FAQ 1 - Should I Lease With an Option to Buy?

I am often asked by buyers if my listings are available for lease option or if I would help them locate a lease with an option to purchase.  First, for those who aren't familiar, a lease with option to buy means that a prospective home buyer would identify a property where the seller is willing to defer the purchase until a later date, usually one to two years, at a pre-negotiated price and terms.  During the one to two year waiting period, the buyer will lease the home, usually after making a sizable deposit and will occupy it as a tenant until the sale closes at the end of the lease term.

While our current market conditions have produced a few of these properties, I generally do not recommend this type of purchase.  Here is why:

Usually, if a seller is willing to do a lease with option, it is often because they have overpriced the property and cannot or will not sell it at market value.  A buyer agreeing to purchase a property this way may be committing to overpaying for the home.  Typically, a deposit of several thousand dollars is required, and would be lost if the buyer doesn't go forward with the purchase at the end of the lease term.  I am told by a lender friend that, statistically speaking, less than 2 out of 10 buyers are able to qualify for a mortgage at the end of the lease term when the reason for the choice to lease with option is that the buyer is trying to find a way to buy a home with bad credit.  In addition to these risks, your selection of properties is greatly limited to the small number of sellers who are willing to lease with option to buy. 

I generally recommend to my clients who are either working on credit repair or saving down payment to commit to renting for a year or two while working with a reputable credit repair specialist, such as Credit Repair Resources and get credit back on track to buy a home.  After a period of several months, if the client follows the plan and does the work that they are instructed to do, they will have cleaned up their credit profile and will be able to obtain mortgage pre-approval.  At that point, the client will be in a position to choose any home that suits, within their budget.    

If this recommendation doesn't fit your current situation or if you have more questions than this post addresses, please contact me directly at mstanifer@gmail.com or (440) 391-1304.  I am always happy to answer your questions and am available to help you locate a property to lease or buy.  

Waiting for the rain

Penny is definitely the smarter of our two dogs.  Chloe is all heart but, sadly, not much on brains.  From the time Penny was young, when she would wrap herself around a tree on her tie-out, I could tell her to “go around the tree,” pointing the direction with a sweep of my arm and she would run counter to her original wind and free herself.  A pretty good trick if I do say so myself. 

Chloe, however will wind herself around the tree, and as I do with Penny, I will instruct her to “go around the tree.”  This interaction only serves to excite her.  She is so happy that I am giving her any attention at all just at a time when she is feeling trapped and forgotten that she begins to jump and smile and wag her tail. 

The more I try to command her, the more excited she gets.  Oh, yes, she has run around the tree as I have instructed her, but invariably, it will be in the same direction she went when she became stuck to begin with.  Eventually, I give up and tramp out in the rain to unwind and “rescue” her.  Oh, did I forget to mention that this is a rainy day trick?  I can’t recall a single time she has performed this one when it was not raining outside. 

As I approach, she will give excited little yelps and I can almost hear the trumpets in her head as her brain plays, “here she comes to save the day!”  Once I am close enough to help her, she becomes so grateful that she jumps up to hug and thank me, wiping her muddy paws all over my clothes.

Other favorite tricks of theirs that I enjoy are the Two Dog Tangle, the Unstaking of the Tie-out, the Tie-out Chew Through, and the Snapping of the Chain.  There is nothing fun about tying out dogs in the yard.  The escape methods vary, but dogs are pretty ingenious when they really want to “self walk.” 

Then there is the safety issue.  Chewing on a twisted steel tie-out can’t be good for the teeth and gums.  Watching a dog lunge on her chain as the mailman stops by is tortuous for me to see.  I can only imagine the damage being done to the trachea and spine.  Additionally, who knows where they go and what they do when they are gone?  I once retrieved them running down the main road with twenty foot cables and twisty, muddy stakes dragging along behind them. On one of Penny’s escapes, she returned about an hour after she left, soaking wet and reeking of chlorine.  Obviously, whichever neighbor’s pool she was in wasn’t home or I am sure they would have called to give me an earful, considering our phone number is on her dog tag. 

But all of that is about to change.  Yesterday, my husband installed deer fence around the perimeter of our backyard.  Because our back yard butts up to the woods and I would like to have a vegetable garden this year, a deer fence is a must have.  Better than keeping the deer out, however, is keeping the dogs in.  While I realize that fences can be jumped, dug under and chewed through, I am not sure my dogs are that ambitious.  Until they prove me wrong, I am enjoying opening the door, letting them out, going on about my business and then finding them on the deck waiting for me when I return. 

I can’t wait until it rains! 

Luxury Features in a City House w/In-law or Rental Suite

3871 West 36th St $69,900

CALL (440) 391-1304 FOR DETAILS! Community: Cleveland Subdivision: Brooklyn Center MLS Number: 3389460 Comments: This impeccably maintained colonial in historic Brooklyn Center is a legal single family with an in-law suite and separate utilities. Can be converted. Downstairs has 4 beds/1 bath. Kitchens are huge and all appliances stay, including washer& dryer. In-law suite upstairs features 2beds/1 bath. Both upper and lower have in-suite laundry. Home features large, partially covered deck and hottub in a covered gazebo. Both the upstairs and downstairs tubs are whirlpool tubs and the downstairs shower features a rainhead. Newer windows, roof, cement work, updated kitchens and baths, etc. Never worry about a power outage. Home comes with an auxiliary power generator. Security alarm services provided by ADT. Pride of ownership shows here. Market rents estimated at $575-600 up and $650-700 down.

