The exit strategy you use to sell your house can be very impactful to the returns you receive from your investment in real estate. Often, a lucrative alternative to selling your house outright, is to sell your house using a lease option sale. This has helped many people generate a higher return on the sale of their property. A lease option is an agreement that typically ranges from one to three years. At any time during this one to three year period the lessee has the right to exercise the option to buy the home or walk away. You will keep the initial option fee that you collected upfront from the lessee if they choose to buy or not buy the house.
Much like having tenants, you’ll be renting out your property during the option period. However, these tenants have much more at stake than the average tenants, as they are, in essence, test-driving ownership of the property. These tenants are willing to pay extra for the chance at living the lifestyle of homeowners while correcting any missteps with their credit or building savings for their down payment on the property. Many win-win sales are made with the right tenants and a thoughtfully constructed lease option agreement. So read on as we explore using a lease option to sell your rental property in Alabama.
Lease Option Sell Price
Because you’re in the driver’s seat, you can set the sales price for the property now when you use a lease option to sell your house in Alabama. Often set above market to account for the appreciation estimated to occur over the contract term, while you take the risk there could be a sudden hike in values, the tenant takes the risk that values drop.
Option Fee
Using a lease option to sell your house in Alabama means that you’ll collect an initial option fee ranging from one to five percent of the sales price, though option fees of up to twenty percent are not unheard of, and the fee is typically non-refundable. With the national median listing price for active listings being around $450,000 as of May 2022, 5 percent would be $22,500, which would apply towards the purchase if the tenant exercises the option.
Tenants Maintain Your Property
While you’ll still hold the title and be responsible for the taxes and insurance, everything else will fall on the shoulders of the tenant when you’re using a lease option to sell your house in Alabama. So, for example, tenants typically carry the financial responsibilities of maintaining the home and even making repairs.
Above Market Rent
You’ll make above-average rental income using a lease option to sell your house in Alabama; the portion of rent paid at above-average rental rates is called the rent premium. The buyers would then deduct the amount paid into the rental premium over the contract term from the sales price upon exercising the option. Of course, if there is no purchase, you’ll also keep these funds.
Talk to one of our highly seasoned professional home buyers at North Alabama House Buyer today about your property, with no obligation. At North Alabama House Buyer, we want you to know you made the best deal and feel good about working with us long after the closing. That is why at North Alabama House Buyer, we’ll compare the numbers of a traditional listing vs. the lease option method and even make you an offer to buy your property directly, as-is, for cash. At North Alabama House Buyer, we’re fully transparent, providing the detail of how each number in our calculations so you can make an educated decision about what works best to sell your Alabama house.
Ready to learn more about the win-win advantages for sellers of using a lease option to sell your house in Alabama? Call North Alabama House Buyerat (256) 824-9181.