Real estate market is not as promising as it has been before. The market has been down for quite some time, even more when there is an existing economic crisis. Because of this, sellers have a hard time selling and buyers have a hard time buying.
Sellers find it hard to dispose of their properties because most of the qualified buyers (which aren't that many) focuses on short sale, foreclosures and pre-foreclosure sales. They do this because the prices of homes are relatively cheaper.
On the other hand, buyers have a hard time purchasing because many people have filed for bankruptcy or have undergone foreclosures. This hurt their credit badly, which then gave them a hard time obtaining a loan.
However, there is one agreement that could put both parties on a win-win situation. That is through lease to own.
Lease to own in layman’s term
Lease to own is an agreement wherein a person can lease the property but can have an option to purchase it within the option period. In this transaction, the seller would usually charge an option fee, which is usually 1% to 5% of the agreed purchase price. Moreover, the rent is expensive because part of it will be credited as down payment.
Lease to own has lots of good things to offer for both the buyer and the seller. Find out what are these.
Seller’s Side
• He or she can earn monthly income from the lease while waiting for the property to be purchased.
• The seller would not have to worry if the buyer backs out because he or she will gain additional income from the rent premium and option fee.
• With the current situation in real estate, the purchase price of the seller can be locked-in which is good because the price would not continue to fall.
Buyer’s Side
• The buyer gets more time to save up cash for purchasing the house.
• Leasing is the perfect strategy to redeem their sinking credit reputation.
• This transaction has no regard for credit history.
• Locked-in prices would allow the buyer to avail of affordable homes, especially when the real estate market suddenly picks-up.
• Equity is built as the buyer pays the option fee and the rent premiums.
Despite the fact that everything seems favorable for both parties, there are also downsides for this option. The seller may incur a loss if the market prices for the house would increase (and he or she has a lock-in price). On the other side of the boat, the renter’s disadvantage would naturally fall on his expenses to avail of the purchase option. If he or she is late with rent, there goes their credit for the down payment. If they decide not to purchase the house within the option period, there goes their option fee.
Lease to own properties are very hard to find. Moreover, should you decide to engage in this transaction, weigh all options properly because this is not applicable in all conditions.
Do you want to buy the best lease to own properties, visit these sites
Ohio Home Blog,
Westbrook Village Rental Property and
Houses for Rent in San Diego.
