Nashville’s Brian Copeland posed a wonderful provocative question on our Local REALTOR forum . . . It was a benign query about “biggest landmines sellers/buyers should be aware of” with respect to “lease to own” transactions.
Once I overcame the pit in my gut knee-jerk reaction to seeing the phrase “Lease to own” (because I have had many experiences – few pleasant – with these), I responded with a whole slew of reasons NOT to do them.
Other REALTORS had similar negative reaction responses . . .
Brian made the point that some Buyers and Sellers need and want these . . . and that to simply choose NOT to do them isn’t serving a viable consumer demand.
As much as the pit in my stomach wanted to prove Brian wrong, I know that he is right.
“Lease to Own” (AKA “Lease Purchase”) transactions CAN be valuable tools for the “Right” Buyers and sellers.
Certainly . . . Done right . . . and a measure of planetary alignment, these transactions offer Buyers not in a position to buy NOW . . . and Sellers in need of relief from the burden of owning the house (Possibly paying more than 1 mortgage and owing more than the market value) the opportunity to scratch each other’s itches.
There are plenty of caveats:
- What happens if the property value changes (up or down) during the lease period?
- What about maintenance issues?
- How much non-refundable deposit money is “enough skin in the game?”
- What happens if the Buyer still isn’t finance-able when it’s time to purchase?
- What happens if the Buyer falls out of love with the house during the lease period?
- What if the Seller falls behind on payments and the house goes into foreclosure?
- What else could happen?
These are the questions we REALTORS ask ourselves going into virtually every real estate transaction.
We want to turn over every stone possible – Think through every eventuality imaginable . . . and create a “bullet-proof” scenario that protects all parties’ interests and increases the odds of the closing actually consummating.
We all also know that the longer the period between Binding Agreement date and closing date, the higher the likelihood that things will go awry . . . so a 1 or 2 year “Lease to own” contract scares the petooty out of us.
Yet it serves a viable consumer demand . . . and we ARE here to serve, aren’t we?
The operative 2 words are: “Done RIGHT!”
What IS “Done Right” with respect to “lease to Own” contract construction?
We’re going to open this pandora’s box around this topic in this Thursday’s mastermind session 7/19 from 10-11:30ish followed by a FREE lunch provided by Dan Zellars with TheDailyClassifieds.com
All in the name of Service . . . RSVP if you want a seat in the room, and I’ll reply with the location.