Hi my question is what happens if a tenant-buyer wants to buy after their 24 month lease is up, and the property has gone down in value to what it they agreed 2 years ago. How can they get the property to appraise for what it was 2 years ago? And buy. For any reason. Thanks
:shocked i may be wrong ,but i would think the tb can buy at agreed price OR refuse to exercise the right to buy OR renegotiate
price OR ask for an extension until prices are up enough for the lender to be ok with it. :argue if im wrong or someone has other ideas feel free to chime in . thanks , (harriet fl)
In a nutshell, what Harriet said pretty much sums it up. Going into deal such as this, both parties face some risk with regards to where property values will go, and where they will end up by the end of the lease.
If prices rise, the t/b benefits from the appreciation. On the other hand, if they decline, then the t/b suffers the loss, as well. Should the latter be the case, the options available to the t/b are as Harriet described.
An option is just that, an option to purchase at an agreed upon price but not an obligation to purchase. The t/b is rewarded by exercising the option if prices have appreciated but if prices go down they simply let the option expire. All the risk of price depreciation is born by the seller/option writer.
Thanks alot great answers i understand now.