Subscribe to Answers
May get a higher offer from a buyer who is unqualified to buy.
Stevens Point, WI
Probably not much advantage
None in our Santa Clarita, California community since prices are either going up or down. They don't stay flat. It could be an advantage if the amount paid for the lease option is high and the market goes down and the leasee walks away leaving the money on the table.
Lease-options are not prevalent in our market.
Ivan Carroll If you are referring to a "rent with option', they rarely work out. Most renters don't exercise the option. A "lease purchase" is a little different, there is no option to purchase. It is nothing more than a delayed settlement.
This is a joke, right Ivan, are you really saying option to sell?
none in my personal experience. I've never had one of those work out for a seller.
In a well drafted document, your legal rights are protected and the tax treatment of the option payment and rents can be properly balanced between your needs (not to change the character of the asset) and the buyer's objective to reduce the purchase price of the home by the amount of the payments. This is of course never going to work in practice because most lenders will apply a standard of "what is a fair market rent compared to total monthly payments?" in computing LTV.
Someone is in the property paying the utilities, maintaining it and keeping the insurance down. It helps cover the nut until a closing can happen.
If properties are not selling, and you need to be out, it is great. But when homes are selling at a good pace, no need to lease, just sell.
If there is a substantial amount of lease option money at stake that is good for the seller. They can keep the money if the buyer doesn't carry through.
Generally speaking, a seller lease with an option will provide the seller with the following benefits:
1. Upfront deposit (non-refundable)
2. High market value sales price
3. High market monthly lease payment
In some cases, a percentage of the monthly payment is applied to the purchase but this is not required.
This is a specialized transaction and should be handled as such.