Back to Results
"Rent with option to buy." What does that mean? Are you locked in to buying? Someone with knowledge please explain? Thanks!
Please enter a valid email address.
Stating a discriminatory preference in an advertisement for housing is illegal. If you think this content is discriminatory or otherwise inappropriate and feel it should be removed from Zillow, please let us know by completing the information above.
We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.
You rent, and after the lease, you have the OPTION of buying. The money you paid in rent is deducted from the price.
Rent with option to buy: When a delusional seller meets an unqualified buyer.
"When a delusional seller meets an unqualified buyer"
that pretty much describes the current market
qualified buyers are waiting for lower prices
You may be paying extra for the option to buy at a fixed price. This makes absolutely no sense in a falling market. And worse case, it can be a scam -- Beware!
At least it's an option, and not a rent "to" own. I would say that if you are going to make this agreement, here are a few caveats.
#1. Make sure that it is clearly stated how much of your rent goes towards principal should you choose to exercise your option.
#2. Before you exercise your option, have a home inspection.
#3. Have a CMA or an appraisal done before you exercise your option, because the price that you agree to when you leased, may not be the "fair market value" for that time.
#4. Have an attorney look over the initial agreement, they can get complicated.
Instead of renting with the option to buy, why not just buy the property now? The price is not going to be any cheaper since you have to agree to it today, and interest rates could be higher when the lease is up.
"When a delusional seller meets an unqualified buyer. "
Very funny! But I am qualified, just want to wait 2 more years for various reasons. It seems more and more rentals I'm interested in are for sale and for rent...meaning the owner really wants to sell but is considering renting if they can't sell. Whenever I go look at the place, they push the "option to buy" thing. Just curious what I'd be getting myself into. Thanks for the input guys.
Why wouldn't you just "rent" a place without conditions? At the end of the lease, you'll still have the "option" to buy any house you can afford (including the one you're living in, if they really want to sell) -- and probably at a lower market price.
P.S. pricedout...typical percentage of paid rent to go towards the principal is 75%, just in case you were wondering what is typical.
Alps, it just doesn't make sense for ME to buy this year.
Jimmy, I'd rather rent a place without conditions. I'm picky though and looking for a place like I would buy if I were buying now (great neighborhood with room for expansion). And the best places at the moment seem to be held by owners who really would rather sell.
A "lease-option" contract provides for a lease or the rental of the property with the right to purchase the property upon or prior to the expiration of the lease term at a pre-agreed price and terms. The tenant/potential purchaser is required to front non-refundable "option" monies in exchange for the right to purchase at the future date.
If the tenant/potential purchaser exercises their right to purchase, the option monies are applied toward the down payment or purchase price.
Lenders allow only those rent moneys paid over and above verifiable market rent to be applied toward the purchase. All advance funds must be fully documented for confirmation.
Lease-option contract is not the same as lease-purchase contract
In an appreciating market, a lease-option is great for the tenant/purchaser because they have locked in today's pricing for tomorrow's purchase.
In a depreciating market, a lease-option is rarely exercised unless renegotiated.
Please enter text in the "Enter the text to display" field.
Please enter text in the "Enter URL" field.
Please enter a valid URL.
Please insert a video embed only
Zillow Advice depends on each member to keep it a safe, fun, and positive place. If you see abuse, flag it. More on our Good Neighbor Policy.