Posted by Phillip on December 20, 1999 at 09:43:50:
I strongly suggest that you consider buying the Bronchick’s Lease Option Course all of these answers are to be found there and more. I am one of his students who is learning lots, and lots of stuff about the legal CYA techniques when doing L/O’s.
I will take a crack at answering your questions… Approaching the owner is a process that involves “educating” the seller to the whole concept; a soft sell approach. L/O will not work for a seller who has to have all of their money at one time.
You can try and get the broker to work with you on the deal with the understanding that at some point he will receive his commission. Something later is better than nothing at all. L/O can be a win-win situation for al concerned; the seller is free of the financial responsibility of coming up with a second mortgage payment, you as the buyer received cash up front (option money), and when the property sells one to two years down the road, the agent can get his commission.
Bill Bronchick’s course includes legal forms that spell this out. The lease and the option are two separate transactions. They should not be combined to stay clear of legal problems. The key is to locate a tenant buyer who with a little help will be purchase ready in a year or so, especially at that point they would have created a sizeable layer of rent credits and hopefully a good payment history. There are mortgage brokers out there who can then pick up the “baton” and move the buyer toward closing. I am told that Countrywide Mortgage is very favorable toward lease option situations.
I am not an expert but hope that this information can be helpful to you.