What's a Normal Lease To Own Option Fee?

The lease option fee varies from deal to deal and like these row houses, are never quite identical

I can't say there is a normal lease to own option fee, but typically it's a small percentage of the asking price for the home. 

Most real estate investors pay as little as they can get away with to the seller. Then the Investor will obtain a more substantial, maybe around 10%, of the final sales asking price from the tenant buyer. 

What Are The Typical Fees Involved In A Lease Option To Buy House?

Let's break down the lease to own process into small parts.

  • First, there is the original homeowner who is looking to sell their property. If that seller is willing to lease their house for a short time now, and close on the sale on a later date. The buyer then offers a small fee to the seller for this benefit.

  • The next option fee that you would see in most lease option purchase deals comes from the tenant that will be leasing and occupying the property. 

What sets the tone for the amount of option fee offered?

If you plan to make all the current house payments, then this fee would be less than if the seller is planning on contributing to the house financially. 

The other option fee is what you will collect from the tenant-buyer, and is normally is non-refundable. Customarily this fee is ten percent of the price that they will be paying for the home. The tenant-buyer leas to own option fee is then used as a credit towards their purchase price. And it will show as a credit to the buyer on the closing statement, when they close on the property.

It's important to always do what is right for all parties, and once you've done a few of these deals the amount of option fee you offer will become second nature. 

Who Keeps What and Why

The seller of the property is offered an option fee, since they are agreeing to the option of leasing the home with the intention of it selling to the tenant. So they get a small compensation for taking it off the active market for a short time. 

Once you and the seller come to terms on the sales price of the home, you can then market the home to a qualified tenant, who will ultimately bu the home. So the tenant-buyer will be charged an option fee for the privilege of leasing the home before they buy it. Customarily, this lease to own option fee is around 10% of the sales price.

We're Getting to the End of Lease To Own Option Fees

I'm keeping this brief, because the lease to own option fee is only one metric of the process. If you want to learn more about the lease to own process, check out these other articles that will help you with this profitable concept. . .

Learn more about lease options and how to make money using them with these articles:

An overview of the lease option method of making money with real estate

Customary lease to own option fees

How to correctly use lease options to buy houses

Free example to print off - Lease to Purchase Option Agreement

How lease option real estate investing can work into your investing goals

Let's get creative with Sandwich Lease Options



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