| When the real estate market starts to slow, home | | | | returned. |
| sellers become desperate to sell, and because of this | | | | If the due diligence period expires, the lease period |
| Lease to Buy Options become more appealing. But | | | | becomes active and the leaser / buyer can take |
| what exactly are lease to buy options and are they | | | | occupancy of the property (note an additional security |
| right for you? | | | | deposit maybe required to be paid). Towards the end |
| A lease to buy option allows a buyer who cannot | | | | of the lease period, the leaser / buyer will have to |
| currently obtain a home loan, to rent a property and | | | | notify the seller if they intend to activate the option to |
| have the option to buy it at a predetermined price | | | | buy the property. The notification to buy must be given |
| after a set amount of time. This gives the buyer an | | | | before the Notice of Intent Deadline defined in the |
| opportunity to build their credit score so that they can | | | | contract. This means that the buyer will need to have |
| obtain a loan by the time that the lease expires. | | | | their loan in place before this date. If a notice of intent |
| For example, a buyer agrees to lease a property for a | | | | is not given, the leaser / buyer losses their right to |
| year at $1500 per month. After the year, the buyer | | | | purchase the property. |
| then has the option of buying the home for $300,000. | | | | There are a couple of potential problems that you |
| A lease to buy option is more complex than a normal | | | | need to watch for, first if you still cannot qualify for a |
| real estate purchase, with the added complexity of a | | | | loan after the lease period, you will lose your lease |
| combined rental agreement and purchase contract. | | | | option money. Another area to be careful of is the |
| Just like in a normal real estate purchase, one of the | | | | sales price and the associated mortgage loan |
| things you will need is a deposit. This is referred to as | | | | appraisal. For example, if you agree to purchase a |
| Option Money, and it is held with the real estate | | | | property for $150,000 and during the lease period |
| brokerage until the buyers due diligence period expires. | | | | home prices decline, you maybe in a situation where |
| The due diligence period enables the buyer to perform | | | | the lender will not loan you the full amount, i.e. they |
| a home inspection (and anything else they may want | | | | value the property less than the purchase price. Of |
| to do), in order to confirm that they are satisfied with | | | | course, if the property prices increase in value, you will |
| the condition of the property and want to progress | | | | find yourself with instant home equity. |
| with the lease to buy option. When the due diligence | | | | Please note that the 'Lease To Buy' details contained |
| period expires then the Option Money goes hard and it | | | | within this article are applicable for the Utah Real |
| is released to the seller. If the buyer chooses to | | | | Estate market, other real estate markets may |
| withdraw from the lease to buy option at any time | | | | implement Lease To Buy Options differently. |
| during the due diligence period, the Option Money is | | | | |