Basics of a Lease-to-Own Purchase
December 6th, 2009 by adminThe option is a vital part of a lease-to-own purchase. Here are the features of a basic lease option:
- Buyer has to pay the option money to the seller for the only right to buy the property and it can be quite a lump sum.
- The buyer and seller have to agree mutually on the purchase price, sometimes much higher than the market value.
- During the option, the buyer also makes a deal about the monthly rent which would be in future for lease-to-own property.
- The term is negotiable, but it is generally for one to three years, and the buyer can take the help of the bank to pay the seller in full.
- The option money mostly does not apply to down payment and a portion of the rent goes for the purchase price. The option money is mostly non-refundable.
- Only if the buyer defaults that the property can be given to some other prospective buyer.
- Buyers are liable to maintain the property and pay all expenses associated for taking care of the lease-to-own property including insurance.
- The buyer will have to buy the property. If he or she cannot, then the rent payments are declared void.
Important points for lease to own property:
- Home inspection is done.
- Title policy should be examined.
- An appraisal should be obtained.
- Seller disclosures should be read thoroughly.
- Home warranty plans, pest certification, and other certificates should be looked into carefully
Advantages
- Sellers mostly can get market value for their properties especially on a vacant lease-to-own property.
- Although the lease payments are more than the actual rent charged in the market, the buyer can earn on the appreciated amount later after he or she has bought the place.
- Buyers make a reasonable down payment, with no qualifications needed, thus making a lease to own purchase a profitable one.
- If the buyer defaults, sellers do not have to refund any money
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Purchasing Foreclosures: The Basics
November 12th, 2009 by adminIn this challenging economy there are many homes coming available due to foreclosures. As buyer, there may be opportunities to buy in your area as a result. You can purchase homes in foreclosure at different stages in the process. Properties can be bought before the foreclosure procedure is completed, at bank auctions, or homes that don’t sell at auction as REOs. All these types of sales can be complex to complete so be sure to hire an agent who has experience with your particular type of situation.
To avoid foreclosure, sometimes a home owner will accept a buyout on their property for less money than is owed to their lender. This practice is called short selling because the owner is selling their property for an amount short of what is owed on it. Sometimes this happens to avoid foreclosure, though it can also happen in the case of fallen property values. Be aware that short sales can take longer than regular sales to close.
Other ways to buy foreclosures are to buy at a public auction or buying bank owned or REO properties. These properties are often priced for less than what is owed on them because the bank does not want to hang on to a bunch of properties. These bank owned properties cost the bank money, so it is in their best interest to clear them out as quickly as they can.
In some cases when these kinds of properties are bought, they may come with tenants who have refused to move or angry tenants who expressed their anger with property destruction when they vacated. Be aware that these are your responsibility to deal with as the buyer, if these possibilities are more than you want to deal with then foreclosures might not be the best option for you.
Do not think that buying distressed or foreclosed properties means easy money. There can be many stresses in purchasing real estate, particularly if you are not prepared for the possibilities that may occur. The best way to make your way through purchases of distressed properties is to ensure that you are as informed as possible and that you have an agent or lawyer working on your side.
