Rent with Option to Buy - Good or Bad Thing for the Buyer/Tenant?

Real Estate Agent with Century 21 New Millennium

I have had several clients call me lately interested in a rent with option to buy.  I must admit I am not as familiar with these as I would like.  However, my initial reaction is that as a buyer I would be wary of them. 

So many times renters get into houses that they think they will want to buy but after 6 months realize it is not ideal.  If they had a rental option then they would lose any deposit they initially put down as well as any extra money they had paying each month.

In this market, especially where rental prices have remained pretty high I think most people could buy a much nicer house than they can rent (meaning for the same rental payment).  It would seem to me that it would be better to take a one year lease and in that time clean up your credit, save up for the downpayment, etc.  IF you still love the house you are living in attempt to negotiate a sale with the landlord.  IF NOT you are now free to purchase a home that better suits your needs.

I'm curious what are other people's opinions on lease with option to buy contracts....



Posted by

If you or someone you know would like information about buying, selling, or renting a home in Prince George's, Montgomery,  Charles, Calvert, Anne Arundel, Howard, and/or Baltimore Counties please contact Dr. Stacey-Ann Baugh of Century 21 New Millennium.


Search Homes for Sale


Donations made to charity with every successful closing!

Dr. Stacey-Ann Baugh

Century 21 New Millennium

240-481-3565 (C)

202-546-0055 (O)




Information deemed reliable but not guaranteed! 




Comments (9)

Harry F. D'Elia III
Avant Garde Residential Management Services - Phoenix, AZ
Investor , Mentor, GRI, Radio, CIPS, REOs, ABR

Personally-I like lease options. However, they must be structured as a Win-Win for both sides. Also, the lease purchaser will need assistance to build their credit to obtain conventional financing down the road.

Sep 23, 2010 06:14 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

I am a firm believer people that want  to Lease with an Option to buy, have either, no Down Payment or bad credit, hence the extra money they negotiate towards the purchase is the money they build for the Downpayment. Key is it has to be a win-win. Figure out what the market is doing is it increasing or decreasing and based on that agree to a fair price and a fair agreement.... could be an easy sale for you in the log run.

Sep 23, 2010 06:28 PM
Tim Lorenz
TIM LORENZ - Elite Home Sales Team - Mission Viejo, CA
949 874-2247

Even with a win win structure I have only seen one go through in my 24 years.  The others have all been unsuccessful.

Sep 23, 2010 06:43 PM
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

As long as rent to buy is an option that is exercised keeping both parties in mind, it's okay. (Well said, Harry, Ender - win-win!)

For whatever reason, I always feel nervous about it, Dr. Stacy-Ann.

Sep 23, 2010 06:44 PM
Melissa McKinney
Everything Pines Partners Fayetteville - Fayetteville, NC

I have to say that these are worrisome for me also.  I think as you do, lease and THEN IF you still love it in a year lets talk about it then!

Sep 23, 2010 06:47 PM
Dan Rosenberger
Harvest Realty - Westfield, IN

Unfortunately there are sellers/owners who use rent to buy to take advantage of people.  They are selling a hope of buying that might not be realistic.  The price of this hope is higher deposit or option money and higher than normal rent amount.  Then in order for the sales transaction to be successful, the buyer has to qualify and the home often has to appraise for at least a specific amount.  Unfortunately would-be buyers are drawn to these arrangements.  Each rent-to-buy is different according to the terms of the deal and the market  climate.  But the keyword here is caution.

Sep 23, 2010 10:57 PM
Richard Iarossi
Coldwell Banker Residential Brokerage - Crofton, MD
Crofton MD Real Estate, Annapolis MD Real Estate

Tracey Ann,

I'm more sympathetic to the sellers in this situation. At the end of the option period, there is no guarantee that the buyers will be able to secure financing, etc. Many reasons to legitimately get out of the contract. The sellers are still on the hook to try and get the house sold.

Thankfully, these are rare in our area, and I think that's for a reason. They rarely work the way they're intended.


Sep 24, 2010 01:28 AM
Margaret Rome Baltimore 410-530-2400
HomeRome Realty 410-530-2400 - Pikesville, MD
Sell Your Home With Margaret Rome

Dr.Stacey, I have done successful Lease to Purchase. It is more beneficial to the buyer than the seller. The buyer is the only one with an option. They can take it or leave it at the end. The seller cannot sell during that time and has no assurance that a sale takes place.

Sellers can sweeten the pie with incentives...think I feel a new post in the making.


Sep 24, 2010 08:41 AM
Mark Hitz
Keller Williams - The Colony, TX

In Texas - there is not a Texas  lease option to buy form.  If there isn't a form, there is a good reason why it doesn't exist. 

Sep 24, 2010 10:44 AM