Posted by Russ Sims on April 14, 1999 at 11:04:25:
Classic L/O situation would be where a seller’s primary motivation for selling is debt relief. Bought house in 1998 for minimal down (lets say FHA 3%) for 100K. Got transfered by employer. Must sell for at least his loan balance of, say 97K. Can’t afford to list it. No money to pay agent’s commission. 97K is nearly full retail price so it’s not going to move fast. In the meantime he’s had to move and is paying rent and mortgage or two mortgages. Needs big time debt relief and that’s where you step in and offer to make his payments for him under a L/O.
Actually, a L/O will benefit someone even if they have equity in the home. Just depends on their motivation. For instance I recently spoke with an elderly widow who’s home is too much upkeep for her. She’s moving in with her kids and doesn’t need to be cashed out of her home (which she owns free and clear). In fact, she wouldn’t know what to do with the proceeds of the sale, anyway. It’s easier for her to retain ownership for a while and live off the monthly cash flow from the lease.This gives her a chance to figure out what to do with proceeds of the sale, if and when the tenant/buyer excercises their option.