Drive by only, subject to inspection

drive by

Sometimes a property is advertised as “subject to interior inspection” or “drive by only”. What does this mean exactly? This means that the seller is selling the property, but only showing it to the offer they select.

While this may be found only occasionally on standard or single family home sales, it is typical to find this request on Income or multi-unit property sales. The explanation is simple: Most multi-family properties (ie, duplexes, triplexes, and fourplexes) are fully rented and therefore, tenant occupied. The seller of the property doesn’t wish to disturb the tenants for every potential buyer who wants to view the units.

For many buyers, especially those who are new to income properties, this can be an unusual concept. The first question I am always asked is, “you mean I need to write an offer before I even see the property?” In this case, yes, that’s what I mean. The usual procedure is to visit and view a property before offering on it, but income properties are different. Understandably, the property’s tenants are not involved in the sale and they would become upset if they had to show their home to everyone who wanted to drop by and look at the property. Basically the seller wants to be sure that the buyer is “real” before they allow a showing.  This helps eliminate “looky loos” and unnecessary disturbances to the tenants.

Is it risky then to make an offer without seeing the interior of all of the units?

Not really. The offer is just that – Nothing more that a signed proposal. You would not have to include a deposit with your offer so you’re not handing over any money. The offer should be written to include “subject to interior inspection” in the additional terms section, so your offer is really “conditional”. If your offer is accepted, the seller’s agent will make arrangements to allow you to view all of the units. Based on your inspection, you would have every right to cancel the offer if you did not like what you saw. Further, even if you do proceed with the sale and open escrow, you still have a designated period of time to do all of your inspections, review the books,  and other due diligence, including using a professional home inspector. This period is usually up to 17 days.

For multi-units, there are cases where one or more of the units are vacant. Also, one of the units may be occupied by the owner of the complex or a cooperative tenant, and is these cases, seeing at least one of the units may be a possibility. In other cases however, go ahead with the drive by and check out the exterior of the property as well as the neighborhood. If these check out, do go ahead with an offer “subject to inspection”. In the worst case, you will simply have to withdraw it.

Short Sale Specialist Orange County, CA

Consider a short sale instead of foreclosure

If you owe more than your Orange County, California house is worth and can’t afford your payments, you might be able to sell it for less than you owe — without having to pay the lender the difference. If you can no longer make your mortgage payments and your home is upside down, a foreclosure may not be your only option. A Short Sale is a sale of a home in which the market price is less than what is still owed on the home. It is a procedure sometimes agreed to by banks and mortgage lenders who often prefer to take a small loss, rather than going through a lengthy and costly foreclosure process. If you have been considering a short sale, or if you have been looking for help with one, you have come to the right place!. To assist you, you will need an experienced real estate team of short sale experts, including a licensed Realtor and professional negotiator. To help with a short sale or if you are facing foreclosure, continue reading to see how I can be of assistance!

If you are losing your home due to income or job loss, divorce, or other cause  and you are either facing foreclosure or considering a short sale, what are your options?

  • Refinance – If you qualify, one of your best options may be a Home Affordable Refinance. You can read more about it here:
  • Lender workout – Ask your lender to spread out the back payments and fees over a fixed number of upcoming payments, or ask for a loan modification, where they will forgive back payments or recast the loan into a new one with a fixed rate (Note: See waning on loan modification scams above. Do not pay a third party to do a loan mod for you – Work only with your existing lender). 
  • Sell and bring cash to closing – This one is difficult for most people because it involves cashing out an IRA, 401K, or savings account to pay off back fees and the loan balance, but it may be a solution for some people. 
  • Deed in Lieu (of foreclosure) – In this scenario, the homeowner trades the deed to the lender in exchange for a guarantee that the lender will cancel the note and forgive the debt.
  • Short sale – You sell your home for less than the amount owed, in cooperation with the lender(s) who forgive the debt.

For all of the options above, I would always advise you to consult with an attorney, tax advisor, or financial advisor.  Real Estate agents (like myself) are not qualified to offer advice on tax, financial, or legal matters. 

