Today’s ultra low market prices make lease options attractive to many. A simple search of Craigs List shows many properties in the Bay Area being offered with this option. Is this a good thing to do in today’s market?
On the plus side, a lease option allows buyers to lock in today’s low rates with a seller while building a down payment through paying extra each month towards it. If you believe the market will go back up, this allows you to take advantage of the prices now. It also buys time to build credit and save for the rest of your downpayment, so can be great for first time buyers or those who were hurt in the downturn.
On the minus side, lease options are “gambling” that the market will, indeed, go back up. If the market goes down, your price is still your price. If you don’t exercise your option to buy, then you forfeit all the extra money you have paid to the seller for the lease option. This also holds true if you don’t qualify for a loan in the amount of time agreed upon when you sign the lease option. This means that it is to your advantage to give yourself as much time as possible!
Some lease options require you to put money down upfront for the priviledge of locking in the price. It pays to do your homework, and retain a good real estate attorney, before entering into any binding agreements with the seller.
For more information on lease option, or also known as rent to own and rent to own homes, feel free to click the links. This site has some great information for those who want to learn more, and has a great system already set up for those who want to buy or sell homes!
2 posts, 2 voices
dolsonk writes, Oct 11, 2007: (8 posts)
Today’s ultra low market prices make lease options attractive to many. A simple search of Craigs List shows many properties in the Bay Area being offered with this option. Is this a good thing to do in today’s market?
On the plus side, a lease option allows buyers to lock in today’s low rates with a seller while building a down payment through paying extra each month towards it. If you believe the market will go back up, this allows you to take advantage of the prices now. It also buys time to build credit and save for the rest of your downpayment, so can be great for first time buyers or those who were hurt in the downturn.
On the minus side, lease options are “gambling” that the market will, indeed, go back up. If the market goes down, your price is still your price. If you don’t exercise your option to buy, then you forfeit all the extra money you have paid to the seller for the lease option. This also holds true if you don’t qualify for a loan in the amount of time agreed upon when you sign the lease option. This means that it is to your advantage to give yourself as much time as possible!
Some lease options require you to put money down upfront for the priviledge of locking in the price. It pays to do your homework, and retain a good real estate attorney, before entering into any binding agreements with the seller.
realestatewonder3 writes, Aug 18, 2008: (6 posts)
For more information on lease option, or also known as rent to own and rent to own homes, feel free to click the links. This site has some great information for those who want to learn more, and has a great system already set up for those who want to buy or sell homes!