Lease-Purchases for Sellers

The lease-purchase agreement is one option that you have as a seller. Many sellers are benefited by using this type of agreement. However, it does come with some potential drawbacks as well. Here are a few things for sellers to consider about the lease-purchase agreement.

Move Difficult Properties

One of the main benefits of using this method as a seller is that it helps you find a buyer for your property. Sometimes, the real estate market can be very difficult and competitive. During these times, you might have to resort to alternative strategies in order to move the property. By offering a lease-purchase agreement, you may be able to attract more buyers to your property. Certain buyers that cannot qualify for other homes may be attracted to your home because of these flexible terms. Selling real estate is a numbers game. This strategy can increase the number of potential buyers for your house and increase the odds of selling it.

Get Option Money

In order to put this contract into effect, you will end up taking option money from the buyer. This is essentially money that you get to keep regardless of what happens. Even if the buyer decides that she does not want to purchase the home after the lease term is up, you can still keep the money. Sometimes, you can negotiate this to be a substantial amount of money. Therefore, you really have nothing to lose when it comes to getting your hands on the option money. You are also free to use it for whatever you need.

Rental Income

In addition to receiving option money, you will be able to get rental income from the property. With this agreement, the purchaser is going to rent the property from you for a certain period of time before purchasing it. Therefore, you will be able to create a source of cash flow in the meantime from rent. With these types of agreements, the purchaser will usually be responsible for maintaining the property and paying insurance and taxes on it as well. This makes it a much more desirable form of rental agreement than most landlords are used to.

Lose Appreciation

One of the main drawbacks associated with this type of sale is that you could potentially lose out on appreciation in your property. When you negotiate this type of deal, you will agree on a purchase price at the beginning of the lease term. Then, when the lease term is up, the buyer will be able to pay you for the property based on the price that you have already agreed on. Since these agreements can take up to three years, the price of your property might have appreciated significantly in that amount of time. 

Delayed Payment

Many sellers want simply to unload a property and move on with their lives. With this method, that will not be an option. You will still be tied to the property for another few years until the purchaser can afford to buy it. In some cases, the deal falls through, and you have wasted 2 to 3 years of your life.