, 2012
I don't have any properties wherein the sellers are willing to consider a lease-to-purchase. And when asked whether I think it is a good idea, I always advise no.

When a home is sitting vacant, it can be hard to understand why the seller wouldn't at least want to rent it until it sells.

Unfortunately, many renters don't treat properties with the same respect as if it were their own. As a result, whether it was a straight lease or a lease-purchase agreement that didn't close, a home that was move-in ready in the beginning may have to be repaired again before selling.

Plus, homes can't be shown without the tenant's OK. I have had first-hand experience with uncooperative tenants who had to be evicted before we could get it cleaned ... again ... and immediately sold.

I strongly agree with the advice given by some of my fellow Realtors. Do a straight rental agreement until you have been able to get your credit in order and some funds saved for a down payment.

In order to help folks reach their home buying goals, I have been referring prospective buyers on the edge of being ready to Baldwin Housing Alliance http://(www.baldwinhousingalliance.com, 251-279-0461) for free counseling. It is a non-profit program to help folks review their current finances to determine if they are ready to be homebuyers. If not ready, they will give you tips on what you can do to gain control of your home-buying future. They can also help you determine if you qualify for special loan and/or down-payment assistance programs. Tell them I sent you, then give me a call to help you with your home hunt once they've given you the "Ready" green light.
0 votes Thank Flag Link Sun Sep 30, 2012
I am working with 2 sellers right now who would consider a lease purchase option. I think it is becoming more prevalent because the rental market is so hot right now. Many people are having a hard time qualifying for a loan or are just moving to the area and want to become more familiar with the area before purchasing. Even if the sale doesn't close, the seller has had their costs covered and usually retains a 1-5% downpayment.
0 votes Thank Flag Link Sun Sep 30, 2012
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!
0 votes Thank Flag Link Sun Sep 30, 2012
In the past year, I have worked with several buyers who have purchased properties through owner finance. It really all depends on your local market, the condition of the property, size of your downpayment amount and the seller's motivation. It has been my experience that the owner finance offer is often a win-win situation and is appealing to sellers who have had a property on the market for several months without success in selling. Also, this may be an option for properties that may need repairs or have issues that may prevent easy financing....if you are willing to assume the repair responsibility.
0 votes Thank Flag Link Sun Sep 30, 2012
About half the transactions are Lender owned and short sale properties so they can not. After that you get to the properties that are owner occupied. Most people need the equityin their property to move on. Other people just want to own only one property and not have to become a landlord. A lot of the rentals are owned by buy and hold investors. From what I have seen in my local MLS less than 1% of the properties in my are being marketed as lease purchase. Why not rent until you can qualify to purchase and have availability of any of the properties in your price range? Leasepurchase transactions have the highest fall through rate of any transaction and you would be out your option fee if you did not purchase the property that you started a leaase purchase on. If you did not have money to pay the option fee th chances to get into a lease purchase go way down.
0 votes Thank Flag Link Sun Sep 30, 2012
Nope. Most sellers want to sell to move on. Most know the rent to own market is a ripoff and the renters almost always fail to purchase and the owner is stuck having to resell the property when the renter defaults and leaves the house worse than when they moved in because they knew they would not be able to buy it and that they were going to lose the deposit and extra option money paid each month.

Just rent and buy when you can.
0 votes Thank Flag Link Sun Sep 30, 2012
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