There Are No Guarantees… - Posted by JPiper
Posted by JPiper on January 18, 1999 at 14:48:57:
I always price my lease/options above the market?.normally 5-10%?.or whatever I think I can get.
Here?s the thing. Who knows what the value of the property will be a year or two down the road?? There are no guarantees. The value could be higher or lower than my option price. If the market value is close, I?m willing to bet the appraiser will bring the appraisal in.
When the tenant/buyer wants to exercise his option, it?s up to you if the property doesn?t appraise. How bad do you want to sell?? Are you willing to lower the price?? Are you willing to extend your lease/option. You?ve got lots of choices?there are no rules.
Just in case you?re worrying about the buyer?..consider another factor. What happens if prices have a big drop?? This has happened in the past you know?? Do you think your tenant/buyer will exercise?? Unlikely. Therefore you will still own the property and will have experienced the brunt of a price drop. Actually the buyer of a property via lease/option has some advantages?and that?s one of them. They can walk away.
What happens if prices have a big rise?? Again, the buyer benefits because you have to sell at a lower price. This happens periodically too.
My suggestion is to price above the market to some degree?.and then deal with the ?what-ifs? when they arise.