A lease option to buy is complicated, and I’ve only seen a few in my career. But real estate agents should be familiar with it in case clients ask.
Here’s a broad stroke explanation:
Let’s say Mr. Brown wants to buy Mr. Green’s house. Mr. Green wants a million dollars, but Mr. Brown doesn’t have that.
So Mr. Brown suggests that he leases the property for $5,000 a month, to build up enough for a down payment, so that he can then purchase the house from Mr. Green.
It’s all dictated in a contract so that Mr. Brown can’t get edged out by Mr. Green.
There are lots of nuances to this, and it’s complex. But now you can at least explain it to clients in general terms. Hopefully, you won’t encounter one in your career.
Peter Lorimer is the CEO of Beverly Hills, California-based PLG Estates.