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Sale instead of Lease Purchase


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#1 ErikOk

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Posted 12 March 2013 - 12:09 PM

I currently have a property that is Lease to Own.

 

If somebody is interested in purchasing right away instead of doing a lease purchase, how have you all handled the assignment fee that you have already calculated in a CA?

 

Do you just collect the full assignment amount now & then you are out of the deal?

 

I am thinking maybe the buyer would not likely want to pay the assignment fee which is around 3% since this is not a wholesale deal, but the value is in the length of the lease & not the price of the house.

 

Should the assignment fee be reduced from 3% because most of that value is in the length of the lease that gives a buyer time to get their finances in order?

 

For example, I know that when a tenant-buyer provides the option consideration (assignment fee), they know that is non-refundable.

 

But I am wondering if somebody wishes to purchase right away, then pays an assignment fee, then something happens where they don't buy then they lose the 3% assignment fee; then what? I'm sure they wouldn't be too happy & would likely want the 3% given back to them even though it is non-refundable.

 

Hope this makes sense?!

Thoughts?



#2 bwalston

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Posted 12 March 2013 - 02:10 PM

Erik, you have already calculated the fee into the strike price with the T/B, correct?  If so, why would you want to reduce the fee simply because the buyer already has his/her finances in order?  You could still work the deal as a CA and the T/B simply exercises the option sooner rather than later :)

 

If they have agreed to the price already, it is what it is...

 

If on the other hand, they have NOT agreed to a price yet, then it's negotiable - although, frankly, I wouldn't negotiate much, because YOU have already done your part of the work on the deal.  The timing of when the option is exercised is between the seller and the tenant/buyer. 



#3 <Steve>

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Posted 12 March 2013 - 04:24 PM

I agree too, the best way is to get this deal assigned and get paid, then let the seller and buyer work through it to close.

 

If not, the other way is to record your option and have the seller also sign a release-for-fee that you give to the closing attorney.  The attorney will mail you a check at close.  The risk is that the property may not close and you are out.  You may also be a sounding board if issues come up.  So you need to keep in mind you are not representing others, only yourself.


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#4 ErikOk

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Posted 12 March 2013 - 05:59 PM

Erik, you have already calculated the fee into the strike price with the T/B, correct?  

Yes.

 

If so, why would you want to reduce the fee simply because the buyer already has his/her finances in order?  You could still work the deal as a CA and the T/B simply exercises the option sooner rather than later :)

After I posted my comment, I did think there was probably no need to change the assignment fee. I do agree that it should likely work as a CA even thought it would be exercised quickly

 

If they have agreed to the price already, it is what it is...

 

If on the other hand, they have NOT agreed to a price yet, then it's negotiable - although, frankly, I wouldn't negotiate much, because YOU have already done your part of the work on the deal.  The timing of when the option is exercised is between the seller and the tenant/buyer. 

The CA has the price is set. I'm thinking no need to negotiate the assignment fee down. I haven't spoken with the potential tenant-buyer yet, but the person I have taking the calls said that they would like to move in on March 20. T/B is currently renting another place on a month-to-month basis. So I am now thinking that they could leave their current rental and just lease the house with the CA for a month or 2 and get their financing in order. Then they would get a couple months rent credit too. We'll see how it goes. :)


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