A Short sale may be a win-win

  • The seller gets out of the mortgage liability without facing bankruptcy.
  • The buyer gets the home at a reduced price.
  • The lender agrees to a loss it considers minimal without going through a foreclosure and being saddled with an un-salable property.
  • For the seller, there is less credit damage and you may be able to qualify for a home loan sooner than if you foreclosed on the property.

While it may seem surprising that lenders would agree to accept less than what they are owed, they benefit by not having to go through the process of foreclosing on the borrower and then having to put the property on the market. A market saturated with foreclosures can cost lenders billions — and as much as $50,000 or more, per foreclosure

Why do a short sale?

There are many reasons why home owners will consider doing one. If you purchased a home at the top of the market or with an ARM (Adjustable Rate Mortgage) or zero down loan, the mortgage payments, association dues, property taxes, and insurance payments may no longer be affordable for you. In some cases it may be better to cut your losses by selling the home and saving those payments instead. If you have been saying ” I need to do a short sale of my Orange County home” or ” I am considering a short sale” it may be for some of the reasons below

  • The home has an adjustable rate mortgage with payments that are no longer affordable
  • Income loss due to job layoff, illness, etc
  • Divorce 
  • Loan modifications did not produce the desired results
  • To avoid a full foreclosure which may be far more harmful to your credit

Renting or leasing a home after a short sale

You’ve successfully sold your home in a short sale, so now what? Most people prefer to stay in the same community where they have lived for many years, where their kids have gone to school, and where they have established friendships. Your best bet is usually to lease or rent a home for a while, until you are prepared to buy again. This can be difficult however because of credit challenges that may have resulted from the short sale, missed mortgage payments, or from other financial difficulties.  If my team assists you by selling your home in a short sale, we will also help you with your next move! We are leasing experts. We handle many more home leases per year than the average real estate agent in Orange County and we have the experience and know-how to work with landlords and credit issues so that you can find your next home! 

If you’d like to see my complete article about short selling your home, visit my web page here:  Consider a short sale instead of foreclosure

 Ron Denhaan (949) 290-3263 

Ron Denhaan, Realtor  
Short sale and foreclosure resource certifiedShort Sale & Foreclosure Resource Certified

DRE# 01728866



OCs vanishing orange groves

Valencia orange

It seems like yesterday that you could drive down any freeway in OC and see miles of Orange Groves. Does anyone know where even a single grove exists today?

Contrary to popular belief, Orange County, CA was not named for its orange groves. The county was given the name “Orange” in the late 1800s as a marketing ploy to attract emigration to the area.  Orange County was initially dotted with cattle ranches. When the cattle business declined due to disease, ranchers started planting orange trees. Oranges became so successful that it quickly became the dominant agricultural product of the county. By the early 1900s, over 13% of the county land was devoted to Orange groves. Orange County and oranges became one.

old grove

old grove

My connection with citrus came early in life. My family first moved from chilly New England to sunny Goleta, CA. There were lemon groves everywhere in this city. The home my parents purchased on Ravenscroft Drive was surrounded by miles of lemon groves. These fields were great to explore and the wonderful smell of citrus blossoms always permeated the air. Field trips at  Fairvew elementary school always included visits to the local Sunkist lemon packing plant. For me, citrus quickly became an integral part of living in California.

After a brief return to the east coast, we once again moved to California; this time to Fullerton in North Orange County. Most of the original orange ranches of Fullerton had already been destroyed, but you didn’t need to go far to see vast amounts of existing orange groves. A trip south on the I5 freeway revealed miles of orange groves in Irvine and San Juan. The El Toro Marine air base was surrounded by vast amounts of orange groves.  Slowly these fields gave way to the bulldozer and to progress. It was so slow it was almost peripheral. Just a few years ago I witnessed the withering and bulldozing of a large grove at the top of Bake Parkway in Lake Forest. Over a period of months, this grove of orange trees slowly turned brown, due to a lack of irrigation. Then, the dozers came and each tree was uprooted and destroyed.

 So what if they’re bulldozing a few more orange groves. This is Orange County. Aren’t there thousand of acres of orange groves left? 

