Lease-option from buyer's perspective

Comments(6)

• 
  loanwizard28th March, 2003

  Quote:
  On 2003-03-28 13:34, nostrandp wrote:
  Hi,
  
  I just joined tci because I'm seeking info about lease-options. I've been renting a house for almost a year and told the landlord (son of owner) I'd like to rent another year. He said his dad may be interested in selling, am I interested? I said I might be--and thought about proposing some kind of lease-option. I know this site and forum focuses on structuring a deal from the seller's perspective. Would anyone be willing to point me in a direction on how to propose something to the owner? Are there books or other resources I could research?
  
  I figure my first steps would be to determine the value of the house and what their mortgage is (via town/county records). I suspect my rent easily covers their mortgage (property values have soared in this area), and would like to apply as much as my rent to the purchase price, etc.
  
  Should I suggest a purchase price or have them suggest one? How much down payment should I offer? (they already have 2.5 mos rent deposit (1 mo of which is pet deposit)).
  
  What kind of back-out clause is typical--in other words, if I decide not to purchase, what penalty would I be subject to?
  
  Well, that's enough to start! Thanks much for any suggestions.
  
  
  
  
  The first thing you need to do is talk with the father and see where he is on the situation. He probably is not a "motivated" seller so you are not going to steal the house from him . BUT, from a purchasing perspective, you can give him full price if the terms are agreeable. I would start out by knowing what similar properties in the area are going for. Next I would drag the price from the seller and no matter what he says, get that little look on your face, you know, the one you use when one of your kids has done something extremely dumb... and say, is that the best you can do? Then let him defend his price. Then I would say, if I agree to that price, let's do it this way. I'm already in the house, so a downpayment isn't neccessary, you can just subtract my security deposit from the price as initial down, then I'll continue on a 2 years lease, during which the rent I pay goes toward the purchase price. If I don't exercise the option at the end of 2 years, I don't get anything back. If I do get financing, then the money I've paid over the last 2 years plus the sec. deposit will be my down payment and I will cash you out. He probably won't agree to that, but then you can negotiate it from there.
  
  Good Luck,
  Shawn(OH)

• 
  cmon10128th March, 2003

  Quote:
  On 2003-03-28 13:34, nostrandp wrote:
  Should I suggest a purchase price or have them suggest one? How much down payment should I offer? (they already have 2.5 mos rent deposit (1 mo of which is pet deposit)).
  
  -----------------------------------------------------
  Hi nostrando
  Loanwizards advice sounds good..I just wanted to add my 2 cents on the above quote....I read somewhere awhile ago, and it seems like good advice, is that the first one to mention a price is the loser, I always repeat that to myself every time I contact a seller
  just wanted to throw that in
  Chris

• 
  StaceyWyatt28th March, 2003

  Nostranp,
  
  I teach a Negotiations class in the Corporate World... Golden Rule: First One To Name a Price... Loses! Regardless of how much they beg, whine or ask.... NEVER be first. Just play dumb... I wouldn't know what a house goes for in this neighborhood?? Get creative with your responses. In my class I use a role play (Right after I teach this rule).. I take off my watch, describe it and ask how much someone would buy it for... someone always pipes in with a fair amount.... $100.. SOLD! Then I ask someone to take off their watch. I then write a $ Amount, for what I am willing to pay, on a piece of paper and give it to one person in the class(They can't tell what the # is). Then I negotiate... I never name a price... ever... after 10 minutes or so they break down and say $100 or $500. I say SOLD!! Then I ask the person who I gave a number to tell them how much I would have paid for it... I usually write a $1 MILLION Dollars. Moral of the story... He who names first , LOSES!! Happy Negotiating!

• 
  nostrandp29th March, 2003

  Thanks everyone for your comments. I got the message loud and clear: DO NOT OFFER A PRICE!!! Also, I like the approach to offer full rent goes to downpayment--gives me the most room to negotiate something less.
  
  Now, what about the legal details. Should I spend $150 to buy a "Lease Purchase Handbook" on-line
  (http://www.lease2purchase.com), which includes draft lease-purchase agreements? Where else can I get this info for less $? I'm a person that likes to have some paper in my hands to read in situations like this...just wondering where to get that paper!

• 
  hartmanjr31st March, 2003

  Go to www.resultsnow.com
  
  They have a book you can download for free.
  
  Joe

• 
  Tonyy27th April, 2003

  nostrandp,
  you might try here bare bones L/P with contracts for I think $89
  [addsig]