Sometimes, acting as the buyer’s agent for one of my Kenai Peninsula clients, I wind up dealing on their behalf with what can be frustrating financial roadblocks. It’s part of the service all buyer’s agents bring to the table…and in recent years it’s become a more common situation.
There can be any number of reasons that trigger a financial snag. A client’s down payment funds might be tied up due to a business-related delay, some other ongoing real estate transaction can hit a scheduling snafu, or it may simply be that an unexpected credit ding has surfaced which can’t be solved within the necessary timeframe.
No matter what the reason, when a client is on track to buy a home — but also needs to buy time — alternate avenues need to be explored. A lease option can sometimes provide a workable answer.
Lease options are agreements which allow a tenant to pay an option fee for the right to purchase a home. The key provision is the agreed-upon price which will be offered at the end of the option period. The lease option period is negotiated; it’s typically one to three years. During that time, the tenant makes rent payments, and often an additional sum which will serve as part of the down payment if the tenant purchases the home.
Since a lease option is a legally-binding contract, unless the buyer is a real estate attorney or otherwise very experienced in contract law, it is common to engage an experienced Kenai Peninsula buyer’s agent to help negotiate the terms. When arriving at a completed lease option, the parties are essentially writing two contracts in one: a lease and a sales agreement. To settle on the key element — the purchase price — a knowledgeable buyer’s agent will prepare a comparable market analysis to determine for how much a similar house costs in the same neighborhood. Adjustments need to be made to fix an agreeable price for a house that won’t be sold for two or three years – a ticklish task for anyone without years of market experience.
If you find yourself thinking about exploring the lease option alternative for the first time, an experienced Kenai Peninsula buyer’s agent will help you evaluate the terms. I hope you will consider me your if you’re thinking of buying or selling a home – even if it’s a couple years down the line!