With many people trying to get SOME action on their home, sellers may consider a lease option.  I thought this point from Candace B.  Pinaud, Leave No Stone Mortgage Lending, www.LeaveNoStone.com was worth sharing.  We are strongly urging any one considering a lease with option in the Ann Arbor Real Estate market to consult with an attorney.  We are helping many clients simultaneously market homes for sale and lease.  This way, the client can look at whichever option avails itself first.  As the market slows down a number of sellers may want to sell their home through a lease with an option to buy. Typically, the seller will offer the lessee/buyer that they will devote a portion of the monthly lease toward the buyer’s down payment.

Example: Lease fee is $1,500 per month with seller agreeing to credit $200 per month toward the buyer’s down payment a year from now; equating to $2400 down payment credit a year from now. 

A year later the option is exercised. The lender will require that the appraiser determine the fair-market Rent of the property at that time. If the fair-market rent is determined to be $1,300 per month, $200/month ($2400 annually) may be applied to the down payment. However, if the fair-market rent is determined to be $1,500 at that time, then no monies may be applied toward down payment.

So be careful because the fair-market rent a year out may be different than it is today!

Click here to search all listings in Michigan with pictures and tours - FREE! Kathy Toth & Team  www.KathyToth.com   Ann Arbor Real Estate Market Experts