It's a 1,998 square foot new home. 4 bdrm/2.5 bath.
Lease price per month $1,580, option amount per month $500
Total per month $2,080. After 2 years, we'll have $12,000 in our escrow account which will basically cover our closing costs. Plus the seller has offered 2% of the homes value as a credit. (Home is $550,000) Any insight?
(Note: For those that live in the Bay Area in Ca, the home is in Lathrop so we'll have a commute.)
2006-12-31 08:59:21 · 5 answers · asked by p.y.t 2 in Business & Finance ➔ Renting & Real Estate
Why lease option? $12,000, while nice for closing costs, won't help with the down much. The 2% helps some. I live in the Bay Area and Lathrops market can be a little iffy if I recall correctly. Have you had a full appraisal done? I would. The price does seem within market limits. Ask yourself this : Why does the seller want to do this? Instead of just selling the house now? I do know the stats on final sales from a lease option aren't good. It would seem worth the money to pay a Real Estate Attorney now to check out the deal. A little money spent now may save much grief later.
You asked for some thoughts so here they are for what they are worth.
2006-12-31 09:24:13 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Who will hold the "escrow account"? Not the Seller, I hope! If it is held by a REAL Title Company or Escrow Agent ( A REAL ONE !!!), Then you can rely on those funds being fairly held. Please note: it sounds like your $500 a month is only acting as a savings account and not accruing any real interest in the property. Won't you still need a down payment in 2 years, and won't you have to qualify for a mortgage at $550,000 less 2%?
I think a better option is Seller Financing, if the Sellers have the equity to do it (and they might not).
Lease Options are tricky and this one doesn't sound that great for you, the Buyer.
2006-12-31 09:23:23 · answer #2 · answered by hatchland 3 · 1⤊ 0⤋
First you need to know what the value of the home is and the going rents for comparable homes. Many times lease option purchase prices are way over the market price. Make sure all promises are in writing. Heres a great addition. Make it possible to extend the agreement for another year or so in case your financing doeasn't happen as fast as you like. Make sure you can afford the home. Life is too short to be tied into a home that takes all your money.
2006-12-31 09:18:49 · answer #3 · answered by sm4125 3 · 1⤊ 0⤋
You should of course be asking a lawyer to check out this agreement first. If you don't have a down payment it could be good for you but you also should ask yourself why the present owner is bending over backwards to sell his home.
2006-12-31 09:10:55 · answer #4 · answered by MimC 4 · 1⤊ 0⤋
I would be worried of the value of the home, if your buying this home, answers that I should ask myself are: If the property will sustain its value when the time comes to refinance. If the seller is reputable and responsible individual, check backround. Will this be done by an attorney. make sure you use an escrow and title company to do this transaction.
2016-05-23 01:04:58 · answer #5 · answered by Anonymous · 0⤊ 0⤋