Unfortunately, no….At one time there were 67,000 acres of Valencia oranges alone in Orange County, enough acreage to account for about 13% of the total County land. Today, the estimate is that are only 100 acres of vintage orange groves left in all of Orange County, and most of these remaining groves are already doomed. About half (50 acres) is already scheduled to be demolished within a year or two.

Santa Ana grove

5-acre grove in Santa Ana

One remaining example is the 5 acre patch in Santa Ana with the original owner’s cottage on the street corner. The remains of this once, great orchard lie between tract houses and a city park. It is estimated to be the last, sizeable orange grove remaining in this city. When a descendant of the family died in 2006, the cottage was boarded up and the property transferred to Concordia University, which has plans are to demolish the grove and build 24 homes on the site (just what a city with over 700 unsold homes really needs)  Note: see update on this grove below

Ignacio Lujano

Ignacio Lujano at the Swanner ranch in San Juan Capistrano

Another, rather heart-wrenching example involves the grove and caretaker of the Swanner Ranch in San Juan Capistrano. For 40 years, Ignacio Lujano lived in a small house on the property and tended to the orange trees. In the fall of 2008, the city of San Juan Capistrano evicted 85-year-old Lujano and now plans to convert the remaining 5 acres of historic orange groves into a city maintenance facility.  You can read more on this story, here.

San Juan house  withering grove

I took this picture of Lujano’s former home on the Swanner ranch, just before the home was bulldozed. The other picture shows dying orange trees on the other side of the railroad tracks in San Juan.

A few remnants of Orange County’s once vast and magnificent Orange ranches remain as small, withered groves, fenced off on forgotten city blocks in Fullerton, Anaheim, and other places. Destruction and re-development of these plots is inevitable.

Remnant grove in Fullerton

Remnant grove in Fullerton

Others exist on private residences. Until now, the owners have withstood change, but the question is, how long will they (or their heirs) be able to resist the temptation of the developer’s dollar?

12682 Red Hill Ave before

12682 Red Hill Ave after

Check out the two photos above. The photo on the top shows a vintage farm house in Tustin surrounded by an original section of orange grove. This home was offered for sale, but it looks like it was bought by an investor. Now Look at the lower photo. Its apparent that the home and grove were bulldozed in order to build multi-family units on the property. Which picture appeals more to you?


Will Orange County ever return to a time where there were thousands of acres of oranges? Obviously not. But does that mean we should destroy the last vestiges of our farming heritage?  Once these final trees are gone, Orange County’s orange groves will be gone forever.  What we should do is to urge the County and the cities that still hold a vintage grove, to preserve them as a living example of our history. A few acres of groves, perhaps with an original farmhouse or cottage, would make a wonderful living museum., This would be a place where our children and grandchildren would have the opportunity to romp among the orange trees, and get a taste of what life was like in Orange County, one hundred years ago.

Update Aug 1, 2012:  One 5-acre orange grove remains in Santa Ana on East Santa Clara Ave. The property also contains a turn-of-the century craftsman home. A small group of preservationists are fighting hard to save this grove from the developers who hope to build 24 homes on the parcel.  The preservationists’ efforts were bolstered in June, 2012 when Santa Ana city council gave the property a historic designation. While this alone does not ultimately save the grove, it does require city officials to look at alternatives to uprooting the trees. The coalition to save the property hopes to convert the home and grove into a historical monument.

From the preservationists’ web site: ” The Save Our Orchard Coalition believes that this orchard is too important to be destroyed in order to construct more houses in Santa Ana. Given the agricultural history of Orange County and the fact that this orchard and family home may be the last intact example of our agricultural past left in the entire county of Orange, we will continue to fight for its preservation, promotion and recognition as an historic site. Looking to the future, we see this five-acre orchard as an important resource for our community and believe that it can be developed into an example of sustainable living and education for this and future generations.”

If you would like to help save this grove, which is one of OC’s last intact orange groves, please visit this web site:  and please donate!

Additional links

A vanishing county symbol

Where are Orange County’s remaining orange groves?

