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LV Home Buyer, Home Buyer in Las Vegas, NV

Seeking a real estate pro and/or attorney experienced with LEASE-OPTIONS in OREGON.

Asked by LV Home Buyer, Las Vegas, NV Thu Jul 17, 2008

Seeking a real estate pro and/or attorney familiar with LEASE-OPTIONS in OREGON. Please reply here or by private message. Thanks!

Help the community by answering this question:


I am in washington, but thought I could give you a little insight. Im sure a qualified oregon agent will respond. I just attended a seminar provided by a institutional lender AND real estate attorney.

There should be TWO documents/contracts. The first is the option and the price you will pay to exercise an option to buy at a specific price and term. The second is the lease and lease terms.

another way of accomplishing a similar method of acquiring a home is the PURCHASE/lease. This is a committment to purchase, with a purchase and sale agreement, and all necessary steps and documents to make that purchase, with a delayed close. A second document is the early occupancy lease. I have used this method when the buyer WANTS to buy the home, but is waiting for their house to sell, credit scores to improve or some other event. (one was waiting till a boat sold).

Both are viable, Both require TWO contracts/documents that refer to one another.
Both require some kind of money exchange. The price for the option along with the lease deposit (two separate money events), or in the case of the purchase lease, Earnest money on the purchase, and any lease terms negotiated.

Best wishes,
Gloria Gomez Matthews
Jensen White Real Estate
Web Reference: http://www.myhomeinfo.info
1 vote Thank Flag Link Thu Jul 17, 2008
I agree with some of the items that Chris cited below. But no seller is going to sell the house with $500 in option money that is why I said if $300 extra above rent goes towards the option then at the end of the year if the buyer does not purchase the house then the seller keeps the $3600 option money. I would never suggest a seller to take a small amount as $500 as option and it is a high risk for the buyer to enter in to a lease option in my opinion so depending who's side you are on is going to be how it is written. If the buyer moves out the seller will have to clean up the house maybe replace the carpet and fix what the buyer ruined and put the house back on the market so it has to be a large amount that makes the buyer stay in the deal. Find out what the lender will allow as a credit above rent before you enter into this deal and how will the home be valued when you want to buy later down the road. Tom Inglesby
0 votes Thank Flag Link Sun Jul 20, 2008
No No, no, no.......I respectfully disagree with Tom...please read my post again.....I try to be as clear as possible. No monthly amount you pay as a buyer will be considered by any lender as a credit to price or in part downpayment as price has yet to be set, but more than that the money is now GONE. If anything, rents paid may be agreed to be considered as a reduction in price...but those are the particulars that are detailed in the agreement.

For example, you & seller agree to a price of $100,000 today (however, most lease/options set price in the future), $1,000/monthly rent, and that price will be reduced by 50% of the rent amount over the life of the option (great negotiation by the buyer to achieve this, this as example is fantasy). So, when you choose to exercise the option 12 months later, at that point in time you write a purchase contract at $94,000 which calculates to consider the rent credit ($100,000 less $6,000, or $94,000). But you will STILL BE required to have a downpayment by any lender, call it 20% of $94,000. Keep in mind the rents you have paid to the seller are spent...regardless of receipts for payment...there is no money that is 'liquid'.

Be VERY careful in separating 'rent monies' from 'credit monies'. You are very best to establish a market rent for the property (fair market rent ), and any monies above that rent you afford are ACCRUED in escrow and not spent. For example, your rent is $1,000 and you choose to afford $1,500 such that over 12 months you have paid $18,000 total, of which $12,000 is in rent which is now passed onto the seller who pays their lender, and $6,000 is sitting in escrow awaiting the day you make purchase intent (date of exercise). Your lender will view the $6,000 as downpayment monies (since it is 'liquid'), as well your option price will be considered as part payment also, call it $500. If you choose to abandon the deal, you get your $6,000 back (which is protected in escrow), but you lose the option monies ($500, keep as low as possible).