Listed By: Michelle Stanifer Cell: (440) 391-1304 Russell Real Estate Services 12198 Pearl Road Strongsville, OH, 44136 www.GetListedGetSoldMove.com

The "Self Walk"

Me: It's raining.  Forget chaining the dogs to pee this morning.  They aren't going to want to stay out there.  I'll  just open the door, let them run out back and do their thing; they will be back on the deck wanting in by the time I put on the coffee.

Penny:  It's warm!  It's Spring!  I am not chained to the deck!  Quick, Chloe, where's the warden?  Do you see her?

Chloe:  Checking... nope!  No sight of her.

Penny:  Come on, Red, we're blowing this joint!

Fade in:  Two red dogs running down the street, muscles rippling, hair flowing, big goofy grins on their face, soundtrack to Born Free playing in stereo in their heads.

Cut to:  Stupid look on my face as I approach French doors to find no dogs waiting for me.

And that, my friends, is how the "self walk" happens at our house.

Spring is in the Air

Each day, I open the door to let the dogs out in the frozen tundra of our yard and am grateful I don't pee outside.  Some mornings, I have to push them out because it is just too cold to go.  I feel for them, sincerely.

I live in a suburb, but my yard backs up to the Cleveland MetroParks.  The sound of the woods in the winter is almost silent.  Sometimes there is a rustling but not much else, aside from the traffic that passes down Valley Parkway.  The woods are teeming with animals still, I'm sure, yet it seems the noisy ones are either hibernating or have flown south.  There is not much stirring out there aside from a few deer.  OK, more than a few deer.

This morning is gloomy and grey, but something is different; there is a stirring.  I can faintly hear the river behind us rushing its way to open waters somewhere.  Familiar birds have returned and are squawking, and there seemed to be movement aground, even without any breeze.  Scurrying hungry little critters in the bramble, perhaps?  As I write this, I hear geese.  Geese!

The air seemed to be warmer and the smell was a little different too.  I detected that fresh, oh so Spring-like scent of wet mud.  Warm wet mud that will soon give way to little green things that, after so long of white and brown, are like soft kisses for the eyes.

I wasn't the only one who noticed, either.  Normally, Chloe bounds off the back deck and drops to pee the instant her paws hit the lawn, while Penny daintily prances off the deck to sniff the yard and detect any intruders in the night before relieving herself.  But not today.  As I surveyed the changes and allowed the romance of Spring to swirl in my head, I glanced over and noticed both my girls standing with me on the deck, nostrils flaring, wistful expressions on their furry faces.  I could only guess at the runs, swims, and chases they were imagining.  We are all so ready for the Spring!

To Buy, Then Sell or Sell, Then Buy?

There are, quite obviously, two schools of thought on this subject.  Choosing a new home is an emotional decision.  Many people fear that if they sell their current home first, they will not be able to find their next "dream home" before they close the sale on their current home.  Conversely, many fear that if they make an offer on the home of their choice before selling their current home, they may not be able to sell in time and could end up making two mortgage payments.  Both opinions are valid; however, one is riskier than the other.  

In our real estate market, agents have some tools to assist with either scenario.  The first is the Contingency Clause or Concurrency Clause.  The second is the Subject to Specific Purchase Clause.

Contingency or Concurrency Clause

A Contingency Clause states that a Buyer is making an offer on a new home, but completing the transaction is Contingent upon the sale of his current home.  If another Buyer offers on the Seller's property before the Buyer can sell his own property, he will be given the option to remove the Contingency within a prescribed number of days and move forward with the purchase without regard to the sale of his current home or to release the Seller from the purchase agreement, rendering the agreement null and void.  In this case, all deposits will be returned.

A Concurrency Clause states that both Buyer and Seller will offer their homes for sale Concurrently.  If the Seller finds another Buyer before the Buyer sells his home, or if the Buyer cannot sell his home within the specified time period, the sales agreement immediately becomes null and void and all deposits shall be returned.

PROS:

• Allows a Buyer to make an offer on his dream home while not obligating him to complete the sale if he can't sell his current home.  
• It allows a Buyer to be certain that he will be able to negotiate acceptable price and terms on the home of his choice before committing to sell his current home. 

CONS: 

• Sellers are reluctant to accept a Contingent offer; although still considered an active listing in the MLS for showing purposes, the status must change to Contingent, dramatically reducing showings.  
• In the case of a Contingency, if another offer comes in on the property, you will have a few days (usually 1-3) to remove the Contingency, that is, to perform on the contract regardless of the sale of your current home, or forfeit the property. 
• In the case of a Concurrency, the MLS status remains Active and the home continues to be marketed.  It is a race to sell before the Seller finds another Buyer and the first Buyer forfeits the property.