For the record, I’m a real estate agent not a tour guide, capish?

 "Looky Loo" who is not ready to buy

I’m saying this respectfully, in response to the occasional request that I receive from people, that goes something like this:

“…Hi, I found your website and though we may not be buying for a year or more, we will be visiting Orange County next week and I was wondering if you were available to show us around a bit? We are considering moving to Orange County, but we really don’t know the area very well…”

– or –

“… I may be getting transferred to Orange County later this year, and if so, I will be in the market for a home for lease. To give me an idea of homes that are typically available, would you be willing to show me a few homes this weekend?”

While I realize that these requests are genuine and  sincere, I do have to wonder if people fully understand what real estate agents do and how we earn our keep.  Do people believe we are on salary? Do they think that our brokers provide us with a company car and a gas card? That we’re so hungry for business that we’ll just jump on any opportunity to show homes?  I think most people just do not know that we are independent contractors who have to pay for all of our own expenses.  When we’re asked to donate a whole afternoon of our time to someone who is just looking, it’s 100% on our nickel.

I know that the “lure” is that these people might buy or lease a home from you at some time in the future (at least, that’s their intention) so you may be tempted to think it’s worthwhile to run them around.  Well, I’ve done a few of these “good will” showings and I can tell you that in almost every case, nothing ever materializes– they just disappear afterward.

To those nice people who have made such a request, please know that when you are genuinely ready to buy, sell, or lease a home, my team will be there for you!  Until then, please understand that like you, it is hard for us to justify spending an entire day working for free (ah,uhm….did I ask you to do a day’s work for me at no pay?)  And while I do enjoy seeing homes, I generally do it for a purpose, that being, to close a deal.

To those in the real estate business, if you hope to thrive in it, I would advise you to make good use of your time.  Work only with clients that have actual potential and take a pass on “looky-loos” and “maybes”.   I hate to pass up potential business, but that’s only if there is any real potential to begin with.  In many cases, you just have to say “no” to those who would only waste your day. Say it diplomatically, but definitely learn to say “no”!

Renting a home after a short sale


Is your Real Estate Agent doing the whole job for you or is he running away after the sale?

Many real estate agents willingly take short sale listings, but for agents to accept your listing without taking full responsibility for your re-location, is only doing half the job. Our clients have done us a great service by trusting us to handle their sale. As a result, we owe it our clients to help them find a new home; not to walk away after the short sale is completed!

Most people prefer to lease a home in the same community after their home closes

The majority of people who short-sell their home usually lease a home after the home closes, and they still want to remain in the same community. This is where they have lived for many years, where their children have gone to school, and where they have established many friendships. A good real estate agent will always begin by keeping their clients up-to-date on available home leases during the course of the short sale — easy to do through their local multiple listing services. This should always be followed by home showings and working with other agents to find potential  rental possibilities.

Why do some agents neglect their clients after the sale?

Yes, I know this sounds harsh, but it comes down to commission, knowledge, plus the amount of work involved in helping people find a lease, especially if they have credit challenges. A short sale pays a standard sales commission while a lease pays very little;  usually only a few hundred dollars. Many agents prefer to move on to another sale rather than spending their time and energy pursing a lease. They may also lack knowledge about leasing and rental law, since the majority do very few leases each year. Last, they may get discouraged if their applicants are regularly rejected because of credit challenges. 

How difficult is leasing a home after a short sale?

The biggest challenge in renting or leasing a home after a short sale is overcoming the damage to the client’s credit rating. Because a short sale is a distress sale, the sellers may have many late payments (including missed mortgage payments) which will have downgraded their credit scores. Leasing a home with poor credit can be very difficult. Most landlords are wary of leasing to someone with low FICO scores and derogatory items on their credit report.  The best solution is to get a qualified co-signer. Perhaps there is a friend or family member who is willing to help?  There are also professional co-signing services that will assist you for a fee. This is often the best solution for people who want to keep their financial affairs discreet and private. There are also other alternatives like paying more rent up front or paying a higher security deposit. See my web page for additional solutions, here.

