Lease Purchase Program

Advantages to the Seller:

• You will receive top price for your house

Let’s be honest. How often is a seller offered full asking price and the buyer pays all closing cost? It does happen on occasion but not often. In a buyers market it almost never happens. However, in a lease purchase model the buyer recognizes that the seller is already making a major concession by considering a lease purchase. Subsequently, in most cases the seller would not be expected to discount the house unless a substantial down payment was being received. The seller now has a contract for the full asking price instead of discounting their house thousands or tens of thousands of dollars.

• The seller receives full disclosure of buyers financial condition and credit development plan

Every possible issue the seller could be concerned about is disclosed with the buyer’s written permission.

• Job stability
• Income
• Debt
• Credit score and past major credit issues i.e. bankruptcy, foreclosures repossessions,
   judgments etc.
• Previous rental or ownership history
• Most importantly: What do they need to do to qualify and how long will it take.
• Down payment amount

• Enhanced probability the buyer will execute the purchase option of the lease purchase agreement

In reality most lease purchase programs are nothing more than glorified rental contracts. The buyer doesn’t have many choices. He chooses a property where a seller will work with them. As time goes on the buyer either does not get his financial house in order and cannot qualify for the house or… if he does qualify he realizes now that he has other options and really wasn’t too crazy about the house in the first place. He or she then goes and finds the home of their dreams.

Firstly, our buyers have chosen the house that we are going to lease purchase. It has not been thrust upon them as a last resort, stop gap option. It is a house they like and would buy if they could qualify at that moment. This has huge implications as time evolves in the lease purchase agreement.

Secondly, the contract is structured where the buyer receives principal reduction from their lease purchase payments in the exact same measure as if they had already received the loan. You may say, “Wait a minute, you can’t do that. You are giving away way too much.” Not so fast my friend. A closer look at the amortization schedule of an average loan scenario will show that during the first two years only a small percentage of the payment goes toward principal reduction. Any seller would be very happy with the return he will be receiving. Also, the buyer is happy, because it is as if they have already received the loan.

Thirdly, because the seller has received appraised value for the house and now will be either making a positive cash flow or paying down the principal on their house…or both…can now offer additional incentives to the buyer to galvanize the buyer’s commitment. This would make it unwise for the buyer to walk away from all they have invested. For example: the seller may credit the buyer with additional money to be applied toward principal. Or the seller may discount the house or pay some closing cost if the buyer purchases the house in a set amount of time. Any of these options would increase the likelihood of the buyer executing the purchase option of the contract.

Fourthly, the buyer will be making virtually the same payment throughout the lease purchase agreement they will be making when they receive full financing to purchase the house. This looks good to the lender and there is no increased payment shock to the buyer that may discourage them from executing the purchase option.

• We can take care of all the contractual issues for the seller and buyer

All of our lease purchase agreements are handled by licensed Real Estate agents in the state of Georgia. We have comprehensive contracts specifically for lease purchase situations in the state of Georgia. These contracts fully protect all rights and concerns of both the buyer and seller. Use of our contracts is not mandatory and if there is mutual consent by the buyer and seller to use other contracts we will certainly be agreeable unless there are major issues that the buyer and seller are not aware that put either party in jeopardy or disadvantage.

The buyer has an ownership mentality

• In our lease purchase agreements the buyer agrees to be responsible for all maintenance and repairs after proper disclosures and an agreed upon time table. The seller will not be badgered with tenant/landlord complaints and request.

Lease purchase homes