The Anna Maria Island Sun Newspaper

Vol. 9 No. 13 - December 17, 2008

REAL ESTATE

Everything old is new again

Remember the lay-away plan? It was a quaint custom associated with the days before credit cards when people actually waited to purchase an item until they had the cash in hand. Typically, you would give the merchant a small down payment, and he would take the item off the shelf and lay it away or hold it for you for a specified length of time until you were able to come back with the balance and take the product home.

Sounds sort of peculiar even un-American in our purchase-with-plastic world, but believe me, the concept is coming back and not just in retail stores. A far more sophisticated and complicated version of lay away is starting to emerge in our damaged real estate market, the lease purchase or lease option.

There’s nothing new about leasing a property with an option to buy. It just hasn’t been too popular or necessary while residential properties were flying off the market at full or over asking price. But since all that has changed some sellers are looking at their empty properties and asking, “Why not?”

Essentially, leasing with an option to purchase is a contractual arrangement between the property owner and the tenant. The tenant pays rent to the owner, and in exchange, is permitted to occupy the property until the end of the contract period when the tenant has the option to purchase the property. In addition, part of the collected rent is applied toward the down payment if the purchase option is exercised. The terms need to be spelled out exactly in the contract relative to the purchase price at the end of the term, what percentage of the rent is to be applied to the purchase price and if any of the rent is refunded should the buyer not exercise his option.

For buyers, especially first time buyers, this is a great way to sort of test drive the property before purchasing, build credit and accumulate money for the down payment. In addition, the concept provides the seller with an income for hisproperty and the probability of a sale at the end of the term.

Leasing with an option to buy could be a way to get some of the excess inventory off the market as well as providing an opportunity for buyers who might not otherwise have the chance to own. Also, there are a lot of qualified buyers just sitting on the sidelines waiting for the real estate market to bottom out who would be good candidates for a lease with option arrangement.

Some of the most innovative ideas are born out of challenging circumstances. It’s time for banks, real estate professionals, sellers and buyers to start thinking creatively, and leasing with an option to buy could be one of the pieces that will fit nicely into the real estate recovery puzzle. As with any legal agreement, professional legal advice is essential. This becomes even more important when the contract involves a non-conventional real estate transaction.

So the next time you find the perfect pair of shoes to go with the perfect cocktail dress for that perfect special occasion, instead of pulling out the plastic, ask to have them put on lay away. Since everything old is new again, chances are the shop owner will understand completely.

Real Estate Transactions
Closed sales between Aug. 18 and Oct. 25, 2008

Anna Maria

102 Magnolia Ave.      Duplex      $1,800,000
619 Rose St.      Single family       585,000
517 Blue Heron Dr.      Lot       525,000
145 Crescent Dr.      Single family       510,000
519 South Dr.      Single family       487,500
305 Magnolia Ave.      Duplex       385,000
244 Gladiolus St.      Single family       340,000

Bradenton Beach

200 Gulf Dr. S. #4      Condo       $675,000
404 21st Pl. N.      Single family       470,000
105 Eighth St. S.      Duplex       300,000
1001 Gulf Dr. S. #3      Condo       275,000
1801 Gulf Dr. N. #237      Condo       259,500
2401 Gulf Dr. N. #2      Condo       158,000
2601 Gulf Dr. N. #528      Mobile       83,400

Cortez

No recorded transactions

Holmes Beach

518 58th St.      Single family       $1,595,000
689 Key Royale Dr.       Single family       1,150,000
5601 Flotilla Dr.      Single family       630,000
136 49th St.      Condo       596,000
507 75th St.      Single family       575,000
508 Key Royale Dr.      Single family       550,000
203 69th St.      Duplex       530,000
5200 Gulf Dr. #604      Condo       480,000
507 65th St.      Single family       467,500
3013 Ave. F. #U23      Condo       450,000
7700 Marina Dr.      Condo       433,500
7702 Marina Dr.      Condo       433,500
312 64th St.      Duplex       425,000
8004 Marina Dr,      Duplex       340,000
405 Bay Palms Dr.      Single family       316,300
4605 Gulf Dr.      Duplex      295,000
409 72nd St.      Duplex      280,000

Source: Manatee County Property Appraiser’s Office


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