Seller wants to do a Lease Option but may offer seller financing

[Cory B.]

A relative of mine is looking at selling his house in Las Vegas. I told him I might be interested in buying it to use as my primary residence. We talked and he suggested a Lease Option might be a better route. Although, he did mention seller financing as also being an option.

His view is that the Vegas housing market, and lending in general, may get shaky in the next 6 to 12 months and that it may be difficult for me to get traditional financing in the future.

He wouldn't want to have to repossess the house if I'm not able to get a traditional bank loan. He doesn't want any bad feelings from a deal gone wrong to harm our relationship - which I think makes sense. He does fairly well financially and is willing to give me a bit of a price discount.

His suggestion is that, at the end of a one year lease, I could exercise my Option and buy the house if I'm able to get financing. Or, if the market has tanked, he may have to adjust the price down a bit in order for traditional financing to work for me. Additionally, if the market has tanked too much, he may want to hold on to the house and continue renting it out to avoid selling it at too low of a price.

It's a three bed, two bath, 1,400 sq ft home with a pool that would probably be put on the market right now for about $320,000. He's willing to sell it to me for around $290,000. He still owes $170,000 on it.

My original thought was to have him carry the note. The kitchen is a little rough. I was going to remodel it before heading to a bank to get traditional financing. But, remodeling the kitchen isn't really an option if we're just leasing the house.

I'm wondering if the Lease Option angle makes sense or if I should push for him to provide seller financing now. Any opinions?

[Cory B.]

@Dave Spooner, thanks for the suggestions.

As I was writing this post it became more and more clear that seller financing was going to be a better way to go.

Good tips about having an attorney look over the contract. I agree, you never know what could pop up in the future to derail a verbal agreement or a loosely worded contract.