The lease purchase option is a terrific tool for home sellers to reach
home buyers interested in leasing before buying. It is an excellent way to
reach many more prospective buyers when used with sale marketing. It is
particularly a useful tool in reaching home buyers who want to "try
before they buy" and home buyers relocating to the area or who want
to lease for a few months to 1 year to get to know the area before
buying. Here are some of the advantages a lease purchase option may provide
you as a home seller?
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Strong Demand From Prospective Buyers
No matter how slow the local real estate market might be, there is almost
always a strong demand from lease-option buyers. Many prospective home buyers
can usually afford the monthly payments but they have often have insufficient
cash for a down payment. The lease-option solves this problem by giving the
tenant-buyer a rent credit toward the down payment. It's like a "forced savings
account." In addition, the tenant-buyer usually pays up-front nonrefundable
consideration for the option, typically several thousand dollars.
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Top Dollar Option Price
Because of strong buyer demand for lease-options, when done correctly,
home sellers can demand and get top dollar for their properties. Usually,
the option price is set at the market value when signing the lease-option.
If the home's market value goes up during the lease-option term, the buyer
benefits. Should the property drop in value, then the tenant usually doesn't
complete the purchase.
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Top Quality Tenants
During the lease-option, the tenant-buyer usually take good care
of the property as if they own it..
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Above-Market Rent
Another seller advantage is earning above-market rent. Landlords
can charge tenants 10 to 20 percent above market rent.
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Seller Keeps the Tax Deductions
During the lease-option period, the seller retains all the property
income tax deductions. If a tenant complains about not receiving any tax
benefits, a reminder about the rent credit toward the down payment usually
ends the discussion.
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