Selling Real Estate on Lease Options

Whether you’re an investor or a homeowner, when it comes time to sell, you should always take a close look at selling real estate on lease options. What makes selling real estate on lease options a powerful technique is that it enables you to tap into a huge pool of people wanting to buy a home but for one reason or another, aren’t quite able to make the purchase right now.

Most sellers give little thought to selling lease options on real estate until a buyer approaches them with the idea. If you’ve already made the decision that this is the way you want to go, you can take advantage of my free training and expertise on the subject by visiting https://wendypatton.com/articles/ or take advantage of the more formal training I offer at https://wendypatton.com/products/.

Selling Real Estate on Lease Options Process

Once you’ve made the decision and understand the process, finding a huge number of prospective buyers is no more difficult than running a well-written advertisement on craigslist or in the real estate classifieds of your local newspaper.

Once you have a list of potential buyers, the next step to selling real estate on lease options is performing background checks. You should first whittle down the pool by checking references and keeping those with a steady source of income on the short list.

Selling Real Estate on Lease Options – The Short List

From the short list, you need to look at their credit history. Regarding the credit history, you need to show some leniency but you don’t want to go with someone that shows a long history of not paying his or her bills. When selling real estate on lease options, your best alternative is going with someone that had a one time bad event on their credit report but otherwise has a history of paying on time and is back on track. These are the people that will soon qualify for a mortgage and will be able to complete the purchase.

Now that the Great Recession is well behind us, the types of buyers you should be looking at are those that had a period of unemployment, those that were foreclosed on, and those that went through a short sale. Of course, there will be others that you want to consider on a case-by-case basis.

When selling real estate on lease options, one-step that many sellers over look is having the buyer talk with a mortgage loan officer. The buyer isn’t likely to be preapproved for a loan but they can discuss what needs to be done to obtain a mortgage in the not too distant future. This gives both you and the buyer a real perspective if the sale can be finalized within the agreed amount of time in the lease option agreement.

Little Know Tip to Selling Real Estate on Lease Options

Before signing the final paperwork, it’s a good idea for you to provide the buyer with a disclosure statement. The disclosure statement tells the buyer about any deficiencies with the house that you are aware of. Almost every state requires full disclosure for every real estate sale. Although you are selling real estate on lease options, you should treat this as an outright sale from the beginning. Otherwise, there is a chance the buyer could back out later when you do have to give them the disclosure statement. Additionally, that could provide the buyer with the ability to demand return of the nonrefundable option fee.

It’s also not a bad idea for the buyer to have a professional inspection of the house done at this time.

Finally, you want to sell the house. You don’t want to become a landlord. Make sure the contract clearly spells out who is responsible for repairs and maintenance of the house. Everything, except the most serious repairs, should be the responsibility of the buyer just as it would be if the purchase had already been completed. That way, you won’t be getting telephone calls about backed up toilets early on a Sunday morning when you’re trying to catch up on your sleep.

By Wendy Patton

For more than 30 years, I’ve used the Sandwich Lease Option System to earn myself and my students millions of dollars. From my experience, I know there is plenty of room and opportunity in the real estate investment market for everyone wanting to participate to find profitable deals. It’s because of that fact and my personal success that I share the Sandwich Lease Option System with others.

If you found this information useful, please visit again soon at wendypatton.com.

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Without a doubt, buying real estate with lease options is the fastest, easiest, and least expensive way to invest in real estate. Fast because it greatly increases your number of potential buyers. Easy because the buyer isn’t looking to qualify for a mortgage and waiting for a third party. Least expensive for the investor because you take control of the property without the costs of buying it.

Win-Win-Win

It replaces the adversarial relationship that often develops between a traditional buyer and seller as they dicker over the terms of the sale. The seller begins collecting rent without becoming a landlord and you, as an investor, find an end buyer to collect a larger lease option fee and begin collecting a little more rent than you pay to the original seller. The end buyer (that the investor also does a lease option with) now has a home without the hassles of qualifying for a mortgage.

Specifically, you as the investor have a minimum of cash come out of your pocket. That means you have more buying power to do more deals and control more real estate with lease options. You also have another major payday by selling the house for more than you owe the original owner when you sell for more to the end buyer. When the end buyer executes the option to buy, you collect your third and largest payday all from the same transaction. Here’s a short list of benefits that come from buying real estate with lease options:

• A top sales price from the end buyer.
• Positive cash flow.
• The largest list of possible end buyers.
• Minimum risk because you’re not the owner on the title.
• No commissions or fees.
• No maintenance (the end buyer is responsible).
• A large non-refundable option deposit.

You’re offering a huge value to the tenant/buyer when you have an attractive financing plan. This translates into the ability to ask for a higher selling price (even in a slow market). Any reasonable tenant/buyer easily understands the concept of trading price for time and value.

Buying Real Estate with Lease Options for the Tenant/Buyer

One thing you do need to be able to do is clearly explain in detail to the end buyer exactly how buying real estate with lease options works. Make sure they know that eventually they will need to repair any credit problems and qualify for a mortgage. There will be a specific option period this needs to be accomplished within.

Explain they do have to pay an option fee up front. It’s up to you if it will apply to the down payment or not but it’s non-refundable. Applying it towards the down payment makes it easier and more likely the tenant/buyer will obtain a loan to finish the deal. Also, make sure they understand that because they want to own the home, they are responsible for maintenance and repairs. You are not a landlord.

Buying real estate with lease options allows them to determine if the neighborhood and house are a good fit for them without the obligation to buy. The lease option period also gives them time to shop around for the best possible mortgage. That a larger down payment will help them qualify for a mortgage when the time comes.

Explain to them that they need to treat the home as though they are buying it. They should have it inspected as they would an outright purchase – before signing the lease option agreement. Also, suggest they have a real estate attorney go over the lease option agreement with them. Explaining these kind of issues with them builds trust and makes the tenant/buyer more comfortable entering into a lease option agreement with you.

Buying real estate with lease options really is the fastest, easiest, and least expensive way to invest in real estate.

By Wendy Patton

For more than 30 years, I’ve used the Sandwich Lease Option System to earn myself and my students millions of dollars. From my experience, I know there is plenty of room and opportunity in the real estate investment market for everyone wanting to participate to find profitable deals. It’s because of that fact and my personal success that I share the Sandwich Lease Option System with others.

If you found this information useful, please visit again soon at wendypatton.com.

For more exclusive content, please subscribe to my RSS Feed and YouTube Channel.

What did you think of this article? Please leave a comment below.