In most property markets nowadays, selling your property has become much more difficult. As we watch with our own eyes that the news come out everyday saying that most of the people doesn’t qualified to borrow bank loan and they can’t afford the 10% deposit as the property price is extremely high.
Other than that, there are numerous owned properties out there that you don’t even be noticed. Once the borrowers failed to pay the monthly loan installments up to few months, the bank has the right to taken back the property to recover their loss of profit. And the property will be put up for auction.
Besides, the banks usually reduce their prices about every month till the properties are sold in most cases in our current market situations. Can you afford to reduce your value every month to keep up with the competition? If you re lucky enough to earn a significant amount of equity in your property, you just might be able to keep up but for how long. Apparently, this is not the smartest way to sell out your property.
Unless you rent out your property as the rent can help to cover a majority of your monthly costs. All you need to do is sit back and wait out this stormy waves for several years.
Well, in both good and bad situations, lease option is another strategy you can try to use to sell out your property. There are many benefits to a lease option. The most important one is that you can sell your property at higher market value, the amount of rent received is also higher in this situation. With this strategy, you are about turning this bad situation into a win-win situation for you and your potential buyer.
You need to know that the potential buyers are everywhere out there, they just wait for little help. They may have a stable income and have savings, but have had some bad background in the past which make them unable to getting a bank loan on their own.
So, how lease option works? A lease option is basically is a rent-to-own situation. You are planning to rent out the property for the future purchase price’s payments. Yes, the tenant is willing to pay the higher rent. They are not only renters but future homeowners. You will usually sign a lease contract with them for about 24 months, depends on how long it will take for them to qualify for a bank loan to buy your property.
Besides of that, it will be up to you to set them up with a mortgage broker that will be able to help them purchase your home in the future. Ensure that the tenant that you choose is on the correct path that will purchase the property in the end. They will need to pay you a non-refundable option for upfront payment. The amount usually is around 3 to 5% of the purchase price, depends on the lease contract. If they do purchase, the option will be deducted from the purchase price at closing. If they don’t purchase and decide not to renegotiate then the option payment is yours to keep.
Last but definitely not least, if you break it down the positives are higher rents, maintain property better than renters, depreciation, and higher purchase price. The worst case that could happen is that they wreck the wall without getting your consent and you have insurance for that. If they do not buy in the end, you get to keep their option consideration and they paid your payments for 24 months. All you need to do is ensure that they will buy your property in the end, it’s all about communication and negotiation skills.
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