Selling our house = buyer wants to do 'lease option'?
Discussion
Currently selling our house at the moment, and I've had a few viewings and one with a guy who said he is an investor in property. He was quite young and without being too derogatory, he didn't speak with the manner I would expect an investor to have (Quite a lot of slang in correspondence, didn't answer questions properly, confused by some of words I used which I would assume someone in property would understand)
He has said he can offer us with two options. One was an offer of around 75% of asking price, which I immediately discounted as it is nowhere near what I believe it is worth or what I would consider selling for. The second was something he said was called a 'lease option'. He went on to describe that this is where they are put on as having an interest on the mortgage and they would be bound by the contract to pay the mortgage for 7 years regardless of interest rate rises or falls, and would fully maintain the property. Within this 7 year period, they have the option to purchase the property outright. If no purchase is made within the 7 years, they have the option to extend (And compensate me £1,000 per extension period) or to cancel the arrangement and I would get the property back.
He has said this isn't a well known process in the UK, and only a few solicitors will deal with it. He has given me the name of a solicitor who he has used before and knows the process.
So its over to PH. This sounds way too dodgy to me, but does anyone know if its a legitimate procedure? As I said earlier, my impressions of him are that he is slighly dodgy, although I could be being presumptious. The solicitor name he gave me does check out, but could be his friend helping in the 'deals'?
We already have a 2nd mortgage lined up for our next property, so selling isnt that urgent for us, but was intrigued by his offer. Is it valid, or am I being too sceptical?
He has said he can offer us with two options. One was an offer of around 75% of asking price, which I immediately discounted as it is nowhere near what I believe it is worth or what I would consider selling for. The second was something he said was called a 'lease option'. He went on to describe that this is where they are put on as having an interest on the mortgage and they would be bound by the contract to pay the mortgage for 7 years regardless of interest rate rises or falls, and would fully maintain the property. Within this 7 year period, they have the option to purchase the property outright. If no purchase is made within the 7 years, they have the option to extend (And compensate me £1,000 per extension period) or to cancel the arrangement and I would get the property back.
He has said this isn't a well known process in the UK, and only a few solicitors will deal with it. He has given me the name of a solicitor who he has used before and knows the process.
So its over to PH. This sounds way too dodgy to me, but does anyone know if its a legitimate procedure? As I said earlier, my impressions of him are that he is slighly dodgy, although I could be being presumptious. The solicitor name he gave me does check out, but could be his friend helping in the 'deals'?
We already have a 2nd mortgage lined up for our next property, so selling isnt that urgent for us, but was intrigued by his offer. Is it valid, or am I being too sceptical?
Never heard of this one.
First question is at what value do they the right to purchase?
By being 'on the Mortgage' do they mean that they are a co-applicant? or are they registering an option to purchase with Land Registry?
What happens if they default? What is happening to the property over the 7 years? Who gets the capital growth between the 7 year periods?
I think I am fairly suspicious of this one and would definitely say use your own solicitor and not one recommended by this investor.
First question is at what value do they the right to purchase?
By being 'on the Mortgage' do they mean that they are a co-applicant? or are they registering an option to purchase with Land Registry?
What happens if they default? What is happening to the property over the 7 years? Who gets the capital growth between the 7 year periods?
I think I am fairly suspicious of this one and would definitely say use your own solicitor and not one recommended by this investor.
A lease option is more common outside of the UK, but I was kind of under the impression it was offered in letting scenarios whereby the tenant would enter into that agreement that they would buy the property after X years for a fixed price from the Landlord.
From your point of view and in your circumstances this offer would not appear to make much sense.
From your point of view and in your circumstances this offer would not appear to make much sense.
3sixty said:
and I would get the property back.
Which means you had over the rights to the property first as they pay the mortgage? Back to the old addage, if it sounds too good to be true, it probably is. Seven years is a long time. Imagine if property prices fell by 25% or they knocked down the rest of the road in a compulsary purchase, do you think the mortgage would still get covered and that they would not cut and run? How many people pay money out for others without having their name on your property. They have not even paid you a penny at this point.
Find another buyer who will CU R eye tight. Or summat similar
3sixty said:
He went on to describe that this is where they are put on as having an interest on the mortgage and they would be bound by the contract to pay the mortgage for 7 years regardless of interest rate rises or falls, and would fully maintain the property. Within this 7 year period, they have the option to purchase the property outright. If no purchase is made within the 7 years, they have the option to extend (And compensate me £1,000 per extension period) or to cancel the arrangement and I would get the property back.
Good for them, appalling for you IMO.They get 'into' your house and mortgate at no risk to themselves, if they simply stop paying the mortgage you have no come back as they have no more (or perhaps even less) invested than a tenant.
A good way for them to get a cheap rent, a poor way for you to lose your house. Also as mentioned above, the purchase price of what? Sitting in a house for 7 years risk free and buying at a price 7 years old would be a lottery win for them so I'd expect that's what they'd word in as.
I expect there is a reason most lawyers won't touch this.
ks is there for a reason and it won't be to suit you.this is the new sell and lease back option, much favored by the BMV's of 2007.
Have a look at singing pig or propertytribes or yourproperty forums for more info...
most of the people advocating this are just selling courses for people with no money to go on who are then convinced they can 'buy a house with no money down!!' and 'you too can have a property portfolio worth £1,000,000 (with a debt of £1.2 million)....
A lot of these property investors would be lucky to afford a lego house let alone a real one!
Have a look at singing pig or propertytribes or yourproperty forums for more info...
most of the people advocating this are just selling courses for people with no money to go on who are then convinced they can 'buy a house with no money down!!' and 'you too can have a property portfolio worth £1,000,000 (with a debt of £1.2 million)....
A lot of these property investors would be lucky to afford a lego house let alone a real one!
Personally, I would be very loathe ever again to sell to someone other than a private buyer. Selling to someone who is not emotionally invested in the sale and who does not stand to lose out horribly if he causes the chain to collapse puts him in a strong position to act like a dishonourable dirtbag at the last minute.
Lease options arent really that new, but over in the UK they seem to be springing up, especially from companies offering courses on the subject.
Personally, it doesnt sound like it suits you, as from what you describe, you are simply marketing your house for sale, along the usual lines.
you do not sound like a motivated seller - in the sense of needing to sell quick, or being in a sticky situation.
We have stopped doing SARB, but are regulated by Landlord association and FSA.
Sounds like he has paid his $499 to go no a course, got his book, and is trying to get a leaseoption, or BMV deal. Might not have the cash, or he might.
If you were in a situation wherby you needed to sell quick, the leae option means he will pay your mortgage, for an agreed period. you live in your house as normal.
Personally, it doesnt sound like it suits you, as from what you describe, you are simply marketing your house for sale, along the usual lines.
you do not sound like a motivated seller - in the sense of needing to sell quick, or being in a sticky situation.
We have stopped doing SARB, but are regulated by Landlord association and FSA.
Sounds like he has paid his $499 to go no a course, got his book, and is trying to get a leaseoption, or BMV deal. Might not have the cash, or he might.
If you were in a situation wherby you needed to sell quick, the leae option means he will pay your mortgage, for an agreed period. you live in your house as normal.
Gassing Station | Homes, Gardens and DIY | Top of Page | What's New | My Stuff