Should you look for a lease now or after escrow opens?  Two strategies

For many clients, the emotional strain of the short sale and loss of their home is devastating. In this case, I usually advise them to move out, well before the house sells. Emotionally, putting the old home behind them and settling in to a brand new place might be the best solution. It may also have credit rating benefits, as the full impact of the sale and missed mortgage payments may not yet be fully reflected on their credit report.

For other short sale clients, the goal may be to stay in their home as long as possible. For these clients, we generally start looking for homes shortly before escrow is opened. The advantage is the reduced cost of not having to pay rent until they are close to closing on their home. The disadvantage of course is the shorter search “window”. This means that we will have to aggressively pursue a new home so that it will be secured before escrow closes.

Be prepared to be flexible in your choice of homes

If your credit is poor, you may not be able to lease any of your top home choices.  Instead, consider accepting a home where the landlord is willing to work with you, even if the home is a bit less than ideal. Older, less updated houses, vacant rentals, and homes that have been on the market for a long time are good candidates. In any case, be prepared to show some flexibility in your choice of homes.

Be sure to use a real estate professional to assist you!

It may be tempting to shop for a lease on your own using the newspaper, Craigslist, or other media. Use caution though — there are many leasing scams out there. The first concern is ensuring that the person you pay your deposit to, is in fact the actual owner of the home. Never give cash or a deposit check to someone unless you are certain that he/she is the legally entitled owner of the property. Second, many people who are in foreclosure are leasing their homes out to collect some cash before the bank takes it back.  I have received numerous calls from tenants who have leased a home, only to find out later that the home is in foreclosure. The biggest issue (aside from finding a new home) is the disposition of their security deposit.  To avoid problems later,I recommend that you always use a licensed real estate professional to assist you with your lease. Ask that your agent check all potential lease homes for notices of default (NODs), liens, paid property taxes, and loan-to-equity position, to ensure that the landlord is financially sound.

My team will help you after your sale!

We will never do half the job!  My team are short sale and leasing experts. If you trust us with your short sale, we will work very hard to help you find your new home.  We do this by aggressively screening potential rentals to find landlords who are flexible and willing to consider your application. One of our team members will also be happy to work with you on showing these homes. Please contact me at (949) 290-3263 to see how my team can help you with your short sale  , and with a new lease after the sale.


Ron Denhaan is a Realtor in Orange County, CA.  He can be contacted at (949) 290-3263 and at   Please visit his web site at:

DRE# 01728866

Short sale and foreclosure resource

When you decide to sell your home, do not fall for an agent who “buys” your listing!

 Unethical real estate agent  As an Orange County listing agent, I’m often asked to provide estimates of current market value for people who are considering the sale of their home.  While I am happy to do so, I also do so honestly by proving my clients with current market comparables (also known as, “comps”).  But being realistic sometimes means that I won’t get the listing. Frustratingly, I often find out that the listing went to an agent who promised to list the home for a much higher price! It’s sad for me to watch these listings sit idle on the market afterwards, knowing that the seller will waste months of marketing time and will be forced to make many price adjustments.  How does this happen? Let’s look at a typical scenario:

You decide to sell your home, so your first step is to interview several real estate agents. After the interviews, the winning agent happens to be the one who promised to list your home for the highest price. You are ecstatic as your  home is listed, but as the weeks go by with no offers and few showings of your home, you realize something may be wrong. Your agent phones you and once again suggests that you reduce your list price. After many weeks and several price reductions, it dawns on you that your list price is now approaching the pricing level suggested by one of the other agents you interviewed. At this point you realize that you have been had. You have contracted with an agent who “bought” your listing.

What is “buying a listing”?

 It is real estate jargon for an agent who attempts to secure a real estate home listing by promising the seller an unrealistically high sales price.  A seller’s exuberance and greed often result in awarding the listing to an agent who promises the highest price. Once locked into a months’ long contract, the seller will have no choice but to agree to the inevitable price reductions . In the mean time, weeks and months of prime marketing time have been wasted.  

Why would an agent “buy” a listing?

