The Elevated Property
From luxury homes to world-class landscapes — The Elevated Property brings you insider insights from Colorado’s high-end real estate and outdoor living markets. Hosted by real estate broker and landscape expert Chris Holthouser, each episode explores market trends, investment strategies, design tips, and the art of creating outdoor spaces that sell. Whether you’re a luxury homebuyer, seasoned investor, or outdoor design aficionado, you’ll get real-world value and expert perspective with every listen.
The Elevated Property
Lease Options Explained: What To Do When Your Luxury Home Won't Sell
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When a luxury home sits for months, a price cut isn't your only option. In this episode I walk through exactly how a lease option works — who it's for, what the trade-offs are, and how it can get you to full price without the wait.
The Loft Group - https://loftgroupre.com
Hey everyone, welcome back. I am Chris Holthauser and this is the Elevated Property Podcast, Episode 4. If you're new here, glad you found us. We're up in northern Colorado, working with buyers and sellers, mostly around Boulder, Fort Collins, Longmont, and Loveland. Kind of that whole front range corridor. And the show is really just real conversations about what's actually happening in this market, not the polished version, the real one. Today I have a guest with me. His name is Mark. Mark reached out a few weeks back. He'd heard about something called a lease option from a neighbor, went down a bit of a rabbit hole online, and kind of came out more confused than when he started. Which honestly is pretty common with this topic. So I thought, let's just have the conversation and see if we can make it actually make sense. Mark, thanks for coming on.
SPEAKER_02Yeah, appreciate it. I'll be honest. I wasn't totally sure what I was agreeing to when I said yes to this, but yeah, I have questions.
SPEAKER_00That's why we're here. Let's get into it.
SPEAKER_02So here's where I'm at. I have a house, I used to live in it, moved out about a year ago, bought somewhere else, and this house has just been sitting. We've listed it, had some showings, nothing serious has come of it. And every single month, I'm paying a mortgage on a house nobody's living in. I'm mowing the lawn on a house I don't live in.
SPEAKER_00Yeah, that's a really common story right now, especially in the upper end of the market. You know, a few years ago, 2021, 2022, a well-priced home in this area would be gone in weeks, sometimes days. Really? Yes, but unfortunately, that's just not the reality anymore. In the luxury segment, so roughly the top 10% by price, we're regularly seeing homes sit eight months, a year. I've seen properties in good locations, well maintained, priced fairly, still sitting. The Colorado Association of Realtors tracks this. Upper tier properties across a lot of markets have been running well past 100 days on market, consistently.
SPEAKER_02Okay, that's honestly that helps a little. Because I've genuinely started wondering if there's just something wrong with the house.
SPEAKER_00Not necessary, but that's always worth checking. You know, how you are presenting it, things you can improve, small things that make a huge difference. We talked about that in another episode. But to be fair, sometimes it is the price. But a lot of the time, it's not. It's a timing problem. The buyer who would buy your home at the right number might genuinely exist right now. They just can't close yet. Maybe their equity's tied up somewhere. Maybe they're waiting on a business thing or another property to move. The traditional market has no real answer for that gap.
SPEAKER_02I see.
SPEAKER_00And that's really where a lease option comes in.
SPEAKER_02Okay, so what actually is a lease option? Because I looked it up and I kept finding stuff about rent to own, and people online were saying it's risky, and I couldn't really figure out what applied to me specifically.
SPEAKER_00Right. So the rent-to-own stuff you'll find online is kind of a different world. That's usually aimed at buyers who can't qualify for a mortgage, lower price points, different situation entirely. Oh, how come? What we're talking about is different. In the luxury market, it's less about credit problems and more about timing problems. So a lease option is it's actually pretty simple when you break it down. A buyer moves into your home now, leases it for an agreed period of time, and has the right to purchase it at a price you both lock in today. They're not buying it this second, but they're committing to it. The price is set, and they're in the home.
SPEAKER_02And they're paying rent during that time?
SPEAKER_00Yes. And typically those payments cover your mortgage and your ongoing costs on the property. So that house that's been draining you every month, that stops. You go from cash flow negative to, at minimum, neutral, often a little better.
