Hello Cynthia:
I need your expert advice.
I'm considering getting an lease-option on a house, and would like to
know more about my rights under such a lease.
For instance, I would like to have the house inspected: the roof, the
furnace; the typical sort of inspection you'd get when arranging to
buy a home in the conventional manner.
Would I have to pay for that inspection? Or, can I reasonably ask that
the owners pay for the inspection; or agree to deduct the cost of the
inspection from the selling price or from my first payment?
While the house itself appears to be in good shape, the exterior is
not. Both the driveway and the stone wall appear to need considerable
repair. The wall runs parallel to the street, so if it should crumble,
I am concerned that much of the stone will wind up in the street.
(This could be a mess in more ways than one.)
Again, do I have the right to demand that the owners arrange for those
repairs during the lease, or agree to deduct the cost of the repairs
from the asking price?
The house is currently listed at twice its assessed value and, as I
just noted, the exterior needs considerable work. So, although the
house itself is in basically very good condition, and is in a very
nice, desirable neighborhood, it has been sitting on the market for a
few months, failing to draw much interest. (I'm guessing the exterior
structural problems worry other potential buyers as much as they do
me!)
I know it's generally advisable to sign a lease option with an
upfront, agreed-upon selling price; however, if I do that, I lose the
option of just letting the house sit and sit as the national (and this
particular regional) housing market continues to cool, compelling the
owners to lower the price.
So, I need to persuade them to reduce the price now, and my best
estimate is that this house is 20-30% overpriced.
What's the best way for me to negotiate the price downward? The best
basis, or the best grounds, or strategy for my argument that the price
should be reduced? Or, do I risk negotiating the price a year from
now? (Btw, the owners moved out several months ago, so I assume they
really need to unload this house.)
I have one other concern: Is it customary to allow 100% of the rent or
monthly lease payment to be counted as 100% rent credit (so that I can
take a tax deduction on every dollar I pay), and so that all the rent
I pay goes toward the down payment? If not, what is standard practice?
I know the price for this question is low, but I promise a good tip
for your answer!
Thanks,
nancylynn-ga |
Clarification of Question by
nancylynn-ga
on
24 Oct 2005 20:22 PDT
Thanks for the quick update, Cynthia, and for going the extra mile for me!
Btw, the fact that these owners are now offering the lease option
tells me they are VERY anxious to unload the house.
My initial response to the lease option was that I'd probably be
better off just getting a conventional mortgage. Then, after doing
some reading on the topic, I began to see some possible pluses to my
agreeing to a lease-to-buy option.
But again, I need to have every dollar possible go for a tax
deductible rent credit and toward the down payment.
While it is a very pretty, very solid house, the owners have neglected
the yard and grossly over-priced the property. I have to come up with
some strategies to ensure that I don't overpay, don't get stuck with
costly repairs that shouldn't be my responsibility, etc.
And I certainly don't want to pay a lease with no return on investment for me!
Thanks again, Cyn. I look forward to your Answer -- I know it will be great.
Nancy
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Clarification of Question by
nancylynn-ga
on
25 Oct 2005 21:23 PDT
Cynthia:
Just updating you: the owners told me today that they are very anxious
to sell, but they absolutely will not pay for any repairs. They are
selling the property as is.
They also said they would prefer to just sell it, not do a lease
option. (So why did they offer a lease option?! *I* didn't ask for
that! . . . Oh, my head is spinning.)
So, the parameters of the question have changed.
1. I want to make them an offer, but not only will it be lower than
what they're now asking, it has to be contingent upon a full
inspection of the house: termites; heating system; septic tank; roof,
general property inspection, etc., etc.
So, if they accept my bid, and an inspector then deems that a major
repair or replacement (such as the furnace) is needed, I want the
estimate of that repair or replacement deducted from the selling
price.
Is that a fair and standard way of approaching such a situation?
I need some sort of cushion like that because, again, even though the
house itself appears to be in excellent condition and is very
attractive, the driveway clearly needs to be repaved, and there are
some other obvious repairs the property (the exterior) requires.
I am content to wait if they reject my first offer. They don't seem to
be getting any other offers. Again, I flat-out refuse to pay the
inflated price they're now asking.
2. As much of my income is 1099, which mortgage lenders or strategies
are best for me?
I plan to stay in this house the rest of my life -- I want this to be
my home, not just an investment. I would prefer a fixed-rate mortgage
with the lowest monthly rate possible. My income is good and has been
climbing steadily, and I have an exceptionally high credit rating.
Sorry for turning this quesion upside down, but circumstances forced
it. (I feel like *I've* been turned upside down.)
Thanks again for your help,
Nancy
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