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This Great House Realty has a proven track record
increasing investor liquidity and helping owners sell their
homes with our creative lease-to-own program. This program
is based on the traditional lease-purchase or lease-option,
a transaction through which a resident leases a home until
they are able to buy it. We have a high success rate with
this program, closing most of the negotiated transactions.
This home selling technique has outstanding benefits for
both the buyer and the seller.
The seller is able to open up their home to many more
willing buyers, while a buyer is able to take advantage of a
homes appreciation. For example in Gwinnett County, homes
have been appreciating between 5% and 7% a year for the last
20 years. Although this is only an average and some years
have been better than others, this gives buyers the
opportunity to enjoy the many benefits of home ownership
while building future equity.
What is Lease Purchase?
A lease purchase is a contract between a buyer and seller to
sell a property with a delayed closing. The contract forms
are the same used in a standard selling situation. All of
the issues of a purchase contract are addressed including
price, financing, taxes, termite bond, title exam, warranty
deed and disclosures. No Detail is Ignored. The closing
date, maintenance and possession issues are the only items
that are different. The actual closing date is left open
depending upon when the buyer is able to secure long-term
financing. The contract terms are usually set up to run
between 6 months and 2 years. This gives the buyer the
necessary time to work through credit issues, which may
exist that prevent the buyer from securing an immediate
loan. The possession issue is addressed through a lease that
is attached as an exhibit to the contract.
How Does A Lease Purchase Benefit The Owner?
- Leases are Longer: A regular tenant may leave after 12
months. A Lease Purchase tenant needs 1 to 3 years to
clean up his/her credit, save up the down payment or
gain the employment tenure necessary to meet lender
requirements. Long leases eliminate the expenses that
accompany vacancies. If they do not close, you have had
a long-term tenant.
- Maintenance Expenses are reduced: In a Lease Purchase
agreement, the tenant takes responsibility for all
maintenance. This can save you plenty of money and
grief.
- Deposits are Larger: While an ordinary tenant deposits
one month's rent as a security deposit, a Lease Purchase
tenant typically deposits two to four times that amount.
This money is called NON-REFUNDABLE EARNEST MONEY and is
disbursed at time of move in. When the tenant closes,
his deposit is credited toward the purchase price.
- You Receive Full Price: Tenants who buy on a Lease
Purchase do not have leverage to negotiate a lower
price. They are not shopping hard for value because
their options are limited. They usually pay full retail
price, or even more.
- Closing Costs are Lower: A Lease Purchase tenant is
usually responsible for paying future closing costs,
saving you the seller several thousands of dollars.
There is no immediate closing cost to execute a Lease
Purchase contract, which allows the buyer the needed
time to save for future closing costs.
- Better Care of Property: Generally, tenants will take
better care of the property if they anticipate owning
it. We still suggest that the buyer regularly drive-by
the home to insure proper care of the property.
- Sell Without A Vacancy: One big expense of selling a
home is the cost of getting it in selling condition and
keeping it that way until closing. Mortgage payments,
insurance, taxes, utilities, paint, carpet, lawn care
and the risks associated with an empty house can cost
plenty. These costs are eliminated when a tenant buys
using a Lease Purchase. They pay rent right up to the
day of closing and there is no vacancy.
How Does A Lease Purchase Benefit The Buyer?
- A buyer gets to enjoy all of the many benefits of home
ownership today, without waiting for mortgage approval
and/or closing.
- The buyer realizes equity as typically homes are sold at
current (today’s) prices. As the home goes up in value
this equity goes to the buyer. For example on a $150,000
home it would not be unusual for the home to increase in
value by $10,000 during the contract term. This equity in
the home now belongs to the buyer. Keep in mind homes
going up in value is never a guarantee but if property is
well maintained this is usually the case.
- The buyer is able to use the increase in the home’s
appraised value to secure a lower mortgage rate.
Frequently Asked Questions
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Do Tenants ever fail to maintain the
Property?
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Yes. Occasionally,
even though they agree to fix all problems they let things
go and damage to the property increases due to neglect. For
this reason it is always recommended to conduct regular
property surveys to monitor physical condition. |
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What about Rent
Credit? |
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Occasionally,
Tenants negotiate hard for some of the rent to apply to
their down payment. This helps them build the down payment
and allows them to close. The only time rent credit affects
you is at closing. Like earnest money, it shows up as a
credit to the tenant as previously paid money. If they fail
to close, they get nothing back. Rent credit is a negotiable
item depending upon the need of the buyer. |
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Who is responsible
for insurance and taxes? |
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The seller must
keep a landlord policy in effect during the lease period.
This policy covers the house and liability issues. Renter's
insurance is a recommended option for the Tenant. Property
Taxes also remain the responsibility of the seller until
legal title changes over. |
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What if they are
ready to close and I cannot? |
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If you have a
title problem or refuse to close, you have defaulted in the
contract. Most tenants are willing to give you a little time
to clear up the problem. If you cannot give them what you
promised ( good title ), they will get mad, and come after
their deposit. They will succeed! Do not contract to sell if
you cannot deliver a good title within the term of the
contract. |
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Is it easier to
Lease Purchase than sell? |
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Yes! Offering your
home for Lease Purchase exposes it to a larger segment of
the market. You will appeal to a larger group of buyers you
cannot reach using the "For Sale" approach. You
will solve your problem quicker using Lease Purchase.
A Lease Purchase is a contract to sell with a delayed
closing date
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What are the chances of a Lease Purchase Closing?
Although there is no such thing as a guaranteed closing,
This Great House has had great success with closing the
Lease Purchases we have structured. We have gone through our
learning curves and corrected the mistakes made in earlier
deals. Experience is a great teacher. We are careful not to
create false hope for either party by making deals that have
little hope of closing. We do not hit 100%, but we have
closed most. The good news is, if you look at the benefits
of the Lease Purchase, there is no downside for the Owner or
the Buyer. You win, even if the Tenant fails to close.
Typically if a buyer is willing to work on improving their
credit they should be able to close within the contract
term.
Why should I use This Great House to help with my Lease
Purchase?
Because of the number of properties that we market on a
regular basis we get many calls a day from people looking
for homes just like yours. We have the experience to help
both parties put together deals that benefit everyone
involved.
Why spend many months working with a traditional Realtor
in hopes of finding that one buyer that falls in love with
your home and is able to actually close? We have seen so
many deals fall apart at the last minute due to a buyer not
being able to get the required financing. Selling homes on
you own or through a typical Realtor eliminates over 60 % of
potential buyers. In today’s difficult market you cannot
afford to eliminate this many potential homebuyers.
We do not recommend relying just on us to sell your home.
We should only be part of your overall marketing strategy!
You have nothing to lose by trying our services and
everything to gain!
What happens if the Tenant Fails to Close?
We find that one out of five do not close for one reason or
another. Several months before the closing date, you will
need to contact the tenant and discuss their intentions. If
they need more time, you may be willing to extend the
closing date. Again, you are in control of this so you will
make these decisions. If they plan to move, there is not
much we can do about it. They forfeit their deposit and will
still be responsible for leaving the property in good
condition. We will begin marketing per your instructions and
complete a normal move-out inspection. Often, the property
is returned in better condition than when the tenant moved
in. Occasionally, the tenant makes improvements that stay
behind and actually increase the property's value.
There is no downside to a Lease Purchase.
You win whether they close or not!
Please email KMorice@ThisGreatHouse.com
or call This Great House Realty today at 678-427-7700 for
more information or to get started with a lease purchase for
your home.
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