Lease Option Vs Subject To
I just wanted to get some opinions on doing pre-foreclosures with lease options vs subject to. From my understanding subject to from a security stand point is better because you get the deed. How does either approach effect your new buyers with title seasoning? This is assuming for instance that I lease option and plan to sell with a dual closing in less than three months. My initial thoughts are that most people understand lease options and seems easier to sell to owners in pre-foreclosure. Also is there any potential road blocks to avoid when marketing the house you have on lease option that I should be aware of.
Thanks
TBarber
Anyone care to comment on this
If you take title subject-to existing financing then you go ahead and close then. so you are not doing back to back closing. This makes the seasoning issue a little easier do deal with.
The big advantage of a Lesse/option is that the seller gets some money on a monthly basis while you put the rest of the deal together. However since there is no closing your seasoning issue is more of an issue-- you're back to simultaneous closings. Sometimes, however, this can actually work to your advantage since you don't have a recent sale at a lower figure to make the appraisal difficult.
The easiest way to deal with this, if you have co-operative sellers and they understand how much money you are making is with a letter of direction. When you get ready to close you enter into a new contract between the title holder and the buyer (you do not appear in this contract) with a letter of direction to the closing agent to pay you your profits out of the closing.