SPEAKER_02Okay, what stops someone from just living there for a year and then walking away without buying?
SPEAKER_00Fair question. So when they enter this agreement, they put down something called option consideration. Think of it like a smaller, more flexible version of a down payment. Typically around 3% of the purchase price. If they close on the home, that money counts toward the purchase. If they walk away, they lose it. Sounds interesting. So they have real skin in the game from day one. It's not a casual thing. And you know, what we see pretty consistently is that these buyers actually take better care of the property than a regular renter would, because they're treating it as their future home. They're invested in it. Literally.
SPEAKER_01That's something I wouldn't have thought about. So it's kind of a more motivated tenant.
SPEAKER_00Much more motivated. They're not renters in the traditional sense. They're thinking of it as their house. They just haven't officially bought it yet. Got it. And the lease period can be structured around whatever makes sense. We've done anywhere from a few months to several years, depending on the situation, and both sides are protected throughout. The legal structure is set up from day one. The seller's equity is locked in. It's not a handshake deal.
SPEAKER_02And who is this actually for? Like, is there a seller profile where this makes sense? Because I'm wondering if I'm even the right fit.
SPEAKER_00Honestly, there are a few situations where this tends to click. The most common one we see is someone like you. You've already moved on, you've got strong equity in the home, you want a good price, but you don't want to wait forever, and you don't want to cut the price just to force a sale. That's probably the sweet spot.
SPEAKER_02That's me indeed.
SPEAKER_00Not just you, many people are in this same situation. But we also see it work for sellers who have less equity and are worried a traditional sale won't cover everything after commissions. Or sellers who've been on the market a while and just don't want to take another reduction. And then there are sellers who want to keep things private. No open houses, no strangers walking through, nothing on Zillow. This can work entirely off market. For some people, that matters a lot. Can you walk me through what this actually looks like in practice? Like a real scenario? Yeah, for sure. So picture a couple. I'll call them David and Sarah. They built a home up in Boulder a few years back. Beautiful property, around 1.2 million. Career opportunity came up in Denver. They relocated, bought a new place. Now the Boulder home has been on the market for nine months. They've had a handful of showings, a couple of offers that weren't serious, and they're paying two mortgages every month.
SPEAKER_02That's me again.
SPEAKER_00It's a lot of people's situation right now. Okay, so here's what happens. We find a qualified buyer for that Boulder home. Let's say it's a family. They love the property, the area. The schools are a big part of it. They can absolutely afford the home, but they're sitting on a property in Texas that hasn't sold yet, and their equity is tied up there. Under a traditional sale, that deal doesn't happen. The timing doesn't line up and both parties walk away with nothing.
SPEAKER_02Which is probably what happened with some of my showings, honestly. Probably, yeah.
SPEAKER_00You know, that gap between wants the house and can close today kills a lot of deals. So under a lease option, that Texas family moves into the Boulder House now. They put down their option consideration, 3%, so roughly $36,000 in this case, and they start making monthly payments that cover David and Sarah's mortgage on that property. For the first time in nine months, that house isn't costing David and Sarah anything. And they have a buyer locked in at a number they both agreed to.
SPEAKER_02And then what happens when the Texas house sells?
SPEAKER_00Well, they close. Could be three months, could be eight. The option period gives them the runway. And when they do close, David and Sarah get the full purchase price. Not a discounted number, not something they settled for out of exhaustion. The price they agreed to.
SPEAKER_02That's music to my ears.
SPEAKER_00And when you actually run the math, factor in the carrying costs they were absorbing every month, factor in the price reduction they were probably about to make, in a lot of cases, they net more through this than through a discounted traditional sale.
SPEAKER_01I mean, that actually makes a lot of sense. Both sides got something they couldn't get any other way.
SPEAKER_00I mean, yeah. Nobody lost anything. They both got something the normal process wasn't going to give them.
SPEAKER_02So where does Loft Group come into all this? What's your actual role?
