First, read about seller financing in general. A lease-option or lease-purchase deal is a form of seller financing.

The wrap-around deed of trust deal is a version of seller financing. The advantage of a wrap-around deal is that actual title is transferred to the buyer. With the lease-option deal, title stays in the seller until the buyer refinances or resells or otherwise pays off the seller.

Generally, buyers can get into a wrap-around deed of trust deal if they have a larger down payment. Generally, a seller prefers to sell on a lease-option or lease-purchase basis if the buyer only has a small down payment. A good example of this is the renter who says, oh, by the way, I would like to have the option to buy this house, and who pays only a few thousand dollars in option money. Sellers generally want to see more commitment from a buyer before they part with title.

But a lease-option deal can still be good for a buyer. It may be the only way the buyer can even get close to becoming an owner.

Advice to sellers who sell on lease-option: A renter who pays extra for an option is generally a better renter. You can build into your agreement a clause that says that the renter is responsible for all repairs and maintenance because the renter intends to become the owner down the road. A seller generally wants a shorter option period, say two years, so that the seller can adjust the price upwards if the market rises. A landlord can generally get higher rent from a lease-option buyer than from a regular tenant. The seller generally will want none of the rent to apply to the purchase price.

Advice to buyers who buy on lease-option: Try to get a five-year lease-option. Whatever is wrong with your credit that prevents you from being able to get financing may take more than two years to fix. Also, try to get the seller to sign a deed and deposit into into true escrow so that the deed will be already signed and notarized when the time comes to take title.  The lease-option buyer will generally ask that a part of the rent apply towards the purchase price. The lease-option buyer is wise to have rent paid through a collection agent – who might be the true escrow holder of the deed – so that he can prove to the lender who does the refinance that he has paid all lease payments on time.

A seller can generally get a higher sale price when he sells on a lease-option basis. This is because there is a larger pool of potential buyers – those who can get financing plus those who have significant down payments and good income but who have dented credit.

Technically, a lease-option deal triggers a due-on-sale clause. However, because generally the lease-option agreement is not recorded, there is no way the lender can learn of the sale unless one of the parties to the transaction tells the lender.

If your are a buyer or seller who finds a seller or buyer who will do a lease-option deal – without the assistance of a real estate broker – contact me, and I will write up the deal and get it set up for closing. I will also set up the collection account and park a deed in true escrow.

On the other hand, sometimes the best way to find a lease-option buyer or seller is through a real estate broker.  A broker wants to be paid his commission, and if the option money is great enough to cover the commission, the commission might be paid at the start of the lease-option agreement. If the option money is small, the broker might have to wait until the buyer cashes the seller out. If the option money is in between, then part of the commission might be payable when the lease-option begins and the rest when the buyer cashes the seller out.

Whether you are working through a real estate broker or not, I am ready and willing to set up lease-option transactions.

I give initial telephone consultations to real estate agents and buyers and sellers by telephone for no charge. I can represent the buyer or the seller. If there is a real estate broker involved, I advise the broker to put together a lease-option agreement on standard forms used by the multiple listing association. Because the standard forms do not cover all issues and because brokers are not licensed to write complex addenda, the broker then brings me into the picture, and I complete the escrow setup.

All mortgages should be assumable – provide the buyer has reasonable credit – however, lenders want to make fees by forcing buyers to get new financing. But buyers and sellers can be creative and “go around” due-on-sale clauses by selling on a lease-option basis.

James Robert Deal, Broker and Attorney
Broker with Agency One Realty LLC
WSBA # 8103, DOL # 39666
425-774-6611, 888-999-2022
James at James Deal dot com

Anti-vaxxer want informed consent and liberty

Anti-vaxxer want informed consent and liberty Ada Drinkwater, Wife mother grandmother great grandmother Liberty & informed consent are not only the American Way, but a part of every document of medical ethics. Informed consent is also a part of the National...

Tetanus Vaccine – TDaP – No Proof Of Safety

The US Institute of Medicine concluded that the evidence is inadequate to accept or reject a causal relationship between the DTap vaccine and autism. How then can the CDC make the blanket claim that vaccines do not cause autism?...

Sign In

CLICK HERE TOSIGN UP FOR A BETTER PROPERTY SEARCH TOOLYou will be asked for your email address and your telephone number.You do not have to enter your telephone number. You can enter any ten digit number if you want to retain your privacy. If you want me...

