You usually can’t find as many Portland lease option opportunities being offered as you would have a few years ago. Because the more normal marketplace has given buyers more confidence and sellers more and better offers, some of the usual reasons that Portland lease options come about rarely develop.

One of the appeals to renters that a local lease option conveys is that it provides some financial wiggle room. Back when housing values in the Portland metro area were in freefall, buying seemed like a much more risky proposition than it does today. After all, nobody rushes out to buy something they think is going to be on sale in a month or two—and for a long stretch during the financial crisis, that did seem to be more likely than not. Especially for would-be buyers unnerved by the press reports of that period, renting for a while longer seemed the prudent course…even if bargain real estate prices made it tempting.

A lease option (short for ‘lease with option to buy’) presented a middle course. When one was available, it looked like a safe compromise—for buyers and sellers both. If the lessee chose to walk away at the end of the option period without opting to buy at the agreed-upon price, there was no penalty for doing so. For the landlord who was willing to sell but had found no takers, a lease option for a Portland home held the promise of continued cash flow…with an improved chance for a sale in the future.

It was a win-win—if all went well.

If not—if the lessee wound up being unwilling or unable to complete the purchase—his or her loss would be capped at the predetermined amount. The owner would be again free to offer the property on the Portland listings. It may not have been win-win, but at least it wasn’t lose-lose.

That the lease option idea is still a viable alternative in today’s stronger market is probably due to some of the other aspects such an arrangement tends to incorporate. For the property seller/landlord, the amount that can be negotiated for the monthly lease payments may be higher because the situation is worth more to the tenant/buyer. After all, the pride of ownership benefit may not be fully present—but some elements are. A portion of a larger lease payment may be earmarked as a contribution to the final purchase price—one that will only be forfeited if the sale fails to close.

For the landlord, too, publicizing a lease-option possibility can be expected to attract high quality tenants. The same pride of ownership element also acts as a strong incentive for the future owner to take maintenance obligations especially seriously. It’s not uncommon for a tenant to go ahead and make minor improvements themselves.

Those are the advantages, but there are some drawbacks as well. The seller remains responsible for taxes and mortgage obligations, even though the tenant-buyer has a certain degree of power over title to the property—and of course it can’t be sold to another buyer during the term of the agreement.

Buying or selling during this less hectic time of the year can sometimes open up creative solutions that do make for the win-win outcome. As your representatives, we always do our best to keep all pathways as open as possible to produce exactly that.

Craig Reger Group

We sell more because we do more.