That option is a lease to purchase agreement This is when a potential buyer rents or leases your home for fair market value AND pays additional money towards the future purchase of the home.
Let’s say someone is interesting in buying your home He isn’t financially prepared to buy a home in your price range today, but he will be ready in a few years Instead of letting the potential buy get away, you can sign a lease to purchase contract That means that he agrees to rent the home from you for a specified time period, and during that time period, you agree not to sell the house to anyone else.
In a lease to purchase contract, the potential buyer pays rent plus an additional amount towards the purchase down payment Let’s say your agreement covers a period of 2 years and your potential buyer pays you monthly rent of $1,000 plus $300 towards the option to purchase your home Over a 2 year period, the buyer would have have paid $7,200 towards his down payment.
If the potential buyer doesn’t go forward with the purchase by the time the contract is up, the down payment money is typically yours (the seller’s) to keep.
Although they’re not widely used today, lease to purchase agreements have been around for years They offer security and income for a seller who needs to move right away, and an opportunity for a buyer to turn his rent into an investment.
If this option is of interest to you (buyer or seller), discuss the specifics with your realtor and attorney, so that you can understand all the details and make informed choices as to what is best for you.