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PREA Signature Realty

A Full Service Real Estate Brokerage 

Info Line:  314.621.5777

Brokerage:  314.397.3182

Display:  314.771.7171

MSilies@PREASignatureRealty.com

 

1709 Park Avenue, St. Louis, Missouri 63104

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ALTERNATIVES TO CONVENTIONAL FINANCING

LEASE PURCHASE / LEASE OPTIONS / SELLER FINANCING

In today’s market, there are more options than simply renting or purchasing.  Often, an individual or family would prefer to purchase.  However, there are often reasons why the decision to purchase is delayed for such reasons employment instability, credit related issues, accumulation of down payment, recent relocation to area, etc.  Leasing is an option.  However, leasing is not the only option.  Here are some of the other options currently available:

 

· Lease Purchase:  Lease purchase agreement are similar to consumer rent to own agreements.  The tenant agrees to purchase the property at a fixed sales price after a period of leasing the property.  The lease purchase agreement can be structured to meet your personal circumstances.  There are two primary variations.  The first anticipates an upfront lump sum payment, followed by the payment of market rate rental payments, and then the closing of sale at the end of the lease term.  The second variation anticipates no upfront lump sum payment.  The tenant pays market rate plus rental payments.  At closing, the owner then credits a percentage of the tenant’s rental payments ranging from 25% to 50% of the paid rent at closing to be used as the tenant’s down payment and closing costs associated with the purchase of the property.  Under both variations, the tenant agrees at the time of execution of the lease purchase agreement to purchase the property at the end of the lease term.

 

· Lease Option:  Lease options are similar to lease purchase agreements.  However, under a lease option, the tenant has the option to elect to purchase the property at the end of the lease for a specified price.  That is, the tenant may (but is not required) to exercise the option and purchase the property.

 

· Right of First Refusal:  Rights of first refusal grants to the tenant an option to purchase.  However, there are two main differences from a lease option.  First, the option to purchase does not arise unless and until the owner has received a purchase offer.  Second, unlike an option, the terms of sale are not set at the outset.  The tenant must either agree to purchase on the terms contained in the third party offer or release the option to purchase.

 

· Seller Financing:  Although not a variation of a lease purchase or lease option agreements, seller financing is becoming more available in the current market.  With seller financing, the owner sells the property and takes back a deed of trust and promissory note.  Typically, the mortgage payments are amortized over 30 years.  However, the promissory note is short term and purchaser is required to refinance after 1, 3 or 5 years (or other period agreed by the parties).

 

If you are interested in purchasing a home or at least starting on the road towards homeownership and there are obstacles in the path, contact the real estate professionals at PREA Signature Realty to explore your options.

LEASING COUNSELORS

 

We don’t just lease condos and lofts.  We also provide guidance and look for opportunities to place tenants on the road to home ownership.

 

For Information on Properties Available for Lease, Lease Purchase and Lease Option and for Sale with Seller Financing,  Contact:

 

Michelle Silies

PREA Signature Realty

314.397.3182

LEASING

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