Advantages of a Lease Option
The option of buying home on the lease option created a new advantage for the homebuyers as well as the sellers. The two biggest advantages are the home is sold without paying a sales commission and the seller can sell the home higher than market value.
By eliminating the realtor, the seller and buyer are reducing the costs by 6% that is the sales commission. Removing the middleman creates a savings of the closing costs for the loan. The buyer will not have to move when buying the home since they already live in the home. This also creates a great situation for the selling avoiding the possibility of losing revenue from the vacant home and not having a renter in the home.
For the seller using the lease option, realize only 25% of people leasing the home will take advantage of buying the home so the money they have paid you in a gain for your income. If you use several lease options home, you will make a great profit based on the odds of actual buyers.
For the buyers, the lease option provides the benefits of not having to go through all the hassles related to the buying a home through a mortgage company. The mortgage company runs your credit, asks for employment verifications, as well as needing to prove your income for several years prior to the time of applying for the home loan. There are also the more fees to be paid when using a standard mortgage compared to the lease to buy option.
The leases can be set up for a ten-year loan or up to twenty years. The length of the lease is the design of the seller and sometimes the buyer. There are the possibilities of also extending the term of the lease when it gets closer to termination period and the buyer does not get a mortgage to pay off the lease loan.
The majority of the lease contract is written at the discretion of the seller yet some sellers will negotiate with the buyer for more favorable terms of the lease. If you are going to either sell the home or buy the home with a lease option, take to the other party involved to design a lease that will be beneficial for both parties. Having a lease contract that is favorable to both will create a better relationship as well as possible sale of the home.
Some sellers know the buyer of the lease home generally will not follow through with the purchase. They know to raise the price of the home so the payments will cover any current mortgage while still providing them a profit from the monthly payments.
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