A seller who is in financial difficulty is not one from whom you want to get a lease-option. Even if the seller wants to sell you the property, it can turn out that when you eventually exercise the option, she may be in such financial straits that she can’t comply with it. read more »
This is a serious problem and one that has received a lot of attention in recent years, particularly in some states in the Southwest. In Texas, lease-options have been severely restricted in the sense that the seller must have a very large equity in the property. read more »
Or the increase could be tied to inflation or housing prices in the area. Having such a clause in the lease-option accomplishes two things: read more »
This is rare; however, in the booming market of the early 2000s, it happened more frequently than it had in the past. The time would come for the buyers to exercise the option. They would obtain a commitment for the necessary new mortgage and would open escrow. And then the seller would simply refuse to sign the deed over to them. read more »
Of course, there is a catch. Usually the seller will insist on a monthly payment that’s higher than you’d otherwise pay if you were simply renting the property. For example, if the market rate for rent on the home were $1,000, the seller might insist on a monthly rent of $1,250. read more »
Perhaps an example will help. The seller wants $200,000 for the property and currently owes $100,000 on an assumable loan. The seller’s payments are $600 a month. You assume the seller’s mortgage and begin making the seller’s old $600-a-month payments. read more »