What is a Lease/Purchase and Is It a Good Idea?

Lease Purchase at Lake NormanThroughout my career in real estate, I have been repeatedly asked this same question.  Now is the time to answer it in black and white.

As a buyer, you have the fever to purchase a new home, but because of credit issues you are unable to qualify for a mortgage.  A seller offers to “lease/purchase” their home to you.

Typically, the seller wants a significant down payment.  This down payment belongs to the seller until you close on the property.  At closing, the down payment will be credited to you.  Then of course, you make your monthly payments like a renter would.  Who pays the taxes, repairs to the home and when the closing date will be are all negotiable between you and the seller.

The beauty of a lease/purchase is that it will allow time for you to correct your credit and be approved for a loan.

Sounds Good!  Here are the negatives…

What if you are unable to correct you credit issues in that period of time?

What if the seller fails to make his mortgage payments and the home enters the foreclosure process?

What if you decide not to purchase the home at the end of the period?

What is the home needs significant repairs that were not obvious before you lived in the home?

Under all of these circumstances and more, you will lose your down payment.

It is just RISKY!  My best advice when asked this question…Rent, Repair Your Credit, and then make a purchase.  You can’t lose!

If you just have to have the home and the only way you can purchase it is through a lease/purchase, please use an experienced REALTOR and an attorney!

 

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About Michelle Nantz

There are many qualities and skills that go into being an excellent real estate professional: integrity, in-depth community and market knowledge, marketing savvy, effective negotiation skills, and a high-quality professional network ~ all of which are hallmarks of Michelle Nantz. In 2003, Michelle began her career in real estate, after a successful career in restaurant and hotel management with her last position as Regional Director of Operations running 56 hotels throughout two states. She owes her success in real estate and management to her expertise in people skills, managing, negotiating, and follow-up. However, it is Michelle’s dedication to quality service that she ultimately credits her success. Michelle shared, “In my experience as a Lake Norman real estate professional, I’ve found that providing the very best service is essentially about putting my clients first. This means keeping myself accessible, being a good listener as well as a good communicator, and responding quickly to their needs.” This “client first” philosophy combined with continual personal improvement and keeping up-to-date with the latest technologies is a cornerstone of both Michelle’s and Lake Norman Realty’s business philosophy. In addition to Michelle’s extensive real estate education and her experience in the local market, she is also an Accredited Staging Professional®, which brings additional value to marketing her clients’ homes. Michelle and her family have made the Lake Norman area their home for over 10 years. In her rare leisure moments, you’ll find Michelle with her three children and husband, or unwinding with gardening or reading. “I live and work in this community and only have the best interests of our community and its members in mind,” says Michelle. Her community activities include participation in Denver Days, Relay for Life and support for Christian Ministries and area schools.
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