Lease Option

[Bill Keegan]

Originally Posted by dougnaie

We are looking at a place in CT that has been on the market since June - not too long given the current market. My husband seems to want to make an offer that is a Lease Option, even though that is not what the sellers are seeking. I think this idea is ridiculous, and may offend them for a variety of reasons. If YOU were the seller, would you consider this type of offer, or write it off as not worth considering?

As several others have said, it can never hurt to put the offer out there. In most cases when dealing with owner occupied residential property, I would say sellers are not going to be interested, for one primary reason. Usually, they will be using the funds from the sale of this proiperty to purchase their next one. If I read your next post correctly, these sellers already have a place to which they are moving, and may not need these funds for that. So perhaps your odds of having that accepted are better here than in most circumstances.
I, however, happen to agree with whomever it was that asked why you would do this. I know you want this house, but what happens if yoru current property doesn't sell? How long can you go on paying for both properties? Also, it sounds like you would prefer to simply purchase, but don't have the funds right now. Another option to conside would be a contingent offer. As in, "I'll buy your house for $xxx, contingent upon the closing of my current property." That way, you are protected from the possibility that your house doesn't sell, and you aren't paying for two properties at the same time. There is still some risk of not getting the house, as the seller will likely insist on continuing to market it, but you should always have the right to satisfy or remove the contingency and ratify the contract.

[palmcoasting]

http://homebuying.about.com/od/finan...7_leaseopt.htm
You can read about the differences here, although I will say that when we've structured the offers, the money that was non-refundable was allowed to be used as funds towards the downpayment when/if the option was exercised. The rent to own situation is something entirely different with generally no initial deposit made over the security deposits, but a portion of the rent goes towards the down payment.
As I said, it can't hurt to make the offer. And it would help to have yourself and Realtor figure out why it's adventageous to the sellers to take the offer and understand fully how it would work/be structured. Many agents do not think of doing lease-purchase-options, many don't think they come to fruition (and many don't) so they don't even bring it up with the sellers. I've had sellers tell me beforehand absolutely not but then when the offer actually came in, they sat down and thought long and hard about it. A couple of them changed their minds. And I have to say, neither of them actually closed...the market changed, buyer's circumstances changed, etc. but they kept the non-refundable deposit and security monies. These sellers may already be carrying two mortgages, similar to a situation that you would be in if you went for a straight purchase, and might be at the time when they need some relief that would come from the rent. You just never know until you make the offer. You are a stronger candidate, from my point of view, since you are not doing this because of poor credit, which is why most of these deals are done. You can offer a shorter term for the option...say 6 months vs 1 year. You are able to purchase outright, you just don't want to. So, your credit isn't an issue. That's a big plus.
If you consider purchasing this house and renting your own out to offset monthly payments, which pretty much makes the money outlays the same as doing it the way you are thinking, do yourself a big favor and make sure you get people in there that are agreeable to having the house shown while they are living there and do a short term lease if not month to month. It's difficult to sell a house with a tenant in it.
I don't know how much money you are working with...is the seller able to hold some paper? If so, you may be able to work a deal where you 'purchase' now, pay their mortgage payments, they forgo payments on any loan they are making to you until the end of the term...say a year with interest being tacked on to the balloon payment. That might buy you the time to sell your house, get them out of their situation.