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Why A Lease Purchase Is Not A Purchase At All

Why A Lease Purchase Is Not A Purchase At All

Lease PurchaseI get a surprising number of phone calls on my Atlanta short sale listings for requests to see if my clients will do a lease purchase on them.  Let's not talk about the short sale or how silly it is that someone would actually lease their home or that someone would actually want to "purchase" a home with an upside down market.  For this discussion, let's focus on homes with equity.  In particular, let's talk about the luxury home market (for our study we'll focus on Chateau Elan homes) and lease purchcases. 

Let's also get the elephant out of the room, a lease purchase is a contract to purchase a property with real money down (called a down payment in traditional purchases).  The money down locks in a purchase option.  There's several ways to do this lease purchase, but usually it keeps the price from escalating and the current owner from selling the home to other parties.  This is what we are talking about.

A lease purchase without down payment or option money is called... RENTING

Now that's out of the way, let's look at some Chateau Elan Real Estate

Our MLS data only goes back to 2007 however in that time, more than 300 homes sold in this one luxury neighborhood.  Chateau Elan features homes from around the $300's (in 2007 the low was $388K, and in 2012 the low as $258K) all the way to the $2 Million range. In that time a whopping 24 homes were listed with some sort of lease purchase or leasing option. 

Of the 24 that mention leasing, only 1 home actually closed utilizing this technique.  Yes, all 23 homes found a regular ole buyer... but here's the kicker...

Of the 23 that sold tradtionally all of them sold well under the average list to sale price ratio of more than 10% in fact, it's so bad that listing your home with an option to Lease it is like a death sentence ensuring that you won't get what you want out of the home (ironic since a lease purchase was supposed to ensure that you got EXACTLY what you wanted).

With only one sale since 2007 via lease purchase, you can see why we say a lease purchase is not a purchase at all. 

4rd Marketing PodcastA 15 year veteran of Atlanta Real Estate, Joshua Jarvis is the host of 4rd Marketing Podcast - A podcast designed to help small business owners (this means Real Estate Agents) grow their business by implementing the latest in real estate SEO, local seo, digital marketing techniques and strategies.  

In addition, Joshua runs 4rd Marketing - a digital marketing agency that specializes in SEO as well as wordpress development.

 

Joshua Jarvis

Jarvis Team Realty

1960 Satellite Blvd Suite 1100

Duluth GA 30097

direct : 678-999-1001
 Atlanta New Homes

Comment balloon 46 commentsJoshua Jarvis • March 22 2012 03:52AM
Why A Lease Purchase Is Not A Purchase At All
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Why A Lease Purchase Is Not A Purchase At All I get a surprising number of phone calls on my Atlanta short sale listings for requests to see if my clients will do a lease purchase on them. Let's not talk about the short sale or how silly it… more