Lease Option Sample Transaction

Buyer and Seller come together. Buyer wants to buy Seller's home on Main Street, but feels the economy is too unstable to buy now. The seller's price is too high. The real estate market has probably not hit bottom. Lender standards are changing daily. The election will change everything. The Seller wants to sell his home and move onto his next, but he has the same concerns about buying his next home. The Buyer and Seller both feel that in time the market will stabilize, but we are not there yet.

The solution: To sell by the Market Modulated Lease Option. The Seller leases his home on Main St. to the Buyer with a purchase option to be exercised in 2 to 3 (or more) years for a price to be set by appraisal at that time. The buyer moves into the home and the Seller moves into his next home with the same lease option arrangement. When the number of years specified is reached, the Buyer's purchase option period commences. At that time, the Buyer purchases the home at then fair market value with his lease option deposits credited to the purchase price. And, the Seller exercises his own purchase option in the same manner.

By using the Market Modulated Lease Option, these parties are able to proactively respond to a stagnant market by taking possession of their new homes now but paying a price later determined by a more stable market. And the Seller passes his Buyer's lease option deposits onto his Seller who does the same as far as the lease option chain will go. Ultimately, the lease option transaction, if continuously utilized, could effectively revitalize the home resale market.

The outcome for the Buyer follows:

Main Street Home
Lease term: 1/1/09 to 1/1/11
Purchase Option commences: 1/1/11
Property value now: $485,000
Purchase price at option time: To be decided by appraisal
Option deposit now: $20,000
Monthly rent: $2,000
Monthly option deposit: $500
Appraised value on 1/1/11: $545,000
Option Deposit credited to purchase price: $32,000

Note: Our lease option form allows the purchase price to be set now or later by appraisal and allows the option period and when it begins to customized to varying need. The instructions prompt you through these choices.