Home Renovation Can Cost A Lot

Reality check: Don’t fall for these TV home renovation fibs Kitchen and bathroom remodels can cost more and take longer than HGTV shows lead you to believe. · by Sharon Salyer · Saturday, January 26, 2019 These before-and-after photos of this Edmonds...

Real Estate Calculations Every Investor Should Memorize

The Top 8 Real Estate Calculations Every Investor Should Memorize by Andrew Syrios | Despite what many of us math-allergic folk would prefer, real estate does involve...

Ten Mistakes Investors Should Avoid

10 Lethal Mistakes to Avoid on Your First Real Estate Investment by Chad Carson | You may have heard that your first real estate investment is the...

How to Make Earnest Money Non-Refundable

Click here if you are having trouble viewing this message. Weekly Membership Newsletter JANUARY 8, 2019 • Stay Connected! QUESTION: I have been asked a few times about non-refundable earnest monies. If a seller, who is a builder, is requesting that earnest monies be...

4 Different Types of LLCs and the Ways They Pay Taxes

4 Different Types of LLCs and the Ways They Pay Taxes by Scott Smith | The following is meant for informational purposes and is not legal advice. For...

Home Inspection Questions

What Buyers Should Ask After a Home Inspection October 9, 2018 After an inspector has finished a home report, buyers may feel overwhelmed by any flaws that might have been found. That’s why it’s important they take the opportunity to learn more so that they can move...

Door Knocking to Find Real Estate Sellers

29 Door Knocking Resources for Successful Lead Generation Posted by REDX January is the perfect time to door knock. Most people wait until the holidays are over to list their home, and more homes are listed in January than any other month. This presents a once-a-year...

How To Choose A Domain Name – by Saul Klein

Choosing Your Domain in the Age of Dot ANYTHING Written by Saul Klein Posted On Friday, 14 September 2018 13:00 · As the Internet continues to...

Mistakes Sellers Make

5 Mistakes Home Sellers Make Written by David Reed Posted On Friday, 14 September 2018 21:56 There’s no shortage of advice for home buyers. Getting approved for a...

Cell Towers Reduce Property Values

Survey by the National Institute for Science, Law & Public Policy Indicates Cell Towers and Antennas Negatively Impact Interest in Real Estate Properties 94% of respondents said a nearby cell tower or group of antennas would negatively impact interest in a...

Reciprocal Easements by Prescription

Reciprocal Usage Easements? What is the Purpose? Many buildings that were constructed prior to the 1960s lacked adequate parking, and/or even on-site common usage with for ingress/egress of automobiles. In property law, ingress/egress referred to rights of a person to...

The Downside of Smart Homes

The Downsides Of Selling A “Smart Tech” House Posted on August 4, 2018Natural Living · · · · · · · Like By Catherine J. Frompovich Listen to Article Will your “smart home” become a true headache and liability when you...

Where Americans Move To – Where they Moved From

Just a few years ago, experts indicated Americans (especially young Americans) were more interested in a different lifestyle than previous generations. Instead of owning a house in the suburbs, the new American dream consisted of renting an apartment in the city....

Selling FSBO Can Cost Sellers A Lot Of Money

Selling Your Home Solo to Save Money? You’ll Actually Make Less Than You Think Posted in Economist Commentaries, by Amanda Riggs on July 9, 2018 385 Some homeowners opt to sell their residence without a real estate agent to get around paying a commission and make more...

Renew the National Flood Insurance Program (NFIP)

RENEW FLOOD INSURANCE BUT QUIT SELLING NEW COVERAGE AND QUIT BUILDING NEW HOMES IN FLOOD ZONES SEA LEVELS ARE RISING Can't read or see images? View this email in a browser Have you taken action yet? Time is Running Out Dear Emelyn, The National Flood Insurance Program...

Underwater Properties – Due to Climate Change

Climate Change Will Force the Poor From Their Homes Low-Lying towns and Homes in Washington will be affected too Alamy This story originally appeared on CityLab and is part of the Climate Desk collaboration. It’s no surprise that a list of places most at risk from...

The Foreclosure Train Rolls On

The Foreclosure Train Rolls On

Private corporations such as Loan Star and Caliber bought thousands of mortgages. The government pays them to modify mortgages, but they are quick to foreclose. They invest in high value instead of low value homes. They should be required to serve the interest of the local neighborhood as are banks. They should be regulated as banks.

Subscribe To Our Newsletter

Join our mailing list to receive our latest news and updates.

You have Successfully Subscribed!

Pin It on Pinterest

Share This