Tuesday, September 28, 2010

Lease With Option Might be the Answer for Baltimore Homes!

Lease With Option Might be the Answer for Baltimore Homes!

Earlier this month I wrote Do I Buy or Sell First ? Reverse Contingency . That post received  some good comments. Not everyone agreed.

Please remember I am just looking for more ways to get my listings sold! To get them sold they have to be shown!  Some of my properties are being advertised Lease With Option. If the seller will consider a rental, we can place the property in the MLS under rentals...another way to get exposure.

This post was inspired by  Rent with Option to Buy - Good or Bad Thing for the Buyer/Tenant?  by Dr. Stacey Baaugh.
                                            Lease With Option HomeRome
When is a Lease with option  beneficial?

When a seller has a vacant home, is out of town, has bought another home, the present one is not sold, high condo fees in an empty unit, has moved to a new job, a condo that has been inherited  and a myriad of other circumstances. This option can give someone time to get their finances in order.

Remember the Lease with Option   is an option only for the buyer. The buyer can exercise the option to purchase.

Why would this be a good idea for a buyer?

When they are not free to put  property in their own name such as in a divorce situation, the need to save for a down payment, waiting for another property to sell, waiting for an inheritance, needing to move for medical reasons and again, a myriad of other reasons.

The sales price is negotiated at the time of the lease. Is this good/bad? That depends on the market, the seller's situation and the needs of the buyers.

Here are two examples of Lease with option.
#1 -Just did a Lease with Option and we negotiated the monthly fee. If  the option is  exercised within the year, the seller will reimburse the buyer 25% of the rent. The seller is happy with guaranteed income for the next year. The buyer is happy not to have to rush and make a decision, knowing there will be an incentive and the price is set.
#2-A couple of years ago a condo was not FHA approved so the buyer could not get financing. We were told it could go conventional. We wrote a lease with option and the seller agreed to reimburse the rent if purchased within six months. The buyer really wanted to buy, did not want to "throw out her money" in rent. When the time came and enough down payment had accrued, again she tried for a loan using 10% and then 20% down. Guess what, the loan could not be made on this building. So what does one do now?   The buyer is living in the home she loves, the seller cannot sell unless there is a cash contract.  We arranged for the seller to do owner financing. All's well that ends!

Lease With Option Might be the Answer for Baltimore Homes!

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