Sometimes a buyer will find a seller willing to rent their home to the buyer for a period of time, say one year, and then consummate a closing for the purchase of the home at that time. The seller gets a contract for the sale of his home, some income from the property for the year, and can move on. The buyer gets control of the home and has time to fix credit issues that might be stopping him from getting a loan, allows time to save up money, or to sell another home.
Sounds good right? Well, it can be, but statistics show that very few lease / purchase deals survive to the intended closing date. Many times the buyer has credit issues that cannot or will not get repaired in time for the closing date. If that happens the seller is forced to extend the contract time period, locking them in to being a landlord for an extended time. If this is not done, the buyers lose out and will need to move out after having added wear and tear to the home. In some cases they will need to be evicted.
The buyer usually has to provide a large, non-refundable earnest money amount to the seller upon move in that is at risk if the deal falls apart. I know some sellers who routinely put buyers in a home with a lease purchase and hefty non-refundable earnest money deposit, knowing that in a year they will not be able to close the deal. He tosses them out and starts over, pocketing the money.
A lease purchase deal can be effective if it is short term and not driven by the buyer's credit status. If the buyer has a home for sale;e, he can do a lease purchase for 3-6 months, sell his home, and take the funds from that sale to complete the purchase of their new home. In my opinion, lease purchase deals are a difficult way to buy a home at best.
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