“World's Most Complete Neighborpedia”
Sponsor a Community — What is Localism? | Register or Sign In
Explore:   What's happening in your neck of the woods?
Home How about a lease purchase for a seller?

How about a lease purchase for a seller?

Lease purchase for sellers?

A few years ago I did a post on lease purchase for buyers.

How about a lease purchase?


I will tell you the gist of it is that in most cases I am opposed to a buyer doing a lease purchase. But what about for home owner sellers? Should you consider putting your home up for lease purchase. The case for a seller to do a lease purchase is much better but with one huge caveat.......

Many of them do not end up selling!
Be aware that there is a good likelihood that if you do a lease purchase it does not mean the home will sell. It could sell and if it is properly structured the chances are better that it will end up in a sale, but there is no guarantee.

So even if it might not end up in a sale a few years down the road why do it?
  • If your home is not selling and you are considering renting it as an alternative then consider adding a lease purchase to the equation.
  • If you are an investor and want higher rent and more upfront cash then consider it.
  • You can get longer lease terms. 24-36 months would be common.
  • Less maintenance. Lease purchase occupants are more likely to treat it like they own it.
  • More cash flow from higher rent
  • More money upfront in the form of Earnest money or other consideration. I recommend the earnest money be non refundable.
  • Lower seller paid closing costs. We don't know what kind of loan the buyer will get 3 years from now. Besides, getting a no closing cost loan is the "biggest no brainer in the history of earth" right?'
  • Higher sales price. Your tenant/buyer is not in a position to negotiate.

If it is all structured properly and the correct expectations are set for both the tenant/buyer and the seller/landlord it can be a good experience that ends in a sale!
  • Set the price realistically. Remember that the buyer will get an appraisal and if the price is too high it wont close.
  • Remember that it it is lease until it actually sells. Abide by landlord tenant law, collect late fees, etc.
  • Don't go crazy with the rent credit. Most lenders won't allow too much credit at the time of the mortgage. However, if the lender balks you can credit some toward purchase and then some toward closing costs.
  • Date of closing, possession, inspection, and many other contract points are all negotiable. It's much easier for a seller to set the terms!



Posted Tuesday Jan 24