In my market, the Lease Option technique is used mostly by investors.  They usually sign a 2 year lease option with the seller with a "Right to possession", which means that they can rent-to-own the same house to somebody else for higher rent.

A typical buyer in my area does not use the lease option.

When I do them for sellers Gloria, I usually ask for a very large non refundable deposit.  If the purchasers do not buy within whatever time frame you decide the seller keeps the deposit, in the meantime the seller still gets the tax break and liabilities of homeownership.  I tend to use this for buyers when they have credit issues.

All the TV investor wannabe millionaires are urged to ask for owner financing of some sort. If they can get a property below normal rent value then they have made some money.  There aren't too many of those around here.  For them it is a phone call and a numbers game just as it is with FSBOs.

Gloria,

If you have a buyer client that wants to do a lease option and has (preferably) 10% down that is a very good thing. My suggestion? Find them a home that they like (just as you would any buyer) and buy it for them using their down payment money. Then lease it to them with the option to purchase for a rent amount that is slightly higher than market rent but lower than their potential payment might be if they bought it themselves. Give them a $100 rent credit for every month that they pay on time. Require them to maintain the property, take care of all little things, and notify you of anything major. Keep the water bill in your name and pay it so you know that it is being paid.

Negotiate the future purchase price. On price if they purchase within 12 months. One if they purchase within 24 months. Make sure the house is in an area that is not declining in value. The house will need to appraise for whatever you agree to sell it for.

When the buyer exercises their option to purchase their down payment becomes their earnest money and is written as such on the purchase agreement. They will also get the rent credit money.

Sometime during the lease help them get their credit cleaned up or introduce them to a loan officer who can help them be in a position to qualify within the 24 month time frame.

For the client it is a win because they get to choose which house they buy. In other words, they don't have to settle for a house just because the seller is offering a lease option. They have someone helping them stay on track credit wise. They don't have to move again when they follow through with the purchase.

For you it's a win because you have very little money into the transaction. You get the buy side commission. You have a positive cash flow every month. You make the difference between purchase and sale price. You do not have to maintain the property or worry about them paying rent on time. If they miss rent payments you can keep their down payment and then re-option the house to someone else, get a regular renter, or sell the property. The down payment money covers the selling costs, cleaning, and minor repairs.

So, it's a chance for you to help someone get in to a house and make a little money in the process.

-Pete