Lease With Option to Purchase, Foreclosures, Short Sales, Bank REO's

If you've been wanting to buy a home but don't have a down payment, good credit or maybe haven't been on the job long enough or a number of other reasons, then this is what you've been waiting for. As you know prices have been falling as the foreclosures kick in and it's time for you to buy a home..

Some problems for sellers is that many people now-a-days can't qualify for a loan or don't have enough down payment per the new lender regulatations. Even if the price is right if no one can qualify for a a loan there won't be a sale.

This is the time of the real estate cycle when a lease with option to purchase (lease option) makes a lot of sense for both buyers and sellers. Many sellers turn into landlords when they can't sell and don't even think about doing a lease option. If they do a straight lease they are losing out on what they were originally trying to do and that was to sell the property.

This is where you the prospective home buyer comes to save the day. A lease option can solve several problems when you find the home you'd like to own. The way a lease option works is that you negotiate with the owner for the right to lease the property with the option to buy it at a future date for a specified price. The period of time you have it leased for, the rent amount, sales amount and all other conditions are negotiable.

If for some reason you don't want to buy the property, you’re not obligated to do so, but the seller has to sell you the property for the agreed upon price as long as you have lived up to your end of the bargain. The great thing about a lease option is that it allows you to get into a property very quickly; because you don’t have to have a down payment, your credit doesn't have to be A grade and you don't have to worry about someof the other things lenders ask for. A big plus is that you’ll only be responsible for whatever monthly lease amount you negotiate with the owner.

While you don’t have to make a down payment, you will typically need to pay the seller an option fee, agree to make repairs in lieu of money or some other arrangement . This is generally nowhere near as expensive as a down payment and is negotiable. This is a compensation fee for the homeowner agreeing to sell the property to you should you decide to buy it. In essence, you’re paying the homeowner for time. The lease option must also contain the price you and the homeowner have agreed upon, should you decide to purchase the property. It must also have an expiration date. This means that you will have up until that date to either purchase the home or walk away.

Several other things to remember in doing a lease option is to have a Right Of Assignment" in case you want to sell the property instead of buying it your self. Any funds you give for an option will normally apply to the down payment or purchase price. Ask the seller to apply some of your lease payment also. You may want to pay a little higher rent to get the seller to agree to this.

Remember, you’re not obligated to purchase the home within the agreed upon timeframe, but if you don’t and the expiration date passes, the homeowner is no longer obligated to sell the property to you for the agreed upon price. Be sure everything is in writing in the lease agreeement and the option agreement. I would advise you to have a lawyer help you with this as it can be disastrous if not done right. Sellers often change their minds about selling if the property has become more valuable either by appreciation or you working on it. The lawyer fees may end up to be very cheap insurance. I speak from experience.