Lease Purchase Win Situation for Sellers and Buyers

The past week I did my first lease purchase contract representing the buyer. I found it was a win/win situation for all parties involved. A lease purchase is when the buyer puts down a down payment to be used an option to buy a house. The buyer in turn agrees to make set monthly payments to the seller for a period of time agreed upon by both parties.

This can be beneficial in so many ways in this market. For the seller, it allows them to move out of their house and get into the new home they need or want. The seller is given a down payment that is non refundable.It is generally called an option fee. Thus if the buyer elects not to purchase the house by the specified end date they lose their deposit on the home. The seller then not only receives monthly rent payments to make the mortgage payment with, but a down payment to use toward the home they want to buy.

For the seller it can also open a window of opportunities in selling their home. With the average days a home is on the market being 145 in the Charlotte area the question looms for a lot of homeowners who are thinking of selling....Can I wait that long and possibly longer to sell my home? This opens a window of opportunity for the seller to expand the pool of possible buyers for the house.

For the buyer, it can be a big advantage. In my case the buyer was in a situation where they qualified for the hosue they wanted; but did not have enough of a down payment saved to purchase the house. This allowed them to get into the hosue they wanted and save up the difference they need to get the required down payment.

In other cases it can be a matter of getting the credit score up enough to qualify. I represented the seller on one where the buyer was 2 points away from qualifying for a mortgage.By allowing them to do a lease purchase my seller was able to make the move he needed for his job and the buyer were able to get into the house they wanted.....Four months later the buyers are happy home owners.

The buyer also has a guaranteed purchase price that they and the seller agree to in advance. This allows both parties to know exactly what the price and terms are going to be before they finalize the contract for the lease purchase. The seller benefits in that he does not have to renegotiate at the end of the lease purchase. The buyer is assured that if the house appreciates in value he can still buy at the agreed upon price.

A lease purchase may not be the right choice for everyone. But in those cases where you have exhausted all other options it may be a feasible option in today's housing market.

Dave diCecco
Realtor/Broker
www.davedicecco.com