1) Obviously, to lock down the listing contract and beat the competing agents.  Once the contract has been secured, the agent can then work the seller into agreeing to a series of stair-step price reductions so that home will eventually sell. In doing so, this agent will eventually get the sales commission (instead of his/her more ethical competitors).

2) Second, with a “for sale” sign on the lawn, the agent will get additional calls and pick up buyers who can be “flipped” into other properties (properly priced ones!)

So what’s the downside for you, the seller?

1) Wasting weeks or months of prime marketing time. Most offers occur within the first 30 days if the home is priced right, but for an over-priced home, it may sit for months without an offer, resulting in a “stale” listing.

2) A “stale” listing equals lower priced offers! As your home sits on the market with price reduction after price reduction, buyer’s agents will stigmatize your home as tired and “stale”.  As a result, they may encourage their buyers to make lower offers on the home.

3) Agents may boycott your home if they realize your agent has “bought” the listing. In a given real estate area, agents often know who the bad apples are, and they may choose to punish these agents by punishing you!

4) With many price reductions taking place over several months, you may wind up “chasing the market down”. As home prices in the area continue to decline, you may now find yourself selling for less than you could have, months ago!

How can I avoid the type of agents who “buy” listings?

 1) First, ask all of the agents you interview for a CMA (comparative Market Analysis). Having accurate and current comparables will help you ensure that you understand the true market value of your home. If after viewing these comps, the agent still suggests a much higher selling price, you may be dealing with agent who wins listing appointments by offering sellers an unrealistically high selling price.

 2) Ask each agent for three references. Call these references and ask them about their experience with this agent.

 3) Ask to see the agent’s sales listings for the prior year (they can easily print this out for you from the MLS). Check each listing for the number of days on market and any price reductions. If you note very long days on the market or an excessive number of price reductions, you may be dealing with an agent who over-prices their listings.

 4) Last, do not fall prey to your own greed! We all want to make as much as we can from the sale of our homes, but look at the current market; not what your neighbor sold their home for two years ago. Real estate market conditions change constantly, and the best pricing gauge is a current set of market comparables for your neighborhood.

To recap, work only with an agent who will provide you with accurate market data and who will help you price your home correctly. You will save a lot of time and aggravation, and more importantly, you will be able to sell your home for the highest amount possible and in the least amount of time! I will  be happy to provide you with a fee estimate of your home’s current value. Be assured that I will suggest a realistic price range that will attract buyers and get offers on the table!

To find out more about how I can help you sell your home, visit my web page here or call me for more information at (949) 290-3263.


Ron Denhaan is a Realtor in Orange County, CA.  He can be contacted at (949) 290-3263 and at   Please visit his web site at:

The trouble with Lease Options

Lease options are not what they appear to be. They are often a "wolf in sheep's clothing".Lease-options, also known as “rent-to-own”, “lease-to-own”, “rent-to-purchase”, etc, are a type of real estate transaction whereby the tenant/buyer initially leases a home or property for a specified period of time before purchasing it.  It is really a conventional lease and a purchase, tied together with an option agreement or contract. For the privilege of the option, the tenant/buyer will pay an option deposit, which can be $10,000, $20,000, or much more (this is addition to a security deposit and monthly rent).  The option deposit is typically applied to the buyer’s down payment.

The process appears very attractive to many hopeful buyers, who see a lease-option as a short cut or back door to home ownership. This is especially true for younger buyers and those with little cash, low income, bankruptcies, or poor credit. Unfortunately, a lease-option is completely unsuitable for these types of buyers and entering into one will only deepen their financial woes.

First off, ask yourself why a home seller would even offer a lease-option?  The answer is because it is more of a “win-win” for them than for the buyer.  Lease-options are typically offered as a sales gimmick to help move a home that cannot sell. This may be because the seller would be “short” if he sold at market value, or perhaps the seller simply wants to sell at a certain price. For the seller, there is little down-side. The seller either parts with the home for his price, which is often well over market value, or in the worst case, leases the home out for a year or more and then collects a large option deposit, when the tenant/buyer fails to execute on the purchase.

