I get questions about buying Sequim homes all the time, but a new question that is coming up after years of being dormant is this one, “Are there any Sequim homes for sale that I could rent with an option to purchase?” Clearly the reason it is coming up recently is because mortgages are not a dime a dozen anymore, and buyers have to qualify financially with a larger down payment in most cases. But there’s a history behind the lease-option.
Sequim Homes and the Lease-Option
A lease-option gives a tenant the right to purchase a home at a certain price and under defined terms. When I drafted these, I created three documents: a rental agreement, an option agreement, and a purchase and sale agreement. They each referenced each other, and I would record the option so the tenant was protected until he exercised his option, if he did.
Sequim Homes in the 1960’s
In the 1960’s and 70’s lease-options were used periodically around the country, including for Sequim homes, and many sellers who invested in real estate, including some small builders, used their own lease-options (and private notes and deeds of trust) to manage their retirement portfolios. Lease-options became a very popular tool for real estate investors, and big names like Dave Delgato and others who traveled the country teaching their real estate investing seminars on how to get rich quick, had entire programs on lease-options. The Olympic Peninsula was a little off the radar in the 60’s and 70’s, so few Sequim homes got on that band wagon.
Lease-options made some sense when the market was hot and many buyers didn’t have the down payment required (this was when down payments were actually required), and interest rates were high, which made qualifying even harder. If you’re old enough, you might remember 18% interest rates for a short time.
Sequim Homes for Sale or Rent
In the 80’s and 90’s interest rates were low and anyone could buy a home, almost. This negated the need for private lease-options, and it also negated the need for sellers to carry private notes (seller contracts). Now it is harder for younger couples to get loans, and even though interest rates remain low for now, young couples are beginning to ask again, “Are there any Sequim homes for sale that I could rent with an option to purchase?”
The answer is no. While buyers have expressed their desire to do lease-options, sellers aren’t taking the bait, at least not yet. Sellers want to sell their homes and get out from under their debt, and many sellers are upside down, so their options are limited. Sequim homes are for sale or for rent, but not both.
Last Updated on September 4, 2011 by Chuck Marunde