Subject to Specific Purchase Clause

A Subject to Specific Purchase Clause is when a Seller accepts a Buyer's offer, however the Seller stipulates that he must find an acceptable replacement home within a specified period of time, which will close in conjunction with the sale of his current home.  If the Seller is unable to find a replacement home within the prescribed time per the sales agreement, the Seller is under no obligation to sell his home to the new Buyer.  

PROS:

• Allows a Seller a specified period of time to perform his new home search while retaining a Buyer for his current home.
• With the Seller's current home under contract, the lender can qualify him for a new mortgage up to his maximum buying potential.

CONS:

• A Buyer may be reluctant to sign such an agreement, as this commits him to wait and hope that a Seller will find a suitable replacement property.  

In this instance, a seller still has options.  The Seller can accept the Buyer's offer without the Subject to Specific Purchase Clause, but counter-offering a longer closing period to allow time for his new home search.  Rather than lose a good Buyer in a sluggish market, a Seller may choose to consider a short term rental or even rent back his current home from the new Buyer until he finds the right home.  

Buying before you sell without a any protective clause

This option is one that I have seen many unrepresented and some represented buyers take and it is one that carries several significant risks that must be considered before moving in this direction:

• Lower selling price for your current home.  Selling under duress, which in some cases fits this scenario, often results in lower offers.  I can't tell you how many times I have heard a buyer touring an empty home state that they thought they would get a deal because the home owner has already bought a new home and "needs to sell."  Even if you are still living in the home, an over-zealous listing agent may recommend the terminology "motivated seller" in the listing comments which will often result in a lower offer.  Regardless, when neither the home is vacant nor the agent has compromised your bargaining position, the pressure to accept a low offer for fear of losing the buyer is present.  
• Dual mortgage payments.  Even if you have the income to support it, making dual mortgage payments can be a significant financial strain. Consideration should be given to how such a burden will effect the family's current lifestyle and whether the shift in priorities is worth the risk.  A change in your employment situation, such as a pay-cut or job loss could have a devastating effect.  

Home buying is never one size fits all.  Whichever option best suits your personality type, it is important that you choose an agent that is willing to listen to your wants and needs and one who is well versed regarding protective clauses in the contract to look out for your best interests.

Chuckwagon Stew

My husband loves his comfort food.  Recently, I have been making what I call “Chuckwagon Stew.”  It’s a beef stew made with ground beef.  It’s quick, easy, cheap and, a term I heard once, ghettolicious! 

The last time I made it, I thought I would like to try it with dumplings.  I haven’t had a dumpling since I was perhaps 8 years old.  I wasn’t even sure I remembered what they were supposed to taste like.  I have heard of dumplings that were heavy and doorstop-ish so care must be taken to avoid that dumpling recipe! 

As I usually do when I have an idea for a recipe, I research the food on the web and then I improvise.  They turned out light, velvety, and delicious.  I was impressed with my dumplings, so I am sharing.  I hope you like them too. 

Dumplings

INGREDIENTS:

1 ½ c all-purpose flour

2 tsp baking powder

1 tsp white sugar

½ tsp salt

2 TBS cold butter

1 egg

½ c milk

*** 1 TBS parsley flakes

DIRECTIONS:

1. Sift or stir together flour, baking powder, sugar, and salt in medium size bowl with wire whisk until light and well blended. I use my Kitchen Aid Mixer with whisk attachment.  I hate sifting, so I just whip on low until my dry ingredients are light and fluffy.  *** To make parsley dumplings, add 1 tablespoon parsley flakes to the dry ingredients.
2. Cut in butter until crumbly.  I also use my whisk attachment for this.  I whisk on low until the butter and flour mixture resembles cornmeal.  

3. With a hand held wire whisk, whip egg until well blended.  Whisk in milk until thick and fluffy. 

4. Add egg and milk mixture to dry ingredients and whip for 30 seconds to blend and make a soft dough.

5. Drop by spoonfuls into boiling stew or soup. Cover and simmer 15 minutes without lifting lid. Serve.

Chuckwagon Stew

INGREDIENTS

1 lb lean ground beef

1 large onion, diced

4-6 cloves garlic, smashed, peeled, minced

2 ribs celery, chopped

2 carrots, sliced thin

8 oz sliced mushrooms

¼ c flour
½ c green beans, cut (optional)

2 large potatoes, cubed

½ tsp ground black pepper

2 lbs canned diced tomatoes (+/-)

2 c water

2-3 tsp beef base or 3-4 beef bullion cubes

1 TBS flaked parsley or minced fresh parsley
2-3 bay leaves

DIRECTIONS:

In Dutch oven or large pot, brown ground beef with onion and garlic.  Add celery, carrots and mushrooms.  Cook until softened. 

Sprinkle on flour and stir with wooden spoon until incorporated.  Add remaining ingredients.  Mix well, cover and simmer, stirring occasionally, until potatoes are softened. 

Once potatoes are softened, add dumplings, cover and simmer another 15 minutes. 

Makes 4-6 servings depending on how hungry you are.