Frequently Asked Questions - Sellers

How will you buy my house?

What is a lease option?

What will you do with my house?

Why don’t they just buy my house now?

What benefits will I have with a lease option?

What if they don’t buy my house?

Why don’t I just find my own tenant or buyer?

What happens if the tenant/buyer doesn’t pay or damages my house?

How much will you pay me for my house?

How do you make your money?

HOW WILL YOU BUY MY HOUSE?

This is probably the first question I am asked. Unfortunately, I don't have an easy answer. There are a lot of factors that I have to take into consideration before I know how I can offer to buy your house. And, since I buy a lot of houses, I cannot pay cash or get mortgages for all of them. This is why I frequently offer to purchase houses using a Lease Option. Some of the factors I have to consider are the size and condition of your house, the location, how easy it will be for me to find a buyer, your equity and if you need all of it now or if you can be cashed out over a period of time. After I have determined all of these things, only then will I be able to tell you how I can offer to purchase your home. But, my preferred method of purchasing is on a Lease Option. Another very important factor is your financial situation. If you are facing bankruptcy or foreclosure the options that I can offer you are different. If you are facing foreclosure, please go to the section on Foreclosure.

WHAT IS A LEASE OPTION?

An Option is a right to purchase your property at a predetermined price within a specified period of time. During that time period I will lease your house, pay the utilities, and take care of maintenance issues.

WHAT WILL YOU DO WITH MY HOUSE?

I will locate someone who wants to purchase your house. They will sub-lease your house from me for a period of 12-18 months. During this time they will work with my mortgage broker so that they can get a mortgage to purchase the house at the end of their lease period.

WHY DON’T THEY JUST BUY MY HOUSE NOW?

Because the typical person that I will sub-lease your house to will not be able to get conventional financing at this time. This means that they probably have little or no down payment, short time on the job, credit issues or no credit history established. They need a period of time to get their credit established or improved to get a mortgage. Leasing for 12-18 months normally gives them the time to do this.

WHAT BENEFITS WILL I HAVE WITH A LEASE OPTION?

You will have immediate debt relief on this property since you will be collecting a rent check from me every month. You will be relieved of all utility bills, maintenance, grass cutting, snow shoveling, etc. Plus, since the title remains in your name until you actually sell the house to me or to the tenant/buyer, you will keep all the tax advantages such as mortgage interest and property tax deductions. In addition, I will pay for advertising your house, screening potential tenant/buyers and showing the house.

WHAT IF THEY DON’T BUY MY HOUSE?

If they don't purchase your house at the end of their lease, I will locate another tenant/buyer and sub-lease your house once again. My contract with the tenant/buyer will run for 12-18 months. My contract with you will run for 36 months and in some cases 48 months. This allows me the time to find a second or maybe even a third tenant/buyer who will purchase your house within the 36-month period of our contract.

WHY DON’T I JUST FIND MY OWN TENANT OR BUYER?

That is always an option to you. If you have the expertise to screen potential tenant/buyers, check references, know what sort of credit scores will allow someone to be able to be financed, deal with maintaining your home while someone else lives in it, work with the mortgage brokers to get them financed and finally set up and arrange a closing, then finding a tenant/buyer on your own would be an easy solution for you. But if you have never done it you might actually end up being a landlord instead of a seller. If the tenant/buyer moves out, you won't have a lease payment coming in and you will be responsible for repairs and maintenance. If they are not paying, you will have legal fees and face evicting them. And if they move out, you will need to start the whole process over again.

WHAT HAPPENS IF THE TENANT/BUYER DOESN’T PAY OR DAMAGES MY HOUSE?

If the tenant/buyer doesn't pay, you still get paid. Your contract is with me, not with the tenant/buyer. If the house is vacant for 3 months while I locate a new tenant/buyer, I still pay you. If the tenant/buyer needs to be evicted, I pay the legal fees and take them to court, while I still pay you your lease payment. You never get involved in the eviction. And, since my contract says that I will maintain the house in the same condition that I acquired it, if anything needs to be repaired, I repair it.

HOW MUCH WILL YOU PAY ME FOR MY HOUSE?

There is only one way to determine how much your house is worth and that is by looking at comparable houses that have SOLD. Let me say that again, the only accurate way to determine the value of a house is to use actual comparable sales. I look at similar houses in the same or nearby neighborhoods that have SOLD. Assessed value, appraised value or list price mean very little to me. A house can be listed for anything but that doesn't mean it will sell for that price. And as far as appraised value, lenders frequently appraise a house for 10% more than its actual worth because they want you to borrow more money. That does not mean that your house is actually worth the appraised value. I will take an average of the comparable houses in your neighborhood that have sold and base my offer to you on this average taking into account any repairs that may need to be done.

HOW DO YOU MAKE YOUR MONEY?

I make my money when the house is actually sold to the tenant/buyer. I am the middle person who takes on the responsibility of the house acquiring a qualified tenant/buyer, checking their references, working with my lender, assuming responsibility for maintenance and repairs. And, if necessary, dealing with legal issues if they are not living up to their responsibilities. My risk is very high and my money is not made until they actually buy your house. My profit is in the price that they will actually buy the house for. If you were selling through a realtor, you would pay a commission. When you sell through me, you are not paying a commission, but rather my profit is made through the price that I sell to the tenant/buyer for.

Last revised: Tuesday, March 25, 2008