Do i have to set a prive to lease option? - Posted by Deborah

Posted by John Merchant on April 14, 2006 at 21:20:11:

While the general legal answer would be yes, a contract has to be complete to be any good. With an offer (and price), acceptance (of that price) and valid consideration, legal purpose, competent parties, etc…

BUT if the price at the time of Option Exercise is determinable from independent 3d party source, then you will have set a price so as to make a complete contract. Although that price is not really determinable now, it would be easily determinable at the time and if the O is exercised.

Do i have to set a prive to lease option? - Posted by Deborah

Posted by Deborah on April 14, 2006 at 19:17:55:

I own a property in CA that I am interested in lease optioning. This way I have a monthly income coming in and am if everything works out will have a buyer for my property in 1-2 years, the leasee has an opportunty to iron out their financing etc.

I do not want to set a purchase price on the property since I believe it is likely that the house will grow faster in value then I think. Instead I would like to allow the lessee to purchase the property at the appraised value at the time they wish to purchase it. In other words we will allow them to exercise the right to purchase anytime after 1 year for whatever value an appraiser gives the house. I have heard of other investors doing this but thought i should ask about the pros and con of such a move.

Any suggestions?

Do you mean PRIVYS or PRICES? - Posted by jammer35

Posted by jammer35 on April 22, 2006 at 15:21:27:

I’ve seen some prices that ought to go into the privy, or maybe just came from there.:wink:

Re: Do i have to set a prive to lease option? - Posted by rent-to-own

Posted by rent-to-own on April 19, 2006 at 20:59:12:

What happens if the market was to crash and the value went down? What if it went down less than you paid or less than what you owed? Then you would would have to take a loss and possibly come out of pocket for any difference if it appraised for less than what you owed. Is that a risk you want to take?

Another way you can do it is figure a price based on the future value. Lets say it’s worth $300k today and you think it may be worth $350k in a year. You can set the option price at $350k OR whatever the appraised value is at the time of exercising the option, whichever is more! This way the minimum option price would be $350k and if the property appraised for more then it would be the appraised value. If the property appraised for less than the $350k you are still protected and the buyer has the option of walking away. You have the option of lowering the price if need be but you are not obligated to do so.

Re: Do i have to set a prive to lease option? - Posted by The Frisco Kid

Posted by The Frisco Kid on April 15, 2006 at 21:00:39:


Set the price, you’ve been brainwashed by the past several years. Allow a 6 percent a year price rise and you should be safe, and if it goes up more then that (I doubt it), then so what? don’t get greedy, let someone make a dollar, your getting the lions share.

Plus appraisals can flucuate greatly, you just might get the one that appraises it at 10% below the actual market at the time (and yes, it can happen).