When you need to sell your house but cannot, you could talk to a real estate lawyer about using a creative option to sell. One option real estate lawyers might recommend is a lease-to-own option. As the seller of a house, this option offers several risks and rewards you should know about before you decide to use it.
The Lease-To-Own Method of Selling a House
A lot of people do not understand what selling a house through a lease-to-own option means, but you need to know what it is so you can decide if it is right for you.
Through a lease-to-own sale, you agree to sell your house to a buyer at a later point in time. The buyer moves into your home and becomes your tenant. He or she gives you a down payment to hold the house for a set period of time, and the tenant pays you rent each month while living there.
You do not transfer the deed of your house to this person until they get a loan for the house and pay you the remainder of what they owe you.
When you set up this deal, you can decide how much to ask for the down payment, and you can charge fairmarket value for the rent. You can negotiate with the buyer on the remaining terms, such as the length of the deal and who will pay for repairs and maintenance. In most cases, the buyer becomes responsible for all repairs and maintenance after moving in.
Rewards of This Method
One key reward of using a lease-to-own option is that you receive a lump-sum down payment from the buyer when he or she moves in. This is a non-refundable deposit, which means that you do not have to give it back if the buyer decides to move out and not follow through with purchasing your house.
The other key reward is that you will have money coming in each month. When you decide how much to charge for the monthly rent, you should consider how much your mortgage is on the house and the amount you need for the taxes and insurance. If the rent covers these expenses, you will not have to pay any money out of your pocket for this house.
This is a great deal to offer if you need to sell your house because you purchased another one already. Most people cannot afford to pay two mortgage payments, so selling with a lease-to-own option is a great solution for this problem.
Risks of This Method
You also take on some risks you take when selling this way. The first is that the buyer might damage your home. The buyer has an incentive not to, but there are times when this still happens.
One other risk you have is you may have problems getting another mortgage loan, simply because the loan on this house would remain in your name for the entire length of the deal. In some cases, people will agree to short-term lease-to-own deals, such as six months. There are also times when people prefer longer terms, such as three or four years.
You can choose the buyer, though, and you can negotiate for the terms you want out of the deal. If a buyer will not agree to your terms, you could look for a different buyer.
If you would like to learn more about lease-to-own options with your home and other creative ways to sell your house, contact Alan David Tucker ESQ. P.C. We offer all types of real estate services and can help you draft a contract for a lease-to-own deal