By Dave Geppert, with Michelle Zarghami
While the current housing market is in a slump, leasing options are becoming more popular with sellers. There are several types of leases available.
The standard lease is becoming more popular. Instead of having the ‘for sale? sign rusting in their front yards, homeowners are putting their homes on the market for lease also. The owner and tenant are responsible for negotiating the terms of this agreement, and all monies collected belong to the seller.
When the lease is up, the tenant moves out or re-signs another lease, if offered. The advantage for the seller is the cash flow, and the fact that they remain the owners of the property, rather than selling in a difficult market, which could possibly result in losing money.
The most common disadvantage to sellers is the chance that the tenants will damage the home, or will not pay rent on time if ever. The eviction process is lengthy, tedious, and in my experience it seems that the courts are pro-tenants. The advantages to the lessee include having the flexibility of the lease agreement, and a security deposit, which at a maximum is one and a half month’s rent in Michigan.
The second type of lease is a lease option. The buyer will have a signed purchase agreement that locks in the sales price of the home, and an option addendum that states a portion of the monthly lease payment will accrue towards the purchase price.
The home does not have to be paid off, and the seller holds title until the lease option is exercised. This is usually implemented within a year or two.
Sellers like this type of lease because the home can still carry a balance, and if the buyer cannot obtain a mortgage within the specified time, all monies revert back to the owner of the property.
The purchasers should be aware of some common pitfalls; a sales price that is final could hurt the buyer if home values continue to slide downward, and mortgage requirements are becoming very strict. Also, the purchaser might not always be able to repair their credit within the contract period.
A homeowner can use a land contract lease if the home is paid off or has written permission from the lender. The home will actually close, and the buyer will receive partial deed, with the title company holding the deed in escrow until the contract terms are met.
In a land contract, the homeowner will require a large down payment of 10-20%. When it comes to leasing, I cannot stress strongly enough how important it is to consult a professional. The terms of the agreement need to be spelled out clearly, and all of the parties? involved need to understand their responsibilities and obligations.
On a separate note: Thank you for all who participated in our boat tour of Lake Orion. It was a great day on the water! Buyers were able to see the best side of lake front properties.
We are planning another tour towards the end of the month or beginning of August. If your home is listed with a realtor and you would like to participate in the upcoming event, please have your realtor contact us at (248)813-4900.

As summer begins to heat up, we will soon see home sales start to cool off. Homeowners will be heading up north, taking much needed vacations, etc.
In the month of May, records show that there were 33 sales in Lake Orion, with the average price $220,557.00, and an average time on market of 166.39 days. The same time last year there were 41 sales, with an average sales price of $220,887.00 and average days on the market was 115.56 days.
To help jump start June and July sales, Michelle and I will be hosting a ‘Buyers boat tour of Lake Orion? scheduled for June 24.
This tour is for everyone including buyers, sellers, or anyone who is interested in seeing what Lake Orion has to offer. We will meet at Orion Marine at noon.
Lake Orion’s newly elected school board member, Tiffany Webber-Phillips will join us to promote Orion’s outstanding school system. Lunch will be provided by Corleones restaurant.
The boats will take you on a tour to various homes on the lake around 1 p.m. If you are interested in adding your home to the tour, please let us know as soon as possible.
We feel this is a great way to promote Lake Orion as a prestigious all sports lake community, with homes costing less than most Oakland County lake front properties.
See you on the lake, and next month, look for ‘Should I Lease??
Please call Dave or Michelle with any questions at (248)813-4900.

The most important question asked during a listing appointment from a homeowner who is wanting to sell his/her home is, ‘what are buyers willing to pay for it??
Sellers have several methods at their disposal to help them determine the FMV (fair market value) of their property. However, some methods are more accurate than others.
When ‘automated valuation models,? or AVMs became available on the Internet, pessimistic realtors screamed to the heavens that the sky was falling and that they would be out of a job within days.
Militant ‘for sale by owners? could not wait to flock to this site to establish the correct list price of their homes.
Now that the dust has settled, we find AVM sites such as Zillow.com involved in class action lawsuits, with sellers suing for damages caused by inaccurate information. AVMs should not be used to establish the price a home is worth, based on a few valid reasons:
*All websites interpret data differently
*They only give a price spread, rather than a well researched opinion of value
*The websites do not all use the same pools of data
*There is always a lag time of thirty to sixty days before recent sales are available on public record
AVMs are a fun and great way to guesstimate a home value, but if that computer has not walked into your home to evaluate it, how can it possibly know what it is worth? I tend to be pro-human; there is no substitute for physically examining the property. The condition of each and every home is significantly different.
Home appraisals are used by mortgage companies, banks, and lending institutions to determine a value of a property before they will approve a loan for homeowners.
The report will include information on comparisons of similar properties; it will note major problems with the property that will affect its value, an estimate of possible time on market, and provide descriptions of the surrounding area and neighborhood.
The appraiser can only give the report to the person who ordered it. It contains valuable information on your property, and it is recommended that you obtain a copy of it from your lender.
The problem with these appraisals is that homeowners tend to view these as the final word in pricing. In this rapidly changing market, these appraisals are only accurate for a couple months, at best.
A comparative market analysis, or CMA, is a real estate agent’s evaluation, based on current sales and local listings. These can be the most accurate way to determine a price.
An accurate listing price of a home all depends on the quality of the data and the realtor.
The CMA should consist of listings in your neighborhood, and should be as similar as possible to the subject property. The report should include active listings, sold/pending sales, as well as expired or withdrawn listings.
A good agent will also hunt down information on FSBOs in the area as well. Look carefully at the report, and pay special attention to the sold and expired listings.
The homes that sell with the shortest time on the market tend to be well priced, and the expired tend to reflect homes in the top end of pricing.
The market ultimately dictates price. By combining the lenders? appraisals and an accurate CMA, sellers can pinpoint an accurate price for listing their home. It is the most important aspect of how long your home will sit on the market.
On another note, Michelle and I are planning a buyers boat tour on Lake Orion for Sunday, June 24. If you would like more information on how your lakefront home can be showcased in this event, please call Dave Geppert or Michelle Zarghami of Real Estate One, Inc. at (248) 813-4900.
Look for more on this event in The Lake Orion Review.