should my husband and I enter into a lease to own agreement?
Posted by MarkJul 27
the house is located in charlotte, nc. We have hired an attorney to make sure that the contract is drawn up in a fair manor..However I am fearful that real estate prices will continue to fall and in 2 yrs. when it’s time to purchase the home it will be worth less than the agreed upon price of 170,000. We have agreed upon an option fee of 8,ooo. 100.oo of the monthy rent will go towards the rent premium. Also, we have the option to extend the lease period for another two yrs. if we want…any thoughts and opinions will be appreciated…Oh and I forgot to mention…the reason why we want to do the lease to own option is because we currently own a townhome in which we have had a hard time selling. we have two small children who need a yard to play in, their own rooms, and a better school district. So we decided to rent it out while we lease to own another home. With the end goal being to own two homes. We have 50,000 in savings now and we will recieve a structured settlement payment that we will recive in the amount of 90,000 in four yrs.
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Glad to hear you’ve got an attorney, hopefully a real estate attorney, because Lease/Purchase or even a Lease w/Option to Purchase requires language specific to that particular transaction, language that only a qualfied attorney can provide. Never, never try a marry a lease agreement with a purchase contract as I have seen some agents try to do.
Lease/Purchase…bad idea…in my opinion. Market conditions and economic volatility alone makes locking into a price today for a close date well into the future makes no sense…no win/win…someone will lose. Would the owner be receptive to "first right of refusal" w/in Special Provisions of the lease agreement should the owner choose to sell when you are ready to purchase?
Does your local MLS keep archives of their market reports? If yours does, take a look at those archives in comparison with the current market report and see if you don’t find the trend moving in a negative direction. These reports are typically accessible through a member of the local MLS board. Hopefully, your attorney is a member and can get that info for you. Research may be your best friend right now.
Lastly, I hope the owner is not putting pressure on you to do what you’re about to do for $170,000, because if the owner is, that could be your red flag. Again, see if they won’t just give you first opportunity to purchase via first-right-of-refusal language within your lease agreement. Best of luck!
the price you are offering to pay is high. I am betting a good foreclosure can be had
in your area for `1/2 of the price of this unit…………but I think that analysis and supposition is
being made a bit late…
so, enjoy the new home
I would say no. I lived in Charlotte and it is so unpredictable there. Most of the people I know have moved away because of the high cost of living. Something like that would need to be committed for the long haul or you will end up losing money.
What you have described is a lease purchase wherein you are obligated to purchase the property by a future date. Have you considered a lease with the option to purchase. It basically works the same way except you’re not obligated to purchase. Granted, with the latter, if you don’t purchase you will forfiet the option money but at least the seller can sue you for specific performance.
realtor.sailor
What most people are putting in lease to own agreements now is that the sales price will be determined once the lease portion of the contract is completed. Two appraisals are ordered, one each by seller and buyer, and an average of these prices is the final sales price. This takes the volatile nature of the current markets out of the equation.
So many entered various contracts with prices determined at an earlier time and now cannot either get financing for the price needed or the property is just not worth it and are losing their deposits. See if you cannot work it out with the seller so you are not stuck down the road.