I recently experienced the same sort of issue. Because of the poor housing market, all the pressure on "companies" "helping" the homeowner, and the difficulty in getting financing, YOUR situation is the
* * * * * UP AND COMING NEW SCAM!!! * * * * * *
We were in the process of negotiating a contract for a LEASE PURCHASE which is different from a LEASE OPTION or RENT TO OWN. I was familiar with Lease Options but had never heard of a lease purchase. Because we were still negotiating, we were relying on our real estate agent's advice and hadn't yet talked to our attorney. The Illinois contract has a 5 day attorney clause but with this sort of situation, you need to have more than one contract. Also, our attorney clause doesn't allow you to alter the "price". I believe that if I didn't have the sort of INVESTIGATION SKILLS that I do, we would be in a similar boat as you right now. Except for the fact that Patti Pereyra (our Realtor and contributer here on Trulia) also gave us some exceptional advice.
Patti's most important advice was that this Lease Purchase is just like a traditional purchase in terms of the "out clauses" and if any contingencies were not met, the buyer could get the Earnest Money back. In our case and possibly yours too, the buyer had a financing contingency that didn't expire until after loan approval two years in the future. We were in the process of negotiating an iron clad contract that if for any reason the buyer couldn't close, we would not only keep the Earnest Money but also any rent and ALLOWANCE TOWARD THE DOWN PAYMENT.
The reason I think this might be your situation too is because of the "ESCROW Money." With an OPTION, the buyer gives you a non-refundable amount of money for the "Option to Buy" OR NOT TO BUY your home in the future. The "EARNEST Money" is sort of the "down payment" which if all contingencies are met and the buyer then defaults, the seller is able to keep the EARNEST Money. If however all contingencies are NOT met, the buyer gets his EARNEST Money back or "refunded". Now, the ESCROW Money is the portion of the MONTHLY PAYMENT that is NOT considered RENT but is instead applied toward the "down payment" at the time of closing.
OK, is that all clear?
So, here is the SCAM PART . . .
They live in the house for two years and then they use the "out clause"/contingency (such as not getting loan approval or the appraised value came out below the contract price) or they decide not to go ahead with the Option to Buy. Since they never have any intention of actually buying the house in the first place, the contract is probably for full asking price or better yet higher ("Oh, in 2 years the house will be worth 10% more so we are offering you 10% over asking price.") which got the seller and the agents all excited. Then they say that since they are giving you full or higher than asking price, that the seller should give them a full or higher credit toward the escrow/down payment.
Let's say your house is really worth $270,000 but you are asking $300,000. Your mortgage payments are $2000/month (principal, interest, taxes and insurance). The going rent for your home or similar is $1500/month. During the two years of the buyer "renting", the seller is paying down the principal (hopefully). Since the buyer doesn't actually own the home, so why should he pay your taxes? Basically, why should someone pay more rent than the going rate? If the seller is "losing money", that's his problem. This is all part of the negotiating set up.
The buyer has 10% for the down payment and wants to accumulate 10% over the next 24 months in order to qualify for a conventional mortgage. They offer you $300,000 for the purchase price and monthly payments of $2000/month. This means the Earnest Money would be $30,000 and the Mortgage Escrow needs to be $1250/month ($30,000/24). So, you are able to pay the $2000/month but they are only paying $750/mo in RENT.
Two years go by and they try to get financing. The house only appraises for $250,000. The financing or appraisal was an out clause. They say, no we don't want it if it's only worth $250,000, give us our $30,000 Earnest money back PLUS the $30,000 in monthly escrow. Not only did you not sell your home but now you have to give them $30,000 out of your pocket essentially.