I assume that when you say you are looking for opinions, you're really asking if it's a good idea to consider that. With that in mind, I'll just say this. That depends on your situation.
Lease purchase and an option are two different things. So I'll address one, then the other.
An option is where you pay a fee to the seller for an option to buy the property at a future date for a specific price. If you think that the price you are getting is less than what the property will be forth at that future date, an option can be a very good thing.
A lease purchase would mean you're renting. But some of your rent money is going towards down payment. Depending upon the language in the contract, you may actually be entered into a purchase and not just a lease. It could also be a lease though, where the agreed upon portion of your rent money is going toward down payment and is being held in escrow. Depending upon the language in the contract, you may or may not get all your money back should you either default on your lease, or decide at some future date you no longer want to lease it.
The best thing I can recommend is to consult an attorney. In the state of Illinois, Realtors can't act as attorneys and give you legal advice no matter how knowledgeable they may be. Unless they hold a license to practice as an attorney, they can get in lots of trouble for pointing you this way or that. So by all means, use a Realtor to help you find a place and negotiate the price. Especially in todays market, there are so many places to consider, you need that more than ever. But talk to a real estate lawyer about the ins and outs of a lease purchase with or without option to buy.
I know several attorney's in the Chicago area. If you need a referral, drop me a line.
The truth of the matter is that most owners and tenants are unfamiliar with the details regarding such a transaction. There are several savvy ways to structure an option to buy lease agreement. It is some extra leg work, but having an option at your disposal seems like a no-brainer assuming the owner agrees to favorable terms.
Consider that in this depressed real estate market, most homeowners are willing to listen to anything.
Downturn Makes Rent-to-Own More Appealing
As the housing downturn continues, rent-to-own contracts are becoming increasingly popular.
Rent-to-own allows buyers time to see if they like the property and time to repair their finances and get a mortgage.
Fritzi Barbour, an associate with Coldwell Banker Caine in Greenville, S.C., says many practitioners are unwilling to recommend a lease-to-own arrangement.
The negatives from a buyerâ€™s standpoint: less flexibility than a rental situation without the permanence of owning and the potential loss of a hefty down payment if the deal doesnâ€™t close.
The down side from the sellerâ€™s vantage point: the possibility that the buyers will be unwilling or unable to buy, but their presence make a purchase by someone else unlikely. Also, the seller doesnâ€™t get the money right away, nor is there real closure to the deal.
Source: the Wall Street Journal, Sarah Max
I disagree. Rent to own is a valid way to make a deal these days. If you are a buyer and can not get a mortgage right now, why should you still keep renting and not be able to take advantage of the discounts in today's market. You can build equity. However, it is not an easy path, it takes the right circumstaces of buyer and seller. You need to be income-qualified, able to make payments, have a down payment and willing to correct credit or do whatever to get a mortgage within 6-12 months. Also realize, while you can take advantage of the market discounts, you are not going to get a steal, you are not in the best bargining position. But prices today are great and you will have equity in no time.
Sometimes it does require a desperate seller, but so what, most sellers are desparate today. And there are investors and rent to own companies spouting up everywhere. Because it is a growing trend in the market place. Look at it this way - you can jump now and get a good price and have your monthly payments going to something or you can wait and maybe pay more. It doesn't always work, but it is worth a shot. Check out my blog for some rent to own tips and let me know if you want some guidance.
In my experience these deals are put together between desperate seller and trusting but clueless buyers who put up non-refundable money up front that they lose when they turn around in a year and realize the price they agreed to pay is way too high so they walk- or worse they buy and end up losing the home to foreclosure.
Always consult a proven and knowledgeable Realtor before making any real estate decisions!
Why would a seller want to lock into a price for which he/she has no idea whether prices might be higher in 12-18 months? Why take on a tenant with poor credit and 'hope' that things change in 12 months or so? How do you get a rent to own tenant out if they cannot meet the terms of the contract? If they have an attorney in the family that might help.
For the buyer/tenant just rent until you can afford a mortgage and then go buy something. For the seller/landlord either rent until the market changes or drop the price and get on with your life. Rent to own is full of potential problems and I doubt that you could even find one in the downtown area.
I think for anyone to really discuss this with authority you need to provide some more detail about your own circumstance and what specifically you are trying to find out.