When you are doing wholesale lease options and are offering the seller market price. When the tenant/buyer closes on the property will it be the market price at the time of signing the agreement or the market price when they actually buy it. For example after two years of renting to own it?
@Natalie Mendoza The purchase price is agreed upon by all parties before anything is signed.
So whether the house is worth more or less when they actually get the loan and close on the house it will be the price that was initially agreed upon years prior?
@Natalie Mendoza That is correct. The option to purchase price is set at the beginning of the deal. Both parties are aware, or should be aware, that real estate markets are fluid and prices fluctuate, creating the possibility the value at the time the option is exercised may be higher or lower.
Thank you so much, Michael.
So if the seller is worried that when it’s time for the tenant/buyer to purchase their house it could be worth more than what the agreed price, what would be the best way to manage that objection?
Direct them back to what they're getting. If you're solving their problem, that should be what they ought to care about. If they want to take a chance and hold it to sell later, that is always an option they have. But there's a reason they want to sell today.
If the seller is worried the property value may increase, they're letting you know early on they're greedy and not motivated. You might want to burst their bubble and remind them that values decline, as well. And with the Consumer Price Index released today showing the highest rate of inflation in 13 years, that's a very likely possibility. Don't chase sellers, Natalie. Remember, you're looking for motivated sellers. Don't be a motivated buyer.
Thank you, Robert. That’s great advice.
@Michael Carbonare Thank you so much for your insight. I’ve been learning a lot from you.