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Are you trying to sell your house in a down market? Would you consider other alternatives? If so a lease option might be a great way to get top dollar for your home and possibly generate some extra money off the sale. A lease option is where you lease (rent) your property to a possiblel buyer who has the option to purchase the property at the end of the lease term. This will enable you to tap into a vast pool of people who want to buy a home but whatever reason, aren't quite ready to make the purchase yet.

Decide if a lease option is the right choice for you
Lease Options aren't for everyone. If you need all the money upfront, you're better off with a conventional sale. Also, most lease options aren't fully executed, so you may have to sell your home again after the lease term has expired. Normally in a lease option arrangement, the owner must continue to pay property taxes and insurance and is generally still responsible for major repairs during the lease term. So you must decide if this is something you are willing to deal with.

Advertise your property
In a slow market many sellers are approached by buyers looking for a lease option. You can advertise in the paper or online. Ads for lease options normally get a large response, so you should have plenty of buyers to pick from.

Screen your applicants, Do a Background check.
When considering a potential buyer you need to look at them as potential tenants. You don want to lease option your home to someone you would not rent to. Take the time to find buyers with good references, a steady income, and the ability to pay the rent as well as monthly option money. When looking at the applicant's credit history, you normally don't want someone with major credit problems, but you will need to be somewhat lenient. Most buyers who seek out lease options do this because they have some impe rfections on their credit and need to improve their credit score before applying for a loan.

Pre-qualify your lessee.
This step should not be skipped. Get in touch with a loan officer or mortgage broker to discuss the potential buyer's chances of obtaining a mortgage once the lease is up. This allows you both to get a realistic idea of whether the lessee will be able to purchase the house. This step is crucial if you need to sell the house at the end of the lease, but ethically, and maybe legally, it's important because if you take option money and a higher rent from a tenant who could never buy the house at the end of the lease, you're just taking advantage of your tenant.
Provide lease option buyer with a seller's disclosure form.
The disclosure form informs buyer of any known problems with the house. You attest, to the best of your knowledge, to the condition of the house. This form allows buyer to make an informed decision and protects the integrity of the contract and sale. It is also in the best interest of the buyer to have an independent home inspection.

Negotiate the contract and collect option money.
You can get fill-in-the-blank lease option forms online, or at office supply stores, but it is best to get them from a local real estate agent or attorney. This will help protect both buyer and seller. The lease option may be added as an addendum to a standard sales contract. Again, legal counsel is highly recommended. You've need to cover money issues, who is responsible for different types of repairs and other complications that are bound to come up.

Agree on the purchase price of the home.
You will be obligated to sell at this price, so you want to make sure it's something you can live with. The price should be at least fair market value iff not slightly more (especially for longer term leases). This compensates for convenience to the buyer and allows for appreciation of the property over the term. Consider an appraisal to validate the price. Most lenders only loan against the appraised value.

Determine how much option money to collect.
Some states have laws setting a maximum amount of option money that you can charge, but normally option fee can be almost any amount. A good rule of thumb is 2-4% of the purchase price. This money yours no matter what. If the lessee becomes a buyer, the money will be credited to the purchase price, and if the lessee doesn't buy, they forfeit the option money. Most buyers choose lease options because they dont have a big down payment, so dont ex pect a large amount of option money

Decide how much of the lessee's monthly payment will be credited toward the option.
In general, the monthly payment will be calculated at fair rental value plus a set amount that will go toward the purchase price. This, like the initial option money, will either be credited toward the down payment or the purchase price or, if the tenant doesn't buy, will be forfeited to you.

Decide on the term of the lease.
Lease options typically run anywhere from 6-24 months. Shorter lease terms usually result in more sales than longer terms, simply because there are so many things can happen over the long term, but the length of the lease should be long enough to allow lessee to their finances in order.

Carry the right insurance coverage
You are no longer the owner-occupant of the house, you will need to update your homeowners policy to a dwelling poli cy. Contact your insurance agent to determine what policy is necessary.

Collect monthly payments.
Collect the payments each month. Keep record of payments received for the lessee to exercise the option or, when you have to go to court to settle a dispute (worst case scenario).

Sell the house
At the end of the lease the lessee can exercise their option to purchase the house for the price specified on or before the date specified. The total option money paid, including any credit from monthly payments will be applied to purchase price. This gives the buyer equity in the home and should make it easier to get financed.

Lease Options are a great way to sell your house, for full price. This is a really simple way to make a sale on your home. For More Real Estate tips, be sure to check out our website http://sellthathouse.org