Miami real estate sellers have plenty of options

If you are a Miami Beach Real Estate Seller, you must have realized that being flexible is the key. If you have not, then I’m sure the time will come. 

The real estate market currently favors buyers and although this doesn’t mean you have to give your property away, it does mean you have to be open to different scenarios that will ultimately get your property sold. 

Today’s real estate buyers are being creative when presenting offers and being open to different options could be the key to selling your property.

We recently prepared a purchase contract for some Miami Shores buyer clients and the deal never materialized because the sellers were being stubborn and wanted things done their way. It was a very strong offer and I personally thought the sellers were making a bad call. 

Needless to say, those same sellers had 2 other offers which they also turned down and their property is now priced below those original offers. OUCH!!

As a seller, you should consider all offers; you should carefully study them and make sure you don’t turn anything down without first giving it good consideration. If you get an offer with a contingency based on a buyer selling their own property, don’t discard it. It may be the perfect scenario for you. There are many ways of accepting contingencies without harming the sale of a property. It could mean adding a kick-out clause and/or stipulating a closing date. Other scenarios you should not discard are options. 

We are seeing a lot of sellers placing their properties on the market for rent as well. Having an option may mean a sale by the end of the lease term. Elizabeth Weintraub does a great job explaining the basic differences of options.

Basics of an Option

• Buyer pays the seller option money for the right to later purchase the property. This option money may be substantial or as little as $1.
• Buyer and seller may agree to a purchase price now or the buyer may agree to pay market value at the time the option is exercised. It is negotiable. However, most buyers want to lock in the future purchase price upon inception of the option.
• The term of the option agreement is negotiable, but the common length is generally from one year to three years.
• Option money is rarely refundable.
• Nobody else can buy the property during the option period.
• The buyer can sell the option to somebody else.
• If the buyer does not exercise the option and purchase the property at the end of the option, the option expires.
• The buyer is not obligated to buy the property.

Basics of a Lease Option

• Buyer pays the seller option money for the right to later purchase the property. The lease option money may be substantial.
• Buyer and seller may agree to a purchase price now or the buyer may agree to pay market value at the time the option is exercised. It is negotiable. However, most buyers want to lock in the future purchase price upon inception of the lease option.
• During the term of the lease option, the buyer agrees to lease the property from the seller for a predetermined rental amount.
• The term of the lease option agreement is negotiable, but the common length is generally from one year to three years.
• The option money generally does not apply toward the down payment.
• A portion of the monthly rental payment typically applies toward the purchase price.
• Option money is rarely refundable.
• Nobody else can buy the property during the lease option period.
• The buyer generally cannot assign the lease option without seller approval.
• If the buyer does not exercise the lease option and purchase the property at the end of the lease option, the option expires.
• The buyer is not obligated to buy the property.

Basics of a Lease Purchase

• Buyer pays the seller option money for the right to later purchase the property. This option money may be substantial.
• Buyer and seller agree on a purchase price, often at or a bit higher than market value.
• During the term of the option, the buyer agrees to lease the property from the seller for a predetermined rental amount.
• The term of the lease purchase agreement is negotiable, but the common length is generally from one year to three years, at which time the buyer applies for bank financing and pays the seller in full.
• The option money generally does not apply towar the down payment.
• A portion of the monthly lease payment typically applies toward the purchase price.
• Option money is nonrefundable.
• Nobody else can buy the property unless the buyer defaults.
• The buyer typically cannot assign the lease purchase agreement without seller approval.
• Buyers are often responsible for maintaining the property and paying all expenses associated with its upkeep, including taxes and insurance.
• The buyer is obligated to buy the property.

Being a “firm seller” in a buyer’s market is not a good strategy, especially considering the seller incentives that are being offered all over Miami, from closing costs to money back, to maintenance fees, free pool installations, and even cars!!

By working with a good, creative and knowledgeable Realtor, you will improve the odds of selling your property in a real estate market where competition is fierce. 

This post was originally written on November 2007 and applies even more to today’s real estate market.