You may have heard the term "rent-to-own" before.
What you may not have heard are the terms:
"Lease-purchase" and "Lease option."
All of these terms are interchangeable. We'll use the term lease purchase for the purpose of this article.
Although they may not be the traditional way of selling your house, lease purchases are potent tools that homeowners can use.
Lease purchases provide a lot of benefits, of which many homeowners are often unaware.
Let's take a deep dive into why lease purchases are a viable and often lucrative way to sell your house.
You Will Earn More Gross Proceeds Than A Cash Sale
To help demonstrate our first point, let's consider a hypothetical house worth $200,000 that would rent for $1,250.
The homeowner wants to sell it, but also wouldn't mind renting the property for a few years.
Our hypothetical homeowner could list the property for sale on the MLS with an agent for $200,000, and will probably get an acceptable offer.
But will the homeowner make $200,000?
Not even close!
The homeowner is likely to have to pay the below-estimated costs:
Realtor Commissions at 6%: $12,000
Buyer Requested Repairs: $5,000 - $10,000
Buyer Requested Closing Costs: $5,000 - $10,000
City/County Transfer Taxes: ~1% of the sales price at $2,000
Home Warranty: $500
Deep Cleaning Cost: $300
Recording Fees: $100
All these costs add up to $36,400, for gross proceeds of $163,600.
On the other hand, let's look at the numbers for a lease purchase.
For our example, we'll say the lease-purchase term will be for 36 months.
Our hypothetical homeowner will earn gross proceeds of: