How do I convince this seller to do a lease option?

His house has been on the market for a year now. For Sale By Owner and he has cut the price from 380k to 345k. It was assessed in 2006 for 320k. I called him today and said I was interested in doing a rent to own deal, with an option to buy the property after time has passed. He was unfamiliar with the concept so I tried to explain it to him. He complained that if he were to do a lease option it would prevent him from selling the house to any third party if they were interested.

How do I get this guy to see that a lease option is best for him?

He is concerned that by giving you an exclusive option to purchase he may miss an opportunity to sell the property during your tenancy. Why not write up a custom lease option agreement that gives your seller a ‘call’ option on your purchase option. That being if he finds someone to buy the property while you have it under lease option he can call your option due and pay you a pre-agreed ‘fee’ to relinquish your option and he gets to sell the property out from under you.

My partner and I are only 21 and 19 years old. We are meeting with the seller tomorrow to look at the house a second time and want to do a lease option. We do not want to put any money down and we are afraid the the seller will be reluctant to do any negotiating with us do to our age…any tips?

LO’s usually require at least 1.5-3% down pardner.

Not really the option price can be anything agreed upon,like 10.00. It is reall two separate agreements one to option one to lease. although they can be combined. hence l/o. or done separately. Either/Or; Both

First of all, you shouldn’t convince any seller to do any type of deal with you. You need to take a different approach. He should be convincing you to do a deal!

He is the one with the problem. You are the one with the solution. Find out what his underlying goal is. Find out why he want’s to sell. Point out the fact that his home has been on the market for a year already.

Also point out his concern for a third party. Ask him, how long will he wait for a third party to come around? another year? Explain to him by doing a lease option, he’ll be putting a plan in place to get his home sold. The person that is doing a lease option is expected to buy his home. He needs to understand that, it is highly possible that they’ll be buying, especially since they’ve put money down upfront.

If he still disagrees, then move on to the next. Don’t get attached. If he is truly motivated he’ll come around. Show him that you can solve his problem and that will set you apart from the rest.

I would not try to explain the lease option to a seller. It will just confuse the seller. John Behle (a paper guru) says the confused mind always says no.

Ask the seller if he will sell you the property at $x (your price).

Ask the seller if he will let you move in as a renter for awhile before you purchase the property if your rent will cover his mortgage payment

If the seller says yes to both questions, then the seller has just agreed to the form and substance of a lease option. The only thing left to negotiate is the length of your rental term.

Lamar is the Man! If you feel you have to “Convince” the seller to let you solve his problem, means that you do not have a motivated seller. Without a motivated seller, you will never make money in this business.

Also, if you do find someone who needs your help, make sure you have the owner put his property in a land trust before you do your lease option. Otherwise, you will likely be in hot water when you put in a tenant buyer who does not or cannot buy at the end of the option period.

Most lease options do not work out, the tenant does not buy. If you do not have the property in a land trust, you may find yourself on the losing end of a law suit if the tenant does not buy and gets a lawyer involved to get his option fee back.

The land trust avoids these hassles. Check around the forum for more info on land trusts, they are the investor’s most powerful weapon.

Good luck!


A land trust does work however I believe the reason why theses lease options have a problem is because the investor is too worried about profit instead of properly screening tenant/buyers. I teach my students how to fill in all the gaps. You have to build your own team of people to get the job done. A ethical credit service, a mortgage broker who is ready and willing to work with your tenants, and of course you must have a true motivated buyer, one who is willing to do what it takes to get to home ownership.

Nobody wants to acknowledge the dangers inherent in doing lease options without a land trust, least of all lease option “Gurus.”

There are serious dangers to both the seller and the lessee in a “naked” lease option, even if there are 17 contracts written on separate pieces of paper in 17 states!

You can “eavesdrop” on a conversation a buddy of mine had with an Arizona housing court judge and get it straight from the judge’s mouth!


Question for you - what if you do this call option with the seller, then you install a tenant-buyer and then the seller calls the option due in the middle of your tenant’s lease term? Your tenant is out on the street and you’ve breached the lease with your tenant.

Or am I missing something?

I agree with you 100%. However in this case he said the guy is actually interested in doing a lease option. So perhaps this is a case of ‘overcoming objections’ as opposed to dealing with an unmotivated seller.

One way to overcome his objection (especially if the house is vacant) is to find out if he needs debt relief and exploit that benefit. If he’s paying two mortgages I can almost bet that payment is eating him alive. Tell him “I’ll be guaranteeing your payments and maintenance until I’m able to get the house sold for cash. Essentially you can forget about this house altogether until I get it sold and it’s out of your life forever.”

Another angle is to push the benefit of him maintaining his mortgage tax deduction write off (because the house is still in his name). Even if you put the title in a land trust, just make him the beneficial interest but have him assign the beneficial interest to you.

If he balks at that, just ask him if he’d like for you to check back with him in a month or so. Sellers’ minds tend to change with time and circumstance.

Nah, he never said he was interested. As you can see above, he said that he was concerned because he wouldn’t be able to sell it to anyone else if he did a lease option, due to the fact that his house was going to be tied up by a tenant buyer.

My key question would be, "Do you want to wait around and see if you can sell it, while still making payments? Or, do you want to take a plan of action right now and have someone take over those payments, with the intent of buying it? You already lost a year…

nsu1997, you made a good point, when you mentioned getting back to him in a month or so. That should generate more motivation and following up with old leads can put money in your pocket almost every time! :biggrin