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I have a question for Real Estate Agents. Do you find that your sellers are open to accepting a lease-purchase offer on their home? Is this something that is typically stated in the listing from day 1? Or something that is considered after the house has been on the market for awhile? Generally at what point do the sellers become open to this option if they weren't at first (house for sale for 6 months, etc.)?
In your experience do think buyers will be insulted at a lease to purchase option offer? I know the best scenario is to sell a house outright and be done with it. I am hoping that that view has changed a bit since the market has had so many ups and downs lately. We plan on buying this summer but may go the lease purchase route.
I have a question for Real Estate Agents. Do you find that your sellers are open to accepting a lease-purchase offer on their home? Is this something that is typically stated in the listing from day 1? Or something that is considered after the house has been on the market for awhile? Generally at what point do the sellers become open to this option if they weren't at first (house for sale for 6 months, etc.)?
In your experience do think buyers will be insulted at a lease to purchase option offer? I know the best scenario is to sell a house outright and be done with it. I am hoping that that view has changed a bit since the market has had so many ups and downs lately. We plan on buying this summer but may go the lease purchase route.
I've found that some are, and some aren't. It usually depends on several things - how long the home has been on the market for sale, how 'desperate' they are to sell, pricing and the surrounding area.
Lease/purchase options can be very tricky because no one really knows what the future holds. The seller may be losing out on future monies if prices increase. The buyer may not be able to obtain financing for the agreed upon price if prices decrease (or have to come out of pocket for more).
Are you looking to purchase through a lease option or do you have a home you're wanting to sell? Best advice (in either situation) is find a reputable real estate agent in your area and discuss the various market situations.
I have a question for Real Estate Agents. Do you find that your sellers are open to accepting a lease-purchase offer on their home? Is this something that is typically stated in the listing from day 1? Or something that is considered after the house has been on the market for awhile? Generally at what point do the sellers become open to this option if they weren't at first (house for sale for 6 months, etc.)?
In your experience do think buyers will be insulted at a lease to purchase option offer? I know the best scenario is to sell a house outright and be done with it. I am hoping that that view has changed a bit since the market has had so many ups and downs lately. We plan on buying this summer but may go the lease purchase route.
Thanks for your opinions.
In your scenario, you are narrowing your possibilities for housing. The best thing to do would be only look at properties where the sellers are already amenable to a lease/purchase rather than look at homes for sale "hoping" they will do a lease/purchase in which case you would be wasting a lot of effort. It would depend on the sellers' motivation/reasons for moving. Sometimes properties in an estate could be more willing to lease/purchase; but there may be legal entanglements. There are sellers who can afford to leave the house vacant and move on, rather than take a chance on an option.
If you want to lease/purchase because you want to take advantage of a market price bottom, that may not prove correct. Lease purchse contracts written by an attorney will contain an escalation price clause to reflect the market at the time of conveyance of the property, one or two years etc.
Why not just do straight rent or buy, and not try to "time the market". Interest rates are at a rock bottom rates now, and you are more likely to get a better deal with a straight purchase.
We short sold 2 homes last year. One we were living in and one we couldn't sell (and were renting out) back in 2006. This was due to a large paycut at my husbands job. We are renting now and he has been back on track for awhile now with his pay at work. We want to do a lease purchase so we can get into a more permanent housing situation. We have 2 small children and I want to get into a home to stay - hence wanting the stability of the lease purchase vs just renting.
Our mortgage co required us to be late on a payment before they would approve our short sale - so we are stuck bring unable tp get a mortgage for 1-2 more years due yo the "30 days late" tag on our credit report. Our score is fine but that tag will hurt us. I would love to just flat out buy a house...
Thanks again for the great advice. Now the trick will be finding a realtor who is willing to work with us. Any tips on finding one? We're in TN but will be moving to NH where we hope to lease / buy. A lot of posts I've read state that many realtors aren't interested in working with people who aren't in the 100% buying mode.
We short sold 2 homes last year. One we were living in and one we couldn't sell (and were renting out) back in 2006. This was due to a large paycut at my husbands job. We are renting now and he has been back on track for awhile now with his pay at work. We want to do a lease purchase so we can get into a more permanent housing situation. We have 2 small children and I want to get into a home to stay - hence wanting the stability of the lease purchase vs just renting.
Our mortgage co required us to be late on a payment before they would approve our short sale - so we are stuck bring unable tp get a mortgage for 1-2 more years due yo the "30 days late" tag on our credit report. Our score is fine but that tag will hurt us. I would love to just flat out buy a house...
Thanks again for the great advice. Now the trick will be finding a realtor who is willing to work with us. Any tips on finding one? We're in TN but will be moving to NH where we hope to lease / buy. A lot of posts I've read state that many realtors aren't interested in working with people who aren't in the 100% buying mode.
Hmmm... TN to NH might be a cost of living problem. Some towns in NH have very high taxes. Do a cost of living comparison on: "Sperling's Best Places"; there is a link there to compare for relo purposes.
Unfortunately the two short sales will definitely hurt you for quite awhile. In this market, longevity of work history is paramount. I think you are much better off renting now that you've explained your reasons for wanting to lease/purchase. I doubt a seller would take a chance on your history; plus with a lease/purchase, you still have to qualify and put down a hefty non refundable deposit which the seller keeps if you don't perform. The difference in "stability" is negligible if the children are under school age. It will be a challenge to find an agent who wants to represent you unless you start out with a pre-approval letter from a bank. As I mentioned, your choices will be narrowed dramatically. Try to get a straight rental, get the kids settled for as long as possible, and see how it goes in a new area rather than jumping in head first. Best advice I have at this point, I know it's not what you want to hear; but it's realistic for you. Keep us posted !
Last edited by QuilterChick; 12-31-2010 at 10:54 AM..
Reason: added thoughts
Oh Yes - taxes *are* high in NH. We actually lived there before (my husband was born and raised there). And its amazing what you can purchase a house for in TN vs NH. A big 4 bedroom 3 bath 3 car garage brick home on a large lot in TN vs a tiny little cape on a tiny lot in NH for the same price. Although housing prices have come down quite a bit in the last few years compared to when we sold our home up there.
We figured we'll be trading private school tuition for high property taxes. NH has great public schools - whereas the Memphis area - not so much - so its an even trade.
My husband has been in the same profession since 1998 and has been with his current company since 2004. He will keep his job when we move to NH - so his job history is/will be very stable. The more I read though the more I think we are going to have to rent for another year or two. No matter what our salary - with the short sales and the lack of 20% down we don't have many options but to rent.
I will post again if we miraculously get a mortgage or if we find someone willing to lease purchase. Maybe it will encourage others who are in the same position.
QuilterChick, peachstate, Silverfall and Brandon - thank you for taking the time to respond to my questions - it helps a lot in my research/planning.
MJ,
I would look for an owner-finance before a lease-option.
You might find one, and even if you pay a high rate, when you have your credit straight, maybe a refi.
Who knows?
Financially, IMO, there is little to recommend the risk of lease option, and the expense at the front end with very good possibility of never closing. Most never culminate in a sale.
I would not recommend an L/O from an owner who has a loan with a "due on sale" clause, unless you can gain strong assurance that the loan will not be called when the L/O is recorded.
I've never had a client even consider it. The vast majority of the time, LPs fail horribly. Investors that offer LPs like them because a buyer will get into their house with a large down payment, make payments for a while and then default, leaving them available to just get another large down payment from the next person and start over again. I'm sure there are exceptions, but not many.
Owners don't want to deal with that mess and understand that if someone can't get a traditional loan, there's probably a reason, and the sellers don't want to be the one to take on the massive risk.
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