A Lease To Purchase Contract
A lease to purchase contract is a real estate contract where a rental agreement is signed by tenants who are also interested in purchasing the property. The contract gives the tenants the first right to buy the property at a previously agreed upon price. The contracts are not common in the Nashville real estate market, though they do take place.
How A Lease To Purchase Contract Works
A lease to purchase contract is often used when interested buyers do not qualify to buy a new home outright. The seller may decide that they are comfortable with the buyers and suggest a lease to purchase contract instead. This means that the seller and tenant have agreed upon a sales price and the seller then acts as landlord, collecting monthly from the tenant/buyer and allocating a portion of the money towards the purchase of the home. A nonrefundable downpayment is usually still required and also applied toward the purchase price.
The length of the lease to purchase contract is determined by both parties. If, at the end of the contract period, the tenant is still not able to buy the home, the contract may be extended.
Why Use a Lease To Purchase Contract?
If your home has been on the market for some time and is having trouble selling, you may want to consider a lease to purchase contract. This option can provide an opportunity for buyers who are interested, but unable to meet the standard qualifications for a mortgage. It can provide a monthly income as well as move you closer toward selling your home. It’s also possible to make more on the sale of your home through this option.
You will not want to consider a lease to purchase contract if you need to sell your home before purchasing another one. It’s also important to remember that lease to purchase contracts usually involve tenants with credit issues, which could mean they have defaulted on a mortgage in the past.
If you would like to know more about Nashville real estate options, including lease to purchase contracts, call us today!