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Savannah Ga Real Estate -- Understanding Lease/Purchase

scratching%20head.jpg Lease/purchase is different than lease with an option to buy. An option to buy means just that, at the end of the lease, or any time during the lease, if the contract is written that way, you have the option to buy the home. This protects your right to be the buyer in case you choose to buy; however, you can choose the option to not buy.

A lease/purchase is a sales agreement stating you will lease the property for a period of time and at the end of the lease period, you WILL buy the home. You usually have to put up a significant amount of money down upfront, around 10%, and you lose this downpayment if you fail to honor the agreement.

Which one is best depends on the buyer's situation. In today's market, a lease with option to buy will enable you to have an option to buy, say a year later, but it will allow you to choose not to buy if the market changes for the worse and prices go down. This is one way to deal with an uncertain market, that is if you can find a seller willing to lease for a year. Many sellers need their money now and can't wait a year, but you can find sellers who are not in a hurry - they just want to cover their mortgage payments.

A lease/purchase might be a good choice for someone with borderline credit who needs a year to improve their credit score. This enables the buyer to work on their financial situation before buying the house they have chosen -- it's just a delayed closing that transforms a lease to a purchase after a period of time. The price you pay at the end of the lease is set upfront, so understand which way the market is going regarding price before you commit and make sure you get a price that is in line with market trends.

Both lease/purchase and option to buy may be used more and more in an uncertain market, and a market where credit is tighter. Make sure you talk with a real estate profesional so that you understand the agreements. These types of agreements are hard to find in a stable market like Savannah, but I have seen these options offered more lately.

If you are relocating to Savannah and want time to make sure you understand the market before purchasing, but you find the house you want in a great area, then one of these options might be the best choice. But, like I say, get advice.

Published Saturday, January 12, 2008 7:00 AM by Mike Farmer

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