LEASE with OPTION to BUY

What is a Lease Option? How does rent to own work? In this video, I talk about what a lease to own is and how they are generally structured.
#RealEstate #RealEstateMarket #HousingMarket
Subscribe for More Real Estate Tips and Real Estate Information - goo.gl/NZB1S6
Lease with Option to Buy
A lease option (more formally Lease With the Option to Purchase) is a type of contract used in both residential and commercial real estate. In a lease-option, a property owner and tenant agree that, at the end of a specified rental period for a given property, the renter has the option of purchasing the property but would not be contractually obligated because they have the option whether or not they want to proceed.
The Seller in a lease option is contractually obligated to sell the home if the tenant chooses to exercise the option to purchase.
How does a lease option work?
A lease option works where the buyer pays the seller option money for the right to purchase the property later at some predetermined point in the future . As for the option, the buyer and seller can agree to a purchase price at the inception of the contractural agreement or the buyer might agree to pay market value at the time the option is exercised.
What happens to the option money if I decide not to purchase?
Generally the option money that you have paid to have the option to purchase the home is non-refundable if you decide not to purchase the home.
If you have additional questions about Rent to Own or Lease to Own, please comment below or contact me directly.
Thank you for taking the time to watch, I greatly appreciate it.
Connect with me:
B L O G ➳ www.jebsmith.ne...
F A C E B O O K ➳ / cbhbrealtor
I N S T A G R A M ➳ / jebsmith
Other videos you might find helpful:
Making an OFFER on a HOUSE - How to MAKE your OFFER more APPEALING - • Making an OFFER on a H...
First Time Home Buyer MISTAKES | #1 Mistake First-Time Home Buyers Make | First Time Home Buyer Tips - • First Time Home Buyer ...
What is a Home Warranty? - • What is a Home Warranty?
Appraisal vs Home Inspection - What's the Difference? - • Appraisal vs Home Insp...
What is an ESCALATION Clause in Real Estate?? - • Real Estate Tips - Wha...
Rex Real Estate - Another DISCOUNT Real Estate Broker You SHOULDN"T Use to Sell Your Home - • Rex Real Estate - Anot...

[@baby7543]

What conditions make a Lease Option beneficial to the buyer? Does the seller keep the accrued “extra” monthly payment if the buyer opts out of the purchase? Currently our market hit its peak but we are now facing a possible recession and we’re seeing the market already start to correct itself so prices are falling. Would you say this is a realistic season for the seller to agree to a lease option so that they can lock-in a good price? How would we go about setting a good pre-negotiated price? I’m the buyer btw.

[@UltimateBargains]

You can look for properties that are "for lease" and then ask for option to buy.

[@soki1847]

If the buyer wants to put down a certain amount of money to secure the place and lease the property for 6 months, does the 6 months lease payments go towards the principal of the purchase price?

[@JebSmith]

It depends on how it's set up. Typically not, only a portion of it would go towards the purchase.

[@amran1929]

Can the leasee/tenant sell the lease option property without seller's consent?

[@ZachChurch]

Thanks, Jeb!

[@JebSmith]

You bet!

[@JAlfredo8783]

Jen, I see this video was made 2 years ago. Do you think it is a better time for a rent to own situation? Thanks

[@JAlfredo8783]

Jeb *

[@JebSmith]

Yes, it's becoming a better time for sellers to consider this option.

[@therealkerri1159]

In a lease with the option to purchase how do you guarantee that you will get back the money you gave them in addition to the monthly payment back if you do not go forward with the sale? Also, how does one guarantee the additional money you gave them on top of rent goes towards down payment for the sale of the house

[@JebSmith]

In a lease option, you don't get the "premium" or upfront back if you decide not to move forward. That's essentially what you're paying in most cases to have the option to purchase the property. The same goes for the monthly payment, that is just the rent you are paying to occupy the home. As for the additional money that you pay monthly on top of the rent for the down payment (depending on how your option is structured) that will be done in a binding contract and that will show that the additional you are paying will go towards the down payment if/when you purchase. I hope that helps. Thanks for watching.

[@teresastrauch5004]

@@JebSmith Does the $$ paid in rent go towards the FMV - total purchase PRICE or just the down payment?

[@JohnDoe-yi9rm]

Do you know which way is most profitable or beneficial to the seller?

[@tlapo9671]

How do you set up a lease to own with a family trust involved? My husband and I would like to set up a lease to own for one of his parents rental properties that they have in a family trust.

[@maliamarsh02]

Should I lease to own if the house I want is $485k but I only qualify for a mortgage loan that is $425k and really want this house it’s a dream home. I don’t have any savings

[@breonmitchell2443]

No save up more

[@dp-qw4ji]

Nuff said Thanks man 👍🏽

[@JebSmith]

You bet

[@lovellpasco2024]

Jeb, after pre-approval, how long does it normally take until closing?

[@JebSmith]

depends on how long it takes you to find a home. Escrows are typically 30 days from the time your offer is accepted.

[@mrpippylongdong]

If I still owe on a property but I want to start a lease option on it, how does it work in regular’s to after the contract is up and the buyer choose to buy. Are they just going through a different bank to bank to acquire the financing. Which at that point you can pay off what you owe on the property and profit what is left over. Is this correct?

[@UltimateBargains]

Depends on the payment terms in the option to buy. Most payment terms require the buyer to deliver all cash at close of escrow, but some options can include a form of seller financing, all or some seller financing with cash.

[@banginzaza]

So all of these sites I saved with homes that have lease options listed mostly likely don't do it? Are they trying to lurer me in?

[@JebSmith]

they could be legit........it's hard to say. Now that the housing market has calmed down a bit, you could see more lease options in the market.

[@ozielgarcia5437]

Can I sell the house I’m leasing with obtion to buy, before the end of the contract!?!?!????

[@JebSmith]

No, usually not since you don't own it.

[@derricksaunders5280]

Correct. Exercise option agreement. Then close with title company.

[@deborahstroman2987]

How is it beneficial to the renter, lease with option to buy if renter has bad credit? Thanks Jeb.

[@teresastrauch5004]

Seller can ask for skin in the game via a percentage DOWN payment and then tack interest into the FMV (fair market value) price (THE seller is the BANK) If the leasee doesn't follow through the seller takes back the property and doesn't give the $ paid back (this is my understanding) Plus you can do specifics in the contract such as the leasee cant alter the house without permission until the FMV Price is paid in full. If they follow through and get a loas after 2 or 3 yrs ..they get a house ..even though they HAD bad credit

[@keshiasmith8902]

I have a question if you are doing a rent to own home and the home isn’t paid for and the roof starts leaking Who’s responsible for getting it fix??

[@JebSmith]

It all depends on what you negotiated in your contract with the seller.

[@ozielgarcia5437]

@@JebSmith can a lease sale the obtain your buy before contract is due??

[@teresastrauch5004]

the person renting - Lease Option to buy requires the renter to be responsible for all Maintenance (my understanding)

[@amran1929]

Can a lessee under a lease option agreement sell the property they are leasing before they purchase?

[@teresastrauch5004]

No. The home still belongs to the OWNER until the contract is paid out.

[@DarkAngel-pt1cq]

@@teresastrauch5004 Is there any risk where the seller, sell the property to someone else halfway the lease period?