So why do lease-options seem so attractive to buyers?  Mainly because many buyers are as un-knowledgeable about the lease-option process as they are ill-prepared for home ownership. To illustrate, here are some lease-option myths:

1) I will “build equity” through a lease-option, because the rental payments apply to the purchaseWrong!  I have yet to see a single instance of a homeowner offering this. At most, I have seen a handful who will offer to apply a small percentage of the rent towards the purchase, but only if the rent is increased by the same amount!

2) The seller will finance the purchaseWrong!  When your lease period is up, the seller will expect you to “execute” the purchase or give up your deposit.  This means you will have to go out and get a loan, plus put up the remainder of your down payment (over the amount of your option deposit).

3) It’s a great real estate technique for people with poor creditWrong! If you have poor credit, it is unlikely that you will improve your financial situation substantially in a year or two.  With poor credit, you will not be able to qualify for a loan; therefore your option deposit will be at risk!

4) It’s a great way to “test drive” a home before buying itWrong! The number of homes offering lease-options is miniscule — Real home choice is virtually non-existent.  Also, if you decide you don’t like the home you will pay a heavy price for your test drive (your entire option-deposit).

5) I will have several years to improve my credit and save for the down paymentWrong!  Most lease-options are for 12 to 18 months only!  You are unlikely to meet your financial goals in such a short time period. Plus, no seller will risk a longer term, as the market price could fluctuate wildly.

6) I may get a great deal if the home price rises during the option periodWrong!  More than likely you will wind up in a law suit when the seller reneges on selling at the original offer price. Many of the lease-options that wind up in Court, do so because of home price fluctuation or because the seller refused to return the option deposit when the buyer fails to execute.

7) If the value of the home drops substantially during the lease period, the seller will agree to return my option deposit (when I refuse to buy the home)Wrong!  He will gladly pocket your deposit, in full!

Considering all of the above, I’m wondering why I see so many Internet articles or Blogs stating that a lease-option is a “great way to get into home ownership”, “a  great way to build equity”, or that it is “ideal for people with poor credit or little down payment”.  I have to assume that the authors, be they fellow Realtors or others, are doing so for their own benefit. It seems to me that they should be letting you know that close to 95% of lease-options fail to consummate in a successful sale (see link by John T. Reed, below). This means that the vast majority of people entering into a lease-option wind up poorer and homeless at the end!

So what should you do instead?

1) Consult with a lender up-front rather than at the end of an option period. This is the first step you should take and you will save a lot of heartache if you find out that it will take more time than you thought to get qualified. I have several lender referrals on my web page here:

2) Rent, and rent cheaply. When you are ready to buy, you will have saved money and you will have the entire market of homes for sale to choose from, rather than a dozen or so in your city that are offering a lease-option.

3) Save money and work on improving your credit. Set your own timetable for doing this, rather than being forced by an option time period.

4) Check market values by asking your Realtor to run “comps”. You may find that the home offering that attractive lease-option is very over-priced.

5) Be realistic. If you are not ready to buy because of your financial situation, don’t try to achieve home ownership through short cuts, gimmicks, AITDs, a loan take-over, creative financing, and other risky techniques.  You will only find yourself far deeper in the ditch!

To recap:  If you are a buyer, understand that  lease-options are not what they appear to be. Like my illustration, think of them as a “wolf in sheep’s clothing”.  They are largely of benefit to a seller with little or no benefit to you, the buyer. If you are a buyer who is financially challenged by credit issues, lack of a down payment, a short sale, foreclosure, a bankruptcy, etc, do not look for a “magic bullet” or quick solution to home ownership. The path to true home ownership will be challenging and time consuming, but in the end, it will be obtainable!

PS – Here is a link on lease-options from a real estate  investment advisor that I greatly respect. John T. Reed offers a unique perspective on lease-options that you will rarely hear from many Realtors or others who might profit from getting you into an option contract:



Ron Denhaan is a Realtor in Orange County, CA.  He can be contacted at (949) 290-3263 and at   Please visit his web site at: