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Home "Lease" that possibly goes to "Lease to Own " mode ...

3 Mo ago I got new tenants that recently shared that they considering buying the home they leasing from me  . What do I do from here on , besides the COMPs from my broker  ? Should she represent both of us , the buyer and the seller ?



meisela
  • February 07 2010 - US
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Answers (3)

Best Answer

Determine whether or not they can buy it. You need them to speak to a Lender type ASAP.

In the meantime, determine the market value with your Broker.

These types of deals are hard to put together. The willing Buyer is often, not a qualified Buyer.
  • February 07 2010
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I thought they wanted to buy it now.

You can't establish the value in 2012. You can guess the value in 2012. You can state the price you are willing to accept in 2012, which may or may not be the "value".

Traditionally this would be done by applying a historic rate of appreciation, to the last known, or appraised, value. We know this rate of growth isn't as easy to pinpoint as it used to be.

This is one of, if not the, major problem with these deals. The buyer wants to pay today's price, and the Seller wants tomorrow's. Again, the state of flux of the current market, makes this difficult to determine.

A fully qualified Buyer will not pay "any" price. A desperate, and/or marginally qualified buyer may agree today, to pay "any" price, out of fear of all other houses going even higher, than your added appreciation.

Today, a smart Buyer may not allow you to add any appreciation to the last established value, due to uncertainty of the future. It is a dilemma not easily solved.

There are other considerations regarding the Buyers qualification, but I think you have discussed them in other threads. If not we can do it here, or by email.
  • February 08 2010
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Profile picture for Meisela
Thanks Hamp . If they can't qualify , I might consider owner's financing , of course for a higher interest then they would have gotten at the bank .

  But how would I establish the value of the property in 2012 ?
  • February 08 2010
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