Quote:
Originally Posted by Porsche-O-Phile
I need to correct some incorrect ASSumptions people are making above:
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Indeed. You are in a lease-
option situation NOT a lease-purchase (rent-to-own). Neither one has anything to do directly with OWC. In other words, you are simply renting a property with the option to buy at the end of the lease term. Also, I'd be highly suspect if someone is telling you that they are going to give you all of your rent back as a down payment. I can see sellers giving (partial) rent credit towards closing costs/pre-paids, but in most cases there are restrictions on what monies the seller can contribute towards the buyer's actual down payment. So, unless they have set up a separate escrow account that your rent gets deposited in every month, I would be very skeptical.
Anyway, in a true lease-to-own situation (lease-purchase), there are two contracts in place. A rental agreement, and a purchase agreement. The purchase agreement ignites at the end of the lease term. Usually there is an earnest money deposit (for the purchase contract), and is often taken in lieu of a rental security deposit. The only difference is that I would make the earnest money non-refundable (as opposed to a rental security deposit, which is refundable).
As a seller, I would personally never even consider a lease-option if I was ultimately looking to actually, you know,
sell. With a lease-option, you have no recourse and very little compensation for time lost, and potential property rehab (carpet, paint, etc.) if they don't follow through on the purchase. The only thing I might consider would be a true lease-purchase, but only with a
sizeable non-refundable EMD. That way the tenant/buyer has a vested interest in following through with the purchase. Also, since there is a high percentage of lease-purchase fall-through, it would weed out the contenders from the pretenders.
Otherwise, I'd take a pass and wait for a conventional/FHA/VA buyer to come along. Contrary to what PoP thinks, there are plenty of qualified buyers out there, especially under Jumbo and FHA limits. You just have to make sure that you are priced right, marketed right, and that the home shows well. Either way, good luck!
