Very simply, an Option to Purchase is just what it sounds like... The buyer typically gives some type of consideration to Purchase the home at a future date in time. There are certain requirements that need to be met for it to be a valid Option to Purchase contract.
1. There must be a termination date.
2. Terms - There must be terms of how the transaction will occur IF the option is exercised.
3. Consideration - The buyer must give some form of value for the option. This is the option consideration. In the event the option is exercised, additional consideration will be given from the buyer to the seller.
These types of scenarios typically come at a premium to the buyer. Either the price of the property is slightly higher to compensate the seller, or the monthly allotment to the purchase price in the lease portion may be lower than you might have wanted or expected. Either way, these scenarios are not right for everyone, but for the buyer with a lot of cash, but not all that great of credit, this may be a great way for them to be able to get into their dream home.
This is not to be confused with a "Lease/Purchase", or a "First Right of Refusal."
Many experts believe there is too much advantage for the person leasing the property in a Lease/Purchase agreement. (If you'd like more information as to why, Google me, send me a text or e-mail, and I would be happy to share with you exactly why.)
And a "First Right of Refusal" is not a guarantee to sell or buy a property, it is just a courtesy to someone who is interested in the property.
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