What is a "lease option"?

A lease option is fundamentally an agreement that gives a tenant the right to purchase the property at a predetermined price during or at the end of the rental period. This structure allows the tenant to live in the property while also having the opportunity to buy it, providing the potential for homeownership without an immediate upfront investment. Often, a portion of the rent paid may go towards the eventual purchase price, making it a strategic financial arrangement for those considering buying a home but who may not yet be ready to make the purchase.

Understanding the nature of lease options is critical, especially for real estate agents and tenants, as it involves both rental agreements and purchase contracts, often requiring careful consideration of the terms and conditions to protect both parties’ interests. The ability to lock in a purchase price and take time to secure financing or improve credit can be highly beneficial in a fluctuating real estate market.