How To Sell A House Using A Lease Option

If you're having a tough time selling your house and want to move without making dual house payments, then the lease option might just be the right solution for you. With the lease option, a would-be buyer agrees to lease your property for a set period of time and purchases from you the option to buy the property at the end of the lease term for a mutually agreed upon, fixed price. The buyer pays you a move-in "option" fee and above-market rent, with the “above” portion and the “option” money going toward the down payment should the sale take place at the end of the lease period. If the buyer decides not to buy the house, the seller retains the “option” and the above-market rental monies. The time period of these lease options usually ranges between one and three years.

The lease option provides the seller with many advantages in addition to the central one of having someone pay your mortgage on a hard-to-sell property. Because lease-option tenants hope to purchase the property at the end of the lease, they have a vested interest in taking better care of the property than most renters. Also, the seller retains all the income-tax benefits of the house during the lease period.

If, on the other hand, you need all the money from the sale of your home immediately, than you're better off with a straight sale. Also, the majority of lease options aren't exercised, which would necessitate starting the whole selling process all over again after the lease term expires. When you lease your home, you are also still responsible for paying the property taxes, insurance, and most major repairs during the lease term.

To find someone to lease option your house, advertise by newspaper, real estate trades, or online. If your house has been on the market for quite a while, chances are would-be renter buyers will approach you. When this happens, make sure to do a background check on all applicants and check with a loan officer or mortgage broker to see if they are pre-qualified to get a mortgage when the lease period expires. Also, protect yourself by having a real estate attorney review the final contract.