The exit strategy you use to sell your house in Roanoke can make all the difference in earning the highest possible returns on your real estate investment. An extremely lucrative alternative to selling your house outright, lease options offer a way for you to earn a higher return on the sale. At the end of the agreement, typically one to three years, they can exercise the option to buy the home or walk away, and you keep the initial option fee that you collect upfront as a down.
Much like renting to regular tenants, a lease option involves renting out your property, but with a crucial difference. These tenants are not just renters; they’re prospective buyers with a vested interest in eventually owning the property. In essence, they’re test-driving homeownership, which gives them added motivation to care for the home.
Lease option tenants are often willing to pay a premium for this opportunity, as it allows them to enjoy the benefits of living like homeowners while they work on improving their credit or saving for a down payment. For landlords, this setup can mean reduced vacancies, steady income, and tenants who treat the property with care and pride.
When structured thoughtfully with the right tenants, lease options can become a powerful selling strategy—and even an investment approach in its own right. Read on as we explore the ins and outs of using a lease option to sell your house in Roanoke and why this method may be the right choice for you.
Asking Price
When you use a lease option to sell your house in Roanoke, you’re in control of the process—and that includes setting the sales price. Typically, the price is agreed upon at the start of the lease and often set slightly above the current market value. This accounts for the expected appreciation of the property over the lease term.
This arrangement creates a balanced exchange of risk and reward. While you, as the seller, take on the possibility of a sudden spike in property values during the lease term, the tenant accepts the risk that market values could decline. This dynamic makes lease options an attractive option for sellers looking to lock in favorable terms while offering tenants the opportunity to move toward homeownership.
Option Fee
Using a lease option to sell your house in Roanoke comes with the benefit of an initial option fee, providing you with upfront income. This fee typically ranges from 1% to 5% of the agreed sales price, though in some cases, it can go as high as 20%. Importantly, the option fee is usually non-refundable, giving you financial security whether or not the tenant ultimately purchases the home.
For perspective, consider the national median listing price for active homes, which was approximately $450,000 as of May 2022. At 5%, the option fee would be $22,500. This amount is credited toward the purchase price if the tenant exercises their option, creating a win-win scenario: you get immediate financial compensation, and the tenant has a stake in the home, motivating them to follow through with the agreement.
This upfront fee not only provides a financial cushion but also attracts more serious tenants who are committed to homeownership, making lease options a reliable and rewarding strategy.
Tenants Maintain Your Property
When you use a lease option to sell your house in Roanoke, you retain ownership of the property until the tenant exercises their option to purchase. This means you’ll still hold the title and remain responsible for property taxes and insurance.
However, much of the day-to-day responsibility shifts to the tenant. In most lease option agreements, tenants take on the financial burden of maintaining the home, including routine upkeep and repairs. This setup benefits you as the seller by reducing the costs and effort typically associated with being a landlord, while also encouraging tenants to treat the property as their own.
This arrangement not only lightens your workload but also aligns the tenant’s interests with yours, creating a smoother and more mutually beneficial transition toward the sale.
Above Market Rent
Using a lease option to sell your house in Roanoke can provide you with an additional financial benefit: above-average rental income. This extra amount, often referred to as the rent premium, is the portion of the tenant’s rent that exceeds the typical market rate.
When the tenant exercises their option to purchase, the total rent premium they’ve paid during the lease term is deducted from the agreed-upon sales price. This gives the tenant a financial incentive to follow through with the purchase.
However, if the tenant chooses not to buy the property, you retain the rent premium in addition to the non-refundable option fee. This outcome protects your financial interests while compensating you for the opportunity and time invested in the agreement. The rent premium ensures that every month you’re earning more than you would with a standard rental, making lease options an attractive and lucrative selling strategy.
Talk to one of our highly seasoned professional home buyers at Linken Investments today about your property, with no obligation. At Linken Investments, we want you to know you made the best deal and feel good about working with us long after the closing. That is why at Linken Investments, we’ll compare the numbers of a traditional listing vs. the lease option method and even make you an offer to buy your property directly, as-is, for cash. At Linken Investments, we’re fully transparent, providing the detail of how each number in our calculations so you can make an educated decision about what works best to sell your house in Roanoke.
Ready to learn more about the win-win advantages for sellers of using a lease option to sell your house in Roanoke? Call Linken Investments at 540-596-5030.