How Does a Convertible Purchase Option Sale Work?
A Convertible Purchase Option, represents a non-traditional home ownership financing solution for highly-qualified buyers who have cash, but for one of many currently restrictive reasons, aren't able to secure a traditional bank financing loan. The highly-qualified buyer signs an agreement with the seller to lease/purchase the property at a monthly rate set by the seller (typically a substantial amount which easily pays the mortgage plus $100-$300 extra). The new buyer can also agree to be responsible for paying the taxes and sewer, maintaining the property and all associated expenses that come with home ownership in their entirety.
The new lease/buyer has the contractual option to buy the property at a predetermined price at any point during the lease period (usually between 18-24 months). If the potential lease/buyer completes the sale, a portion of the lease payments will be credited back to the lease/buyer by a traditional bank, to be used as the buyer wishes. This is most often as credit toward a down payment with the traditional bank.
If the potential buyer does not to complete the sale, they forfeit any monies paid or any financial/ownership claim to upgrades, new appliances, fixtures, home repair expenses, etc and the home reverts back to the original owner. The potential buyer, on the other hand, has far less negotiation ability when it comes to the contractual price of the property which usually results in the property selling for the asking price or higher (should a bidding war occur). By buying a home this way, the potential buyer also has the added benefit of experiencing the pride of home ownership immediately, while at the same time, being able to save for a bigger down payment (or other qualification needed) to secure a traditional financing ทาวน์โฮมมือสอง กรุงเทพ loan or to wait for the financial industry to ease its restrictions in regards to its lending practices.
What's In It for the Seller?
What's in it for the seller? Simply put...EVERYTHING! For someone who is having trouble selling their home, a convertible purchase option gets cash in the owner's hands, a sale of the property, as well as possible residual monthly income, instead of continuing to go deeper into financial distress, walking away from the home, or just having the home sit vacant. This way, even if the new buyer does not complete the sale, the seller hasn't lost much ground, and in most cases, finds themselves far ahead.
Beware of Pitfalls
Because this method of purchasing a home is not common, sellers should ensure that the new buyers are financially qualified to purchase your home. For a new lease/buyer you must be aware that unscrupulous property owners may let you sign a similar contract when they have no intention of ever selling you the home. In that case, you run the risk of losing any rights to the property as well as all of your payments and hard work that you put into making the property your own
When considering a lease-option purchase, or any purchase, make sure you're dealing with a reputable firm.
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