I hope this helps....I have experienced lease options, made the kind of mistakes you learn by, and understand them well enough to advise you as the buyer to talk to your lender and your attorney FIRST. You are VERY best to consult an attorney on the terms of such an agreement and expect to pay $600 to $800 for that counsel and paperwork.

Keep in mind that if the property is not free and clear of any lender, the lender can call the note at any time which may force your exercise of the option as the seller will have to suddenly satisfy the note.


Chris Courtney
State Certified Residential Appraiser
Principal Broker
(541) 284-2511 office
(541) 912-1405 cell
Web Reference: http://www.HouseNow.com
0 votes Thank Flag Link Sat Jul 19, 2008
The monthly amount you credit can be applied towards the down payment or the price. You have to charge fair rent and that can be part of the option money per month or not. It might be hard for a buyer to fix a price on a house when the market is going up or down depending on the area. If you leave it to an appraisal a couple of years from now you don't really know what your house is going to be worth? Would you have been better off to sell now while rates are down? I see the rates going up and if rates go up 1/2 poin at 6 to 6 1/2 it will hit the buyer for about $19,000 in reduced purchasing power in a $180,000 loan. Kind of scary for both parties. Will you have one or two or 3 appraisals and they cost $400 each to figure out the price? Usually renters have bad credit or some other problem but usually the rent and option money is not realistic if they compare other rentals or are they are just waiting for a house to sell then I would do a delayed closing. Good Luck, Tom Inglesby
0 votes Thank Flag Link Fri Jul 18, 2008
Tom - I presume you mean the monthly extra $300 goes toward reducing the final sale price. The option consideration fee is a one-time fee and usually applies toward the down payment.

Is that your understanding, also?
0 votes Thank Flag Link Fri Jul 18, 2008
The answers that were given so far is great information but no one referred to the rent amount and how much above you want to give towards your option. In the past the seller credited you your rent. Not any more you must pay fair rent and then maybe $300 and this would go towards the option. In most cases when buyers find this out they change their mind. Get this figured out and talk to a lender now before you enter into something. I would just do a delayed close and not put the extra money at risk. Good luck.
Tom Inglesby, Broker
RE/MAX Equity Group Inc
0 votes Thank Flag Link Thu Jul 17, 2008
Hi Las Vegas,

Lease-options can be tricky, but here are some general points on how they work.

1. The lease is the contract that establishes rent for the property which may or may not include a premium above the rent rate. The 'premium' remains in an escrow account and accumulates over the life of the lease agreement such that when the buyer chooses to exercise the option, monies have stacked up that serves as partial downpayment. Meanwhile, the monthly rent monies pass through an escrow company to the seller. So, if your monthly rent is $1,000, try and afford $1,200 or $1,500 so those additional monies stack up over time. You may also choose an interest bearing account that a title company will assist you with establishing. Those monies are also protected in escrow should you choose to not exercise the option, but you will be losing the option 'price'.

2. The option 'price' is a price which may or may not be credited to the eventual price of the subject property. The seller & you as buyer may negotiate this option price and there is no standard. The option is a recorded document. The option has an expiration date. Additionally, provisions within the option agreement for transferability and setting property price are agreed. You do not typically set the price on the property at the time of option agreement, but in the future when the option is chosen to be exercised. As the buyer, If you set price now, the property may decline in value when you choose to exercise the option such that appraisal may be an issue and moreso buying a property for more than what it is worth. On the other hand, the property may appreciate in value over this time. Typically, any seller under good counsel will agree to setting the price when the option is chosen to be exercised. This is so the seller may gain in appreciation, but in this market who can predict pricing 2-5 years from now.

3. Lastly, hire a good attorney to handle the paperwork. If there is a broker involved, they don't get paid until the option is exercised and the property actually sells. This may relieve a seller who would want to collect enough monies now to cover any requested broker fees and which would ultimately become more expensive for you up front.

You can search real estate for sale at http://www.HouseNow.com.

Good luck!


Chris Courtney
541-912-1405 cell
Web Reference: http://www.HouseNow.com
0 votes Thank Flag Link Thu Jul 17, 2008
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