Lease Purchase Contract

What is a Lease Purchase Contract/ Lease Purchase Agreement?

At the foundation of rent to own properties, lies the lease purchase agreement. It can be a very popular choice for those interested in getting into their own home before making a commitment. But, what is a lease purchase, exactly? 

A lease purchase is a combination of an exclusive right of first refusal option for later purchase of the property and a traditional rental agreement. Basically, you will lease the real estate with the option to purchase later. Typically, the resident will pay an option fee and  monthly payment + rent credit for a set duration. The lease purchase contract will include a locked-in sale price and a unique set of terms and rules.

Lease purchase agreements tend to be flexible for both buyer and seller, making them a good choice for those with special financial needs. Read about transaction structure, benefits, and difficulties of a lease purchase contract on wikipedia.

Know the Differences Before You Purchase: Short Sale vs Foreclosure Homes

Each presents it’s own set of benefits for a buyer. They are especially known for being generally lower in cost than the average home on the market. Know the skinny on short sale vs foreclosure homes prior to buying. When you’re looking for a deal, it’s sometimes easy to get excited before you know everything you need to know in order to make a decision. Take advantage of the window, but don’t get ahead of yourself. 

You can start to understand the two opportunities by looking at the similarities and differences.

Similarities with Short Sale vs Foreclosure

• Both have alterations to the current or last mortgage agreement
• Both will likely sell for a price less than market value
• Both present an opportunity for buyers

Differences with Short Sale vs Foreclosure

• Short sale is voluntary where foreclosure is forced by the lender
• Short sale homes are still in the possession of the original owner, where foreclosures belong to the bank
• Short sales have only a small window of opportunity before the home goes into foreclosure

As someone who has purchased either a foreclosure or a short sale home, what other similarities and differences do you notice?