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dan332

5% option money make a difference?

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Just poking around looking to see what info is out there on lease options and RTO, I came upon a decent article at Wikipedia on "how to sell your home with a lease purchase". One of the footnotes was as follows, which I have never seen before. I've seen discussions back and forth on whether there is a risk or not of LOs being seen as sales, (including on this board), but I've never seen anything mention a % as the basis for how a LO is viewed. Has anybody heard of this 5% thing?

 

-Dan

 

" In many jurisdictions if the total of the initial option money (the option fee) plus the option money from the monthly payments exceeds 5% of the agreed-upon purchase price, the seller must go through foreclosure proceedings if the prospective purchaser falls behind on the payments. If the total option money is less than 5% of the purchase price, the standard eviction process can generally be used. For this reason, lease options typically set the total option money at less than 5% of the price."

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Dan, that's the first time I ever heard of someone claiming that. I don't buy into it in the slightest. Wikipedia is a joke. Anybody can write anything, state that it is a fact, and it's there for all the world to see.

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Dan, that's the first time I ever heard of someone claiming that. I don't buy into it in the slightest. Wikipedia is a joke. Anybody can write anything, state that it is a fact, and it's there for all the world to see.

 

MC,

Thats what I suspected. I was mainly interested to see what the average seller would find when they did a search on RTO or LOs. In all the articles and sites I saw there was no mention of this thing (except Reeds site which seems to be down on every CRE technique.) Even Realtor.com has LO properties on their site, so if the NAR is comfy with them I dont see any problem. Actually I thought the 5% thing might be way to tell a homeowner that they shouldnt be too greedy on the option money:B)) But no.....that would probably do more harm than good.

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