As a seller is it smart to do lease to own option in Texas?

Asked by Jenbmr4, Irving, TX Mon Dec 5, 2011

I am trying to sell my home but have been getting a lot of requests for lease with option, or lease to own. Is this worth the hassle of hanging on to the house when I am moving out of state?

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Rob Johnson, Agent, Irving, TX
Mon Dec 5, 2011
Hi Jenbmr4,

Probably not. It's very tough to be a landlord generally, but even more difficult when you are not on hand locally. You can have a property management company handle these things, but it will cost you a portion of the rent and you'll need to keep good records for tax purposes. And you still have the other costs of being homeowner. You are also allowing a buyer to live in the house before the sales contract really kicks in.

As far as selling your home, it's ultimately a function of price. Depending on your neighborhood in Irving, putting house on the market may be the best thing. House tend to sell better when furnished/occupied.

Obviously, we can help with that, if you don't already have a listing agreement.

Rob Johnson
RE/MAX DFW Associates
1 vote
Bruce Lynn, Agent, Coppell, TX
Mon Dec 5, 2011
Don't do it.
If the banks won't give the buyer a loan, why would you?
There's no good way to do this.
In fact the Texas legislature basically outlawed this practice a few years ago.

There may be a reason you are getting more of these inquiries.
1 vote
Kim Nwachukwu, Agent, Irving, TX
Mon Dec 5, 2011
9 out of 10 residential lease options do not close. Why? You have to have a sale price NOW - and if that sale price won't appraise when the option is done the property won't be financed. The contracts need to be written by attorneys to stand up - and they are fairly complicated documents. Do you own the property outright, or is there a lien against it? With no lien you could owner finance, still a hassle but less than a lease option.

Not everyone is well suited to be a landlord - and both of the scenarios have a touch of that in them. The other factor in this is that many of the people that ask this question probably shouldn't be purchasing a home at all. Yes, some people do have extenuating circumstances, but by and large my experience is that they are few and far between. I could write a book about this subject - but you asked for an opinion, so here's mine: big trouble, big hassle, highly unlikely to work out.
1 vote
T.E. & Naima…, Agent, Dallas, TX
Thu Dec 15, 2011
The sticky point will be the terms you agree to.

While the state law did not prohibit executory contracts, it did make them very risky for seller/landlords. You must as the seller comply with the provisions of the law or risk losing every single penny the renter paid to you.

Realtors are not allowed to write up contracts that are executory (meaning not closed/executed within 6 months). Only an attorney can write the contract between you and the renter/buyer.

We handle such requests all the time. We have attorneys who can put together something that makes sense, protects you as much as you are protected from a renter, and doesn't cost an arm and leg - just an arm.

You need to sit down with a professional and discuss your needs first.
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0 votes
Anne Bokalo, Agent, CANTON, TX
Mon Dec 5, 2011
Personally it's a good idea for you if it's not selling because you can write everything off and someone else is paying into your equity. The other thought to keep in mind that the renters will be more involved in the property meaning that they'll take care of it better since it's going to be there's, that in itself is a bonus. I and other landlords have horror stories of renters trashing a place so. And yes I agree it usually doesn't work out for the buyer but you will still have the property after having an expense to have a lawyer write up a contract.
0 votes
Dallas Texas, Agent, Dallas, TN
Mon Dec 5, 2011
Up to you as a property owner IF you want to be a landlord. With good tenants which are screened could be an asset with tax benefits.

Lease options you need to refer to your mortgage IF any terms or conditions you might violate .

Lynn911 Dallas Realtor & Consultant, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
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