In the St Louis area, we negotiate 2 contracts - the first is a rental contract from date x to date y. The second is a purchase contract where the purchase date is the ending date on the lease contract. The buyer is responsible for doing all their inspections up front and those are negotiated up front so everyone knows the status of the home prior to the buyer/renter moving in. The appraisal and the loan commitment date, however have to be within a month before closing, which leaves the seller very vulnerable to what the property values for the area will be when it is time for the second contract to kick in since the sales price is negotiated up front.
They are also vulnerable, because if the buyer isn't able to qualify for a loan when the lease ends (and sometimes that is because the rules for credit scores, how much money you have to put down, etc have changed not because the buyer didn't fix the issues that initially caused them to rent rather than buy right away), they now have a tenant in place, with tenant rights that they have to get out of the home in order to sell it to someone else. I have seen it get to the point where the buyer refused to leave and the seller had to go through the process of evicting them, plus the seller then has to go through the home and make it "show ready" again before it can go back on the market (paint, clean carpets, etc).
On the buyer's side, typically the homes that are set up for lease purchase are the ones that have a bit more difficulty getting sold. Often they have an "issue" that has prevented regular buyers from finding them attractive enough to put in an offer - it may be a wet basement, or a horrible backyard, or they make be on a very busy street or any number of other things. The really nice homes, esp since we are back to a sellers market in much of the greater St Louis area, are selling quickly and the sellers don't need to deal with a lease purchase contract offer. That means that the buyer who choses to put themselves in a lease purchase contract starts out by limiting the homes available to them to ones that have issues that will 99% of the time still be there when they get ready to sell the home in the future.
Bottom line, I highly encourage people to fix their issues first, then buy a home as a regular purchase so they can consider all the homes in their price range, not just the ones that have issues
if you can't qualify now for a loan, or need to save up money for a down payment, I suggest you simply rent and deal with those issues for the time being.......then buy a home when you're financially sound and ready to move forward !
I have just worked on a lease/purchase property recently. What I found was many real estate agents will tell you it is very difficult. In my opinion it is not. There are many sellers out there that have not considered leasing there properties until a buyer can close, but will! All an agent has to do is ask.
Make sure you comepletely underdtand what it involves.
I ifnd that many consumers think it simply means you pay rent, and if you decide to buy the house, all the rent you paid is put towards the purchase.
It (usually) does NOT mean that!!
Usually, there is NON-REFUNDABLE money (deposit) the buyer must put up, or "option"money - you are paying for the right to exercise your option to buy the house at a later date. The seller must sell at the agreed upon price to you - you do not have to buy, but you are paying for the right to walk away - that money will be forfeited if you do not complete the purchase for whatever reason.
If you don't have money to use as a deposit, usually an amount of rent OVER and ABOVE the normal rent is paid, and that overage is applied to the purchase.
You lose that money if you do not buy the house!
So....if you cannot qualify NOW for a loan, for whatever reason, be very certain you will be approved later on.......or you will lose your deposit.........also, be sure the seller is financially sound and not underwater with the mortgage.
Make sure you are protected so that the contract stipulates the house must appraise out at the price you agreed to (that sale price is usually decided now, not at the end of the lease).
I could go on and on, but I won't - just warning you to make sure you really understand what is involved.
If the agent you work with is unsure, or you don't have an agent - please seek the advice of a real estate attorney before signing on any dotted line!
You can visit StLouisPremierLofts.com, Highrises.com, StLouisMissouriHomes.com for current listings and to see learn about living in the City if that is an option you are considering. Any Realtor can help you by searching the MLS. I set all of my clients up on Listingbook so we can work together on finding a great place to live.
Hope this helps.