SPEAKER_00So we call this the elevated value strategy at Loft Group. It's our framework for putting these deals together in a way that actually works for the seller. And we go about it a couple of different ways depending on what the seller needs.
SPEAKER_02Okay.
SPEAKER_00In the first version, we're the connector and the manager. We find the right tenant buyer, structure the whole thing, handle the details, and the seller stays part of the arrangement. They receive the monthly payments, they keep ownership, and we manage it so they don't have to deal with it day to day. For a lot of sellers, that's the big one. The house just stops being their problem. Got it. In the second version, for sellers who really want a clean exit, we step in more directly. We essentially take over the structure ourselves. The sellers' costs are covered, they receive ongoing income, and at the end of the term, they receive the full agreed price. But in the meantime, they're fully out, not tied to the property at all. From the seller's perspective, it just feels like the house is handled. I'm done with it.
SPEAKER_02And what does the actual process look like?
SPEAKER_00Like, how does it start? It starts with a conversation. We look at the property together, talk through what the seller actually needs, figure out which structure fits. From there, we lock in a purchase price and terms, get everything documented to protect the seller's equity, and then we go find the right tenant buyer. We handle all of that. Nice. The seller doesn't have to run an ad or screen anyone. That's our job. And once someone's in place, we manage the whole thing through to closing.
SPEAKER_02Can this run alongside a traditional listing? Like if I still want to keep it on the MLS while I'm doing this?
SPEAKER_00Yes, and that's usually what I'd recommend. We can keep the home listed on the MLS while also working this path in parallel. So if a cash buyer shows up tomorrow ready to close at a great price, great, you take it. But if the right buyer needs some runway, you've got this instead of a missed opportunity. You're not shutting one door to open another. Both are running at the same time.
SPEAKER_02Okay, I have to ask the obvious question, is this actually better than just selling traditionally? Because when you explain it, it sounds almost too clean. There has to be a trade-off somewhere.
SPEAKER_00No, fair question. It's not always better. If the right buyer is out there, ready to close at the right price, a traditional sale is still the cleanest outcome. I'll always say that. That's still the best case scenario, and you should always be running that simultaneously.
SPEAKER_02So when does this make more sense than just holding out?
SPEAKER_00When a seller has been on the market for eight, nine months, when they're weighing whether to wait even longer, relist with a different agent, or cut the price again. At that point, the question isn't whether this beats a perfect traditional sale. It's whether it beats where things are actually heading. And usually, it does. Interesting. The one real trade-off is time. And look, that's real. Your equity is locked up for a period. You're not getting a lump sum check at closing next month. But it's secured, it's protected, it's generating a return. It's not just sitting there draining you. And the sellers I've walked through this, the thing they say pretty consistently afterward is they wish they'd had this conversation earlier.
SPEAKER_02Yeah, I've spent a lot of months just kind of hoping the next showing will be the one, and it never is.
SPEAKER_00I mean, that's what you're supposed to do. That's what every seller goes through. But in today's upper market, especially up here in northern Colorado, where inventory's been building and these timelines have stretched, the sellers I've seen do well, they just had more options going in. More paths available. That's really what this is. One more path. One of the traditional process just wasn't giving you.
SPEAKER_02I mean, yeah. Honestly, way more useful than the hour I spent going down Reddit threads on this. I feel like I actually get it now. And yeah, it's making me think about my situation differently.
SPEAKER_00Good. That's that's the whole reason to do this. And look, every property is different. Every situation is different. So if anyone listening is in a similar spot, the first step is just a conversation. No commitment, no pressure. We look at the property, talk through what makes sense for your situation, and go from there. You can find us at loftgroupre.com, or email me directly at chris at loftgroupre.com. And if this was useful, share it with someone who's in that waiting game right now. They'll probably appreciate it. Mark, really glad you came on. Hope you enjoyed as much as I did.
SPEAKER_02Yeah, I did. I have options now, which is great. Thanks, Chris. This helped.
SPEAKER_00Not a problem, Mark. I'm always happy to help. Okay, everybody, that's it. Thank you for listening to another episode. It's time to go. I'll see you in the next one.