There is another method I often consider when it’s important to
sell my house quickly. Over the years I’ve sold quite a few houses this way, and even if it didn’t work out for the buyer each time, it always worked out for me. Let me explain a Lease Option Agreement this way -- I collect an option fee in a lump sum or added onto the monthly rent payment when my tenants sign a one-year lease. For this option fee my
tenants have the right to purchase their house at a certain price within a certain period of time, usually on or before the last day of the lease.
Basically, my tenants are people who want to buy the house they are leasing, but they need some time to build up their credit or to save up a down payment. During the year they are paying rent, sometimes I structure their lease payment so that a portion of it applies to the purchase price if they decide to buy the house. In addition, I often ask for the option fee at the time the lease is signed. Since I have collected an option fee in advance and possibly a little more each month, I have collected more money than I would have collected had I rented the house to tenants who had no interest in buying it. Plus, I have an agreement that, essentially, provides certain benefits, not the same but similar to those I get when I sell my house quickly.
It should be pretty clear by now that I am in a good position when I have people living in a house and considering it their home, people who, in fact, desire to buy the house as soon as possible. I am obligated to sell the house to them at the agreed-upon price on or before the last day of their lease, but I am not obligated to return their option fee. The option fee is the price they paid for the privilege of securing a certain price and keeping the house off the market for a year. Those two things are valuable. And, in addition, the tenants are not obligated to buy the house at all. They still have the right to move out if they decide not to buy the house by the end of the twelve month rental period.
A lease option agreement gives both the landlord/seller and the tenants/buyers a good deal. A couple things that can affect this mutually beneficial set-up are changes in housing prices and changes in circumstances. The seller is legally obligated to hold the price and the opportunity for a year, but the tenants do not ever have to buy the house. Changes in the housing market during the contract year may not benefit either of the parties, but the agreement is still in place. More often than not, a lease option agreement works to the benefit of the seller and the buyers.