I’m a real estate investor and when I need to
sell my home quickly I usually sell it myself, having several ways I can do that. One of those ways works pretty well for me, although it’s not an immediate sale, but it gets buyers in the house who are making payments and that works for me.
When I’m talking to homeowners and they are interested in my
home for sale, but they don’t enough money for a down payment, I often make a suggestion that solves the problem for all of us. Commercial real estate agents use lease option agreements, but the form is not used in residential real estate as often. It’s actually a lease agreement with an option, an opportunity, to buy the home later at a certain price. Residential real estate agents won’t be much help with this arrangement, so I’m always ready with the form I had my lawyer prepare for me.
Since I am the landlord and the seller, when I sign a lease option agreement I am allowing the future buyers to move into the home and make monthly lease payments so that I can sell my home quickly. At the time they sign the lease the buyers may pay me a fee and there may be an additional amount added to each payment, both of which are credited towards the sale price of the house. The fee covers two advantages and they are really paying for the privilege of having these advantages. First, a purchase price that doesn’t change during the lease agreement of one or two years is a great advantage when market prices are rising. And second, they are assured that no other buyer can appear and buy the house from me at any price. The tenants are protected. Having the option, they are protected. Both the up front and monthly portions of the option fee are credited to the buyers when they close on the sale. If they never close on the sale they forfeit the option fee money. That money represents my compensation for keeping my home off the market and making it unavailable to other buyers during the term of the lease.
You have to remember that I have the obligation to sell them the home but they are not obligated to buy it. They have flexibility. That’s why a lease option agreement is often a good solution for the buyers and also for me when I need to sell my home quickly, or at least know that the payments are covered by tenants who have the intention of buying it. If it’s done correctly, a lease option agreement works for everybody, when the proper forms and understandings are in place from the beginning.