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Marketing Your Property

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Raquel Baranow
  • Tucson, AZ
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Option to buy in lease

Raquel Baranow
  • Tucson, AZ
Posted Apr 12 2024, 07:00

I’m thinking of offering an option to buy in the lease maybe after three or five years with no money down and the sale price would be the low end of the Zillow estimate. 

I would also carry the loan and establishing a penalty for early payoff (how much penalty?) … I’m getting too old to manage and fix the place up plus, I’m moving out of town, 16 miles away.

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Michael K Gallagher
  • Real Estate Agent
  • Columbus OH
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Michael K Gallagher
  • Real Estate Agent
  • Columbus OH
Replied Apr 12 2024, 07:05

I love this idea in general. Keeps the banks and institutions out of it and makes it more efficient. My only issue with the above is using the zillow estimate. If you are looking 3-5 years down the road In my mind I'd want to have a "not to be under xyz amount" whatever that is to make it make sense to you, but then having the property appraised or using a CMA from a local broker to guid the valuation rather than zillow. They are just far to speculative and all over the place with values for me to want to base a contract/option off of it.

When we have options to renew in leases we generally use the language "market value" so there is also that option.  But I also like the idea of having a "not to be under" as I mentioned above if for some reason prices in that market do fall in the next 3-5 yrs.  

But as I said the concept in general is amazing and i'm a huge fan.

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Alyssa Wright
  • Real Estate Agent
  • Pittsburgh, PA
31
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46
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Alyssa Wright
  • Real Estate Agent
  • Pittsburgh, PA
Replied Apr 12 2024, 09:09

I completely agree with what Michael is saying here! Overall, providing the option to buy in the lease can be a great opportunity for both you and tenant; provided the quality of the tenant. But I've had a lot of issues with the accuracy of Zillow's estimate in terms of accuracy as it really isn't; in my opinion, structured to predict changes in rent over time or take into consideration any additional amenities or upgrades. Like Michael mentioned, your best bet for this would to be to have either a CMA done or have an appraisal done.

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