Sell Any Home Faster Through Lease-option

Since mortgage rates started to go up there’s been a drastic reduction in home sales, lease-option is expected to be become more a great tool in selling your home.

The great thing about lease-option is the flexibility of a property owner to sell whether it’s a house or a condo.  Lease-option could also be use for commercial properties.

Lease-option is a complete opposite of your typical home selling.  There are always more lease-option buyer than there are sellers.  When you have more buyers it will surely be easier to sell your home.  It will be a great benefit to any home seller to have a deeper understanding how lease-option really works.  

What is exactly a lease-option?

It’s a lease of a house, condo or even a commercial property, that gives the tenant the option to purchase the property.   And this option gives great advantage for both the buyer and the seller.

Lease-option is not the same as lease-purchase.  Lease-purchase agreement requires the tenant to purchase the property at the end of the lease.  Whereas lease-option, the tenant could exercise the option of purchasing the property.

Lease-option is such a great tool especially when there is more supply of homes than the demand.

Rent Credit – The Key to Lease-option Success

A rent credit is set when a rental agreement is established between the tenant and the property owner,   This credit clearly states how much of the rent is to be applied toward the purchase of the property.   For example, let’s say the rent is $1,500 per month with a $500 per month credit.  After 12 months of rent, the tenant could have built a $6,000 rent credit toward the purchase of the property.

A decent rent credit could be anywhere from 20 – 30 percent and sometimes could be all the way up to 100 percent.  A higher rent credit provides better incentives for any prospective renter. 

A clever way to share with your prospective renter in educating them the advantage of lease-option is like a “forced savings”.  They would have built a great amount of down payment when they opted to purchase their rented property.

There are also some tax benefits that property owners could enjoy when it comes to lease-option.  Consult your tax advisor to know more of tax strategy using the lease-option.