Seller Features and Benefits
If you don’t need much cash up front, the best way to get your full asking price and relief from monthly payments is to offer it for sale on a Lease Option. Since you’re offering a huge value and attractive financing to assist the tenant/buyer, they tend to be willing to pay a higher sales price. Tenant/buyers can easily understand the concept of trading price for time and value.
The earnings potential for the landlord/seller is tremendous since a well-negotiated deal will reap profits at every stage of the game.
Sell Your House!
Here are some features and benefits for the landlord/seller:
Top sales price, even if demand is low: You attract more buyers who are willing to pay a premium because of the exclusive financing terms and value you’re offering.
Higher than usual rent: Since you are flexible on your financing terms and are offering a tremendous value, you can demand a higher than usual rent.
Positive cash flow: Since you can demand a higher than usual rent, your positive cash flow will increase.
Non-refundable option money: When a tenant/buyer executes (signs) a Lease Option contract, they put down an non-refundable option deposit that is forfeited should they default or decide not to buy.
Save thousands in fees: Since you are selling your home by owner, you will avoid paying a 5-10% realtor commission which quickly adds up to thousands of dollars. You will also save on advertising costs because your home will be sold a lot faster.
Highest quality tenants, minimum risk: Because you are renting to tenants who have a vested interest in your home, they think like homeowners and tend to take good care of it.
No maintenance, no landlording headaches: Tenants who have a vested interest and believe they are a homeowner may feel a “pride of ownership” that encourages them to pay on time, perform routine maintenance and make improvements to your home.
Tax shelter is held intact: Because you remain on the deed until the option is exercised, you maintain all of the tax benefits of ownership.
Largest market of buyers: You are marketing your home not only to traditional buyers, but also to renters and investors. These three groups make up over 95% of people whom buy real estate.
No vacancies: When you advertise your home as a Lease Option your phone will literally ring off the hook. Typical turnover time is days or weeks instead of months or even years.
Peace of mind: It is safer than conventional rentals because of the quality of the tenants and their vested interest in your home. It also means that someone is living on-site who will watch and guard your home against fire, theft, vandalism, etc.
Frequently Asked Questions:
I already have a Realtor, why do I need you?
We are not Realtors©, this program is entirely different than the usual “listing” method. Selling your home this way takes you out of competition with all the other homes for sale on the market and brings the buyer to your house. Generally speaking, Realtors© are not familiar with this type of transaction, do not know how to make it benefit you, and because there is little or no money in it, are not interested in promoting it.
I do not want to rent my house, will this help me sell it?
Yes. Most of the owners we have helped want exactly that. This is a way to get the home sold. Although you may prefer to sell it outright today for full price, what are your plans if that does not happen? This is absolutely not a rental situation. Rather than keep on reducing the price and giving away your equity, why not find out about other methods of selling.
How do you know the people in the home will buy it?
Interestingly, this is actually how we get paid without charging you a penny. We ask the buyers to commit a reasonably substantial amount of money to the purchase before they move in. Typically this will be about 3% to 4% of the sales price. On a $100,000 home it will be around $4,000. Although this is paid to us, it is nevertheless your security, since the buyers have committed a substantial investment to the purchase. We are fair with the buyers and when they buy the home this is credited to the purchase. If they don’t buy the home they DO NOT have this refunded! It’s common sense. If anyone puts down $4,000 on a home you know they are serious about buying it.
Also, this way we do not have to ask you for any fees or commissions at all. In addition, our buyers will pay ALL buyers and sellers closing cost, including your title insurance premium.
How can I be assured that I will get my monthly payment?
We have very special exclusive copy written agreements that put all this together for you. As an example, if the buyers are even ONE DAY late on their payment, they have breached the agreement and risk losing their large initial investment of several thousand dollars as well as their right to buy the home. To make this even more secure, we structure what is known as “rent credit” in this agreement. The buyers get a significant percentage of the monthly payment credited to the purchase. Again, if they are late on the payment they lose the rent credit.
* Rent credit does not affect the monthly payment you receive. It is simply a credit the buyers get only when they close on the purchase. It does not have to be “escrowed”. If your rent due is $800, you get the full $800 every month.
This sound too good to be true, how do I know I can trust you?
You don’t have to. You will have the payment made directly to you every month. Nothing is done with the Title at this stage, it is still your home until it closes in the normal fashion through a closing attorney.
Why will they buy my house and not my neighbors?
The combination of their initial commitment and substantial rent credit creates a powerful incentive for them to buy your property. We are the only company in the area offering buyers these benefits and this takes you out of competition with all the other homes for sale.
How long do I have to wait until the closing?
What brings buyers to your home is time. Typically, you have to be prepared to wait twelve months for the closing. However, during this time you will have payments coming in and the property being looked after by people with some pride of ownership.
Who takes care of repairs and maintenance during this period?
The buyers do, 100%. Major items would be covered by your homeowners insurance, which stays in your name, and the buyers will even pay your deductible if a claim is ever necessary.
I don’t want to worry about my house, what if I am moving out of the area?
We are your partners until the home closes. If there is ever any action needed on the property or with the occupant, we will help you. There is no fee for this, it is part of our service. Our agreement serves as your sales contact with the buyers. When it is time to close we take this to the closing attorney and they conduct the closing as normal. You do not need to even be here for closing, papers can be sent to you to complete the sale.
