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Lease Option Guide For Realtors

November 6, 2012 by     Realtors, Rent to Own

lease-option-guideMany realtors write off rent to own or lease options as a gimmick, and believe that there is no money to be made working in this area of real estate. In addition to being an investor I am also a realtor and I’m here to tell you there is nothing further from the truth. Not only can  you help hard working Americans find a home to call their own or sell faster than the rest of the market there’s a bunch of money to be made.

Is a lease option a legitimate form of real estate transaction?

The answer to this is simply yes, of course it is otherwise I wouldn’t waste my time writing this. There are legal implications and restrictions though so be sure to check your states regulations on real estate and rent to own.

How does a Realtor earn commission on a rent to own sale?

There are a number of ways in which a realtor can earn commission on a rent to own sale. It mostly depends on who has initially hired the realtor, the buyer or the seller. In the case of the seller it can be structured several ways, the simplest way would be to get paid at the end of of  the rental agreement at the time of purchase. Since this is not exactly the best deal for you as a realtor you can structure it either half upfront half at sale or 100% up front. In the case of being hired by a buyer you would need to either work out a fee payment from the buyer or work with the seller to get paid in one of the formats stated above.

What Should Be Included in the Contract?

  • Rental Agreement Terms
  • Extension Clauses
  • Option to Purchase
  • Down Payment Price
  • Applicable Rent Credit
  • Exit Clauses for Buyers incase of Foreclosure
  • Purchase price ( fixed or variable)

What things should I look out for in a rent to own deal as a real estate professional?

  • Buyers who aren’t really serious about buying, spend tons of your time and don’t have their finances in order or are not actively working on cleaning up their credit.
  • Sellers who want to sell above market price.
  • Sellers who are in dire financial circumstances where the selling or renting of the home is the only thing that can avoid foreclosure.

Should I suggest rent to own / owner financing for my seller or buyer?

  •  The listing is about to expire and there aren’t many other options at the price the owner wants to sell. –  Yes
  • Seller needs to sell quickly or at least rent in order to move. – Yes
  • Seller is trying to sell home above market price. – Yes
  • Seller has home priced at a reasonably in a competitive market, and has time to wait on the sale. – No
  • The seller is trying to avoid a short sale or foreclosure. – Yes
  • Your buyer found out they need more time in order to qualify for financing. – Yes
  • The buyer will likely not be able to attain financing for a houses in a certain price range. – No
  • The seller has possible costly  home repairs upcoming, found often in older homes. – No

Hope you realtors out there found this useful, and this will be a growing list and resource so check back frequently. If you have questions or concerns that you would like us to add please feel free to comment or email us at