Many people who can’t afford to buy a home, or think they can’t, are attracted to lease purchase agreements, a lease with an option to buy the home.

I saw a lease purchase ageement several months ago from one of the largest property managers in the Valley that was so skewed in favor of the landlord that it was embarrassing. Sure the property manager represents the landlord, but this lease was ridiculous.

The renter paid $1000 or $2000 up front that would go toward the purchase price if the renter exercised the purchase option. None of the rent went toward the purchase price.

The purchase price would be determined by an appraisal, that’s fine, but the worst part was that the renter/buyer would pay all of the seller’s closing costs and a 6 percent commission to the property management company! So the renter/buyer would have to pay the market price PLUS about 8 percent if he were to exercise the purchase option.

The renter could buy another house in the neighborhood and pay only the market price because that seller would very likely pay all the seller’s own closing costs and the brokerage commission.

The renter/buyer became the least likely person in the world to buy the leased home because any other buyer who waltzed in would only pay the seller the market price while the seller would pay the seller’s own closing costs and the brokerage commission.

I assume many people attracted to lease purchase options are first time home buyers and they may not know the seller usually pays those particular fees.

Or, more likely, the renter/buyer signed the lease purchase agreement without reading it.

Just be careful, some lease purchase agreements are ABSOLUTELY TERRIBLE for the renter/buyer.

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