Lease Option for Your San Diego Home?


by Roberta Murphy

Would you consider a lease option for your San Diego home?

Lease Option Your San Diego Home
Keys to San DIego Home

We started using the lease option on offers a couple of years ago It was and is a tool that can match desperate sellers with reluctant buyers. It’s also a tool that can work well for the real estate investor. In prior years, few homesellers would have considered this alternative, but times are changing. True, too that real estate markets don’t always stay down and once again, lease options will fall out of favor.

A recent example in our San Diego real estate practice involved a motivated buyer with high income, but who also had compromised credit (USC student loans). He offered the tranferred seller a non-refundable deposit of $3200 and somewhat-inflated rent of $3500 per month. All of the deposit and a percentage of the rent would apply to the purchase price 12 months later–and should the buyer not pursue the purchase option, the deposit and rents would all belong to the seller.

The buyer, oth the other hand, has the option to purchase this Carlsbad property at its appraised value 12 months later (likely a good thing for the buyer). This gives him a year to repair his credit and arrange financing. It also helps to soothe the fears about a declining San Diego real estate market. The seller, who had already moved out of the home, has mortgage payments covered for a year and a non-refundable deposit to pocket. The seller would have preferred a sale and the buyer would have liked to purchase in a more solid market, but this compromise bought time for both.

Marginal real estate commissions for the lease option flow at beginning of lease, and full sales commission will flow only if/when the transaction closes. Again this may not be the best solution, but we are in a difficult financial times. We would all have preferred a “clean” and solid transaction.

Markets, however, don’t always cooperate.