Is This Lease Purchase a Good Deal?
Yes, for the Seller!

Selling vs. Lease Option - Typical Scenario Comparison
Home SOLD on FHA/VA/Conventional Loan Home SOLD on a 2-Year Lease-Purchase
Listing Price $150,000
Selling Price $145,500
Commission -$8,730
Closing Costs -$4,365
Improvements -$2,000
Mortgage while Listed -$2,000


Sellers Expenses:
 

(-$21,595)


Sellers Net Proceeds:
 

($128,405)

Option Price $165,000
Down Payment $3,000
Commission -$4,950
Closing Costs -$4,950
Improvements $0
(+)Rent/(-)Mortgage $7,200/2 yrs.


Sellers Expenses:
 

(-$9,900)


Sellers Net Proceeds:
 

($165,300)*

* Until the transaction closes and title transfers to the buyer, the Seller gets a tax rebate of approximately $4000-$4500, which is not shown in the figures above. Thus, making the seller even more money (over $170,000); by owning the property another 2 years during the term of the lease option contract.

  • Seller sells home for 10-15% more
  • Seller Nets Over 30% More in Proceeds
  • Seller requires a Buyer Down Payment
  • Buyer pays For Maintenance
  • Buyer buys Home once Loan Qualified at end of Lease
  • Buyer pays considerably more for the Home
    The Bottom Line:

     Buyer will end up paying out $192,000 for a property available on a loan for only $145,500! ---

    Here's how come...In the lease option agreement, the price of the home is inflated to a selling price of $165,000. When the contract is agreed on, the buyer/tenant must provide the seller a $3,000 down payment. For the next 24 months, the buyers must make a rent payment of $1,000 a month to the seller ($24,000 total). During the two year term of this lease option agreement, the buyer is expected to resolve any maintenance problems that exist. Will the seller agree to credit you any of the rental payments. Maybe a portion and maybe none. Don't forget, the whole time the $1,000 rent is being collected, the seller is probably making a mortgage payment, property taxes, and insurance. The most you could expect in credit would be the residual after those expenses are paid from the rental payment. Who WINS?