How Much Should I Charge For A Lease Option Fee?

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When talking to sellers about the lease option fee, here’s how to make the most money out of it in a way that benefits you, the seller and the buyer.

“Is it better to have an announced lease option of $2,000, $5,000, $10,000, etc., or work with each individual buyer? I lose a ton of prospects because of the amount of lease option fee that I ask for.” – Tom Parris

 
Joe: Absolutely do not post the lease option fee in your ads. Don’t tell people how much it is. The first question that you’re going to ask them when they call you is, ‘How much do you have for a down payment?’
 
Joe: If they tell you, ‘I’ve got $3,000,’ your answer would be, ‘Well, if you had 5, I know we could make this work. Can you come up with 5?’ And if they can’t, that’s okay – you can do it for 3. Or if they say, ‘I’ve got $5,000. I could do for a lease option fee or a down payment.’ ‘Well if you had 7, I know we could make this work. Could you come up with 7?’ Yes, they might. Or if they tell you, ‘Yes, I’ve got 10.’ ‘Well, if you could come up with 15, I know we could make this work.’ So, you’re always negotiating to try to get the most amount of money out of that buyer as possible for a lease option fee because that is the money that you’re putting in your pocket.
 
Joe: Now, it’s not only to your benefit to do this, it’s also to the benefit if you’re doing the “For Rent Method” of whoever the seller is of that property; whoever the owner is of that property, because it’s more likely that the person who is the lease option buyer will actually exercise that option. With options, it’s less than 30% of the people that buy on lease option who actually exercise the option. So, the more money that they have as a lease option fee, the more likely it is that they’ll exercise that option.
 
Joe: So, it’s in your best interest because you’ll make more money. It’s in the seller’s best interest because it’s more likely that they’ll exercise the interest, and it’s in the buyer’s best interests to give you more money because it makes them more likely to buy that property, which is their whole goal in the first place. I hope that answers the question.