What happens if the occupants damage the house? I have heard all sorts of horror stories about rental property.
I have too. In fact, I have experienced it myself with some normal rental properties over the years. All the homeowners we work with have initially the same concerns. “Renting” a home is always a gamble. But we have buyers who will commit several thousands dollars to the purchase and treat the home as if it were theirs. In fact, it is common for theses people to ask permission to make improvements, quite the reverse of normal renters. In the worst-case scenario you should have insurance to cover actual vandalism.
How much can I get for my home?
I don ‘t know until I have seen your home. Depending on your situation there may be other ways for you to profit from this type of arrangement than solely by considering the sale price. For example,
· Making no more payments on a vacant home
· Getting some positive cash flow each month
· Your mortgage balance may be reduced, increasing your equity
· You can take depreciation expense and reduce your income taxes at tax time
· The buyers will pay all of your closing costs.
The price will be fair and will be agreed upon with you in advance. We do not encourage buyers to negotiate and do not come back to you to reduce the price time and again. The buyers take your home “AS IS”. You know before we begin exactly what you will get at closing.
How can I get a good price if we have to credit all this rent and down payment?
Here’s the “secret ingredient” for you. As long as we are within reason we can raise the initial asking price to accommodate the credits you can offer. Lease Purchase buyers are not focused exclusively on the sale price. They have other needs that they are more concern with, such as, getting into their own home today that they can buy later. The sale price is not an issue. If this did not work for you I would not still be in business. The bottom line is that you will get at least as much as if you had sold your home through a Realtor at current market conditions and often much more, and you get it taken care of immediately.
How do you get buyers to commit this kind of substantial down payment, why would someone do that?
We understand the needs of this particular section of the home buying public and we provide the benefits they are looking for. The buyer is looking for a) time and b) rent credit. These buyers usually need time to qualify for a loan but want to move into a home they can call their own now. The rent credit sweetens the deal and eventually helps the buyer qualify to purchase. This strategy, along with only having to move once, is very attractive to most prospective buyers
Incidentally, the benefits to you for allowing this time are a) more money at closing, and b) a fast resolution to your home sale with monthly income.
Who are your typical buyers?
There are buyers looking for homes that are in situations where it is difficult or inadvisable for them to actually buy today. For example, people who may have recently been divorced and need some time to get reestablished before they can buy. Many self-employed people have the down payment and income but need another year of tax returns to qualify on paper for the mortgage they need. Perhaps a family is moving to town and has not yet sold the home they are moving from, or maybe they are moving for a new job and need a year before they can prove their new income. Every one is in a different situation. These are the buyers we have. Their situation is more important than the house. Because of their situation they cannot be overly selective, so if it’s a nice home in reasonable condition often the first person we interview and show your home to will take it.
How long does it take to find a tenant/buyer for my house?
Our rule of thumb is 30 days or less. Routinely we can match up our buyers with a home in a matter of a few days.
What happens if you can’t find a buyer?
We will. But if not, you are at liberty to do whatever you want with your own home. We do have to have our paperwork in order before we start to conform to legal requirements, and so that we are clear with you on the numbers. However, it is not a “listing agreement” such as the Realtors have. I ask for 30 days, but if at any time you decide that you want to do something else, or if you happen to find a regular buyer before we do, you are quite at liberty to go ahead and sell it. You will not owe me anything. I am not interested in trying to make you do anything you don’t want to do. However, if you have not canceled our agreement, once we sign up a buyer, you absolutely are committed to a sale and cannot then sell the home to anyone else. If it is still listed for sale, at that point it must be withdrawn.
I am currently listed with a Realtor, can you still help me?
I am not a Realtor© so I have no legal or ethical reason not to help you if you need my services. What you do with your Realtor© and your agreement with them is up to you. You could simply wait for it to expire if you have the time and are not in any rush to find a buyer. But most Realtors© would acknowledge that the longer a listing stays on the market the less it gets shown.
Some owners have asked to be released from their listing agreement so that they can work with us unimpeded. While I do not have a problem working with you at the same time as you have it listed with a Realtor©, I have found the reverse not to be true. Before you make any decision on this it would be best for us to discuss what the best arrangements would be for you and your own particular situation. But in any event, the start of a “rent to own” is not technically a sale and therefore no commission would normally be due to anyone.
I don’t want anyone living in my house before they have paid it off completely, can you still help me sell my house?
Yes. If you will tell us the bottom dollar you would take for your home and give us a key to put in a lock box on the front door, we will market you home to the regular cash buyers we come in contact with everyday. Free of charge. Our goal will then be to sell at a slightly higher price than we are giving you. Of course without a tenant we can not make your monthly payments as with our other programs. Again. we do have to have our paperwork in order before we start to conform to legal requirements, and so that we are clear with you on the numbers. We will continue marketing until the home is sold, but if at any time you decide that you want to do something else, or if you happen to find a regular buyer before we do, you are quite at liberty to go ahead and sell it. You will not owe me anything. However, if you have not canceled our agreement, once we sign up a buyer, you absolutely are committed to a sale and cannot then sell the home to anyone else. If it is still listed for sale, at that point it must be withdrawn.