Buying or Selling a Home/Lease to own transaction

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Expert: - 1/18/2010


Question
Hi there,

I just put our house for rental and threw out a lease-to-own option and I've been getting some inquiries on the option.

I've read numerous articles on lease-to-own transaction and am familiar with pros and cons of the option for both buyer and seller.

Current market value of my house is $275K - $280K. Bank owned house (exact same model) was sold for $275K in the last month.
Advertised rent - $1,900 including garden service and HOA.

My question relates to how much to charge for the option to buy in two years. I am not trying to rip off anyone and I just want to be fair to the potential buyer. However, I do want myself to be equally fair and be rewarded for taking risk.

What's a typical amount charged for the option fee and earnest deposit for lease to own?


Answer
Hi David...

No typical anything in real estate... you need to find a figure that is workable to all parties, and keeps you protected... how much of the rent goes to the option, and how is the option handled.. you should have a realtor or lawyer on your side draw up papers that are norm to your area.. I would make the option non-refundable.. you stand more to loose than the buyer who can't qualify today.. I would take a lower price on my property today and get it sold over a lease option.. and who know where the market will be in two years... the home may not appraise for the agree price at that point and now you are still out a buyer and a sale... good luck

Buying or Selling a Home

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Connie Wildasinn-Broker,GRI,RealtorŪ

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Broker,GRI,RealtorŪ, Investor since 1979. Buying or Selling Residential and Income/Investment Properties, How to understand the process, how to negotiate through the transaction, What to Look for - But more importantly 'What to lookout for!', How to tell if the time is right - or hold on and wait. Why not to listen to your friends and even your family members, Who really has your best interest at heart?. Understand why any market is a good market and how to spot a good investment for you! If you are looking in California.. check out my website www.MetroCalBrokers.com and if you need assistance in a neighborhood I don't service, I will locate a local agent to that area who actually knows their profession and can assist you in your needs!

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