The Seller’s Being Unwilling to Honor the Option Part 2
Another way this situation might play out is that the seller might come to you and say something like, “Let’s compromise. I’ll sell the property to you for $400,000. That’s still $200,000 below market—all profit to you. But I’ll also get to share some of the equity increase the property saw during the last few years.”
To avoid a lengthy and costly lawsuit, would you agree?
How to Minimize the Risk. Again, there’s no way to eliminate the risk of this happening, rare though it might be. But you can minimize it by taking the following precautions.
- Know the person with whom you’re dealing. An honest person doesn’t usually turn dishonest. If the person selling the property was honest when you got the lease-option, he or she is likely to stay so. This is one of several reasons (others are below) that I suggest you get a credit report on the seller before going through with the lease-option. (The seller will surely want one on you, so just return the favor.) Someone with excellent credit is more likely to be a straight shooter.
- Insert an automatic price increase into the lease-option. This is not as commonly done, but it’s not unusual. It’s a phrase that an attorney or a good agent can put in that says the price you’ll pay will go up, say, 3 percent a year.
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