Hi Marisa, I think you'll be hard pressed to find a rent-to-own deal that does not require a non-refundable option fee. But that doesn't mean it's not a safe transaction. What you are purchasing with that fee is the exclusive locked-in price and terms for a specified time period. Are you able to refund the seller of the lost time he/she reserved the home for you at those designated terms in the event you don't buy? Of course not...that would be silly! Just like when you buy an option on a stock...it's non-refundable...unless of course you choose to exercise that option therefore realizing the value it secured for you.
Just renting with the first right of refusal has it's own risk as well...what if at that specific time the owner has a buyer and at that point you are unable to purchase whether it be due to financing or just bad timing.
Rent-to-own/Rent with an option is highly customizable and in response to "What if the property loses value": you can easily add a clause specifying that the terms will continue until the property does appraise for the contracted price unless some other arrangement is reached (i.e. the seller having the option to reduce the price to the appraised value for example). This way your option fee still counts towards the purchase and is not "lost".
There's always advice to work with an agent and/or consult an attorney, and I'll further that advice to say if you're working with an agent...make sure they specialize and/or have lots of experience with lease options and same with the attorney you have who reviews the contract. Just like with doctors...there's all kinds and you wouldn't go to a Pediatrician to advise you on brain surgery.