One of the biggest pleasures in this profession is working with tenant-buyers to get them into the home that they will soon own! These people are excited! These people are motivated!
Have all the forms ready to go and printed. Have the tenant-buyer sign as soon as possible. Signing at the time they give you the deposit is ideal.
The Seller’s Lease Option Forms and Contracts are in Order
More often than you might think, you will have an excited tenant-buyer before you have all of your lease option forms and contracts completed with the seller. That’s how excited tenant-buyers can be. It can be done but it’s uncommon to have a tenant-buyer move in before you have all the paperwork in order with the seller. Some of the key steps you want to have completed with the seller are reviewing the title paperwork, being sure the taxes and mortgage are current, and of course, have your lease with an option to purchase paperwork signed by the seller.
When working with the tenant-buyer, always remember that you are the landlord to them and that you are also the seller to the tenant-buyer. You must perform like a professional by having all of the tenant-buyer’s lease option forms and contracts in order.
The forms we provide specifically favor your end of the deal as the seller.
The Selling On an Option Check List is Your Friend
The course material comes with two crucial checklists. First is the checklist that guides you through the process of working with the seller. But here, we are dealing with the checklist that guides you through the lease option forms and contracts with the tenant-buyer. Because you are the seller to the tenant-buyer, the checklist is labeled as “Selling On an Option.”
The tenant-buyer process begins when you advertise that the house is available on a rent to own basis. Prospective tenant-buyers will call you. In a short time, you will build a list of buyers that you can call at any time (without even needing to advertise).
The tenant-buyer process really gets rolling with the application. You’ll collect the application fee at the same time that you give them the application to fill out. Because this is a non-refundable application fee, be sure they understand that the application must be completely filled out. It contains most of the information you need to qualify them for the lease option. This is not a standard rental application. More information is required and it’s a good idea to let them know you’ll be verifying what they provide to you. It’s also important that information be provided for every applicant over the age of eighteen that will be living in the house (not just the ones that will apply for a mortgage).
The checklist is very easy to follow because it’s sequenced in the order that the lease option forms and contracts need to be completed and processed.
The more information you gather on the application, the better off you will be if you ever need it. Other details in the course remind you to be proactive by doing things like making copies of driver licenses and bank checks for the tenant-buyers. Some of the information you collect on the application isn’t necessarily needed to qualify the tenant-buyer, but if you ever do have a problem with a tenant and need to later collect from them, you will want complete information on the application.
As the professional in the deal, it’s important to keep in mind that not all of the applicants are going to qualify for the lease option purchase you offer. The applicants know they are at least a little shy of being able to qualify for a mortgage. Unfortunately, you will need to reject some of the applications. There is a rejection letter provided that thoroughly covers rejected lease option forms and contracts. The fill-in-the-blank rejection letter begins with “We regret that we are unable to help with your housing needs” and is legally based on the Fair Credit Reporting Act, 15 U.S.C. Section 1681, et seq., as amended by the Consumer Credit Reporting Reform Act of 1996 (Public Law 104-208, the Omnibus Consolidation Appropriations Act for the Fiscal Year 1997, Title 11, Subtitle D, Chapter 1).
But hey, let’s get back to the most enjoyable part of the process…
Next Steps After the Happy Tenant-Buyer’s Application is Accepted
Even if the happy tenant-buyer can’t move into the house immediately, one of the first things you do after approving their application is to collect the non-refundable deposit. This deposit is separate from the option fee but is later applied towards their option. The non-refundable deposit holds the property and shows their intent to rent it. If they don’t later sign their contracts or move in, they would lose this deposit. When they do move in, you need to go through the check-in/out list and video the home in the “move-in condition.”
At this point, other important lease option forms and contracts may still be in the proposal or negotiation version. Before the tenant moves in, you want all of these to become a complete set of formal and signed lease option forms and contracts. At a minimum, this includes the rental agreement, option agreement, and sales agreement. As a professional, I’m persistent about making sure tenant-buyers understand exactly what they are signing and committing to.
They are signing up to buy a home and for many of them, it will be the first home they have ever owned.
You and the tenant-buyer are almost at the end of this happy trail. The checklist is designed to help you remember to take care of a few other legal requirements involving lease option forms and contracts. This includes providing the tenant-buyer with forms like the seller’s lead-based paint disclosure and the seller’s disclosure about any known defects in the home. You need to disclose everything you know, but because you’ve never lived in the house, you rely heavily on what the seller has disclosed. Don’t get hung up about having to disclose everything because every house sale requires this. Disclosing what you and the seller know is not what can get you in trouble. Not disclosing what is known is what causes problems. For instance, the basement might have leaked several years ago but it was fixed and no longer leaks. Not disclosing that can get you in trouble and possibly require that you or the seller have it repaired if it starts leaking again… your best move is disclosing everything.
Don’t forget to wrap up the small stuff. Some of this requires a few more lease option forms and contracts. One of the more important items is verifying the tenant-buyer has taken out renter’s insurance. You also want to confirm that any advertising you were running has been canceled and that utilities to the house have been turned on. One more thing is making sure that a tenant-signed copy of the check-in/out list has been returned to you. Nothing big here. Just make sure all of the “i’s” are dotted and the “t’s” are crossed so that everyone in the deal is happy and it’s a win-win-win come true for all!
It’s always about making lease option forms and contracts as easy as pie!
Every lease option form and contract that you need is ready and waiting for you to TAKE ACTION…
- Investing In Real Estate With Lease Options.
- Advanced strategies for Buying and Selling with Lease Options.
- Your Wealth Building Arsenal.
- Add Personalized Coaching.
- Cooperative Lease Options.
- Expand to Get the Deed “Subject To.”
- Round it all out by Working with Realtors.
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.
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