Posted by chris on January 19, 2000 at 03:53:36:
Look at it this way. You are providing a solution right now for the seller and they do not have closing costs to pay until you decide to exercise the option. Also, as you say they may not be able to afford to pay a commission if the house is worth $100K with a mortgage of $98K on it. A lot of things are going through a desperate seller’s mind.
Some people cannot save for whatever reason. Look at this from a different example. A credit risky person needs a $1000 sofa. They will never be able to save the money to come up with a partial payment and they do not have a credit card. However, they can go to a rent to own store and with affordable monthly payments for a long time finally own that sofa. It may cost them $1800 or more and they might not be able to make all the payments but it is the only chance they will have to own a sofa.
In other words if the tenant buyer had a choice they would not need investors to l/o a house to them. A lot of people want to try out a house first before committing to buying it. There are a lot of reasons.