Is a Lease-to-Buy Contract Worth Signing?
A lease-to-buy contract is an option that isn't new, but is becoming more popular when you're renting a high-rise condo or loft.
Leasing a property before you buy can have advantages for you as a potential buyer.
One of the biggest advantages to the buyer and the seller is the flexibility of the contract.
It's important for all parties to read, understand, and sign the contract.
How A Lease-To-Buy Contract Works
An agreement between a tenant and owner that includes an option to buy allows the tenant to purchase the property while the lease is valid.
Agreements of this type are usually drawn up for duration of twelve to eighteen months.
However, the duration of the contract may be longer at the discretion of the buyer and seller, especially if the buyer needs additional time to have the funds available for the mortgage.
Buyer's Exclusive Rights
The tenant and owner agree to the terms before the contract is signed.
While the contract is in effect, the renter has an exclusive option to purchase the property.
Lease-to-own agreements allow the buyer to put down less than a traditional down payment.
The amount is usually between one and five percent. The renter pays the seller a deposit and the monthly payments go toward the purchase of the property.
Benefits For Lease-ToPurchase Buyers
The lease-to-buy contract is an opportunity for a buyer to save money for the purchase when they don't currently have the funds for a traditional down payment.
The contract allows a buyer with a low credit score to increase their score and resolve any credit problems before the lease expires.
The higher the credit score, the more likely the buyer is to be approved for a mortgage.
The advantage of a lease-tobuy contract is that the payments the buyer makes build equity in the property.
If the buyer is approved for a mortgage, the property can be purchased at any time while the contract is valid.
Entering into a lease-topurchase contract is a good way to determine if buying a condo or loft is the best option.
What Sellers Need To Know
A lease-to-purchase contract can be beneficial for the seller when the market is slow. The contract allows them to increase their cash flow.
The lease-to-buy agreement is a good option for real estate developers who are having problems leasing or selling units.
Some real estate developers offer incentives to potential buyers. The broker may offer an option to buy at a set price if they purchase the condo or loft within a year of signing the lease.
Ensuring A Successful Transaction
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When entering into a lease-to-purchase contract, it's essential that all parties understand the contract.
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It's advisable to have a real estate attorney go over the terms of the contract before it's signed.
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The property should be inspected and all necessary repairs should be made before the contract is finalized.
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All parties should be clear about who will pay for the maintenance and repairs to the property.
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If there are any tax liens, it should be disclosed in the contract. The buyer should be aware of the amount due for taxes, HOA fees, and insurance.
If you are looking for a condo to buy in Arizona, We Know Urban Realty will help you find the perfect place.
Their realtors are experts when it comes to urban living. Visit the site to see what's available right now: www.weknowurban.com
Will Daly, Broker We Know Urban Realty, LLC 834 E Claremont Street, No 3 Phoenix, AZ 85014 (480) 510-8755 Email: Will@WeKnowUrban.com