How does a lease option work in real estate?

A lease option is an arrangement in real estate that allows tenants to not only rent a property but also gives them the right to purchase it at a predetermined price within a specified timeframe. This structure benefits both tenants and landlords; tenants have the opportunity to live in the property while considering a purchase without immediate financial commitment, while landlords have a potential buyer secured for the future. The purchase price is usually agreed upon at the beginning of the lease, protecting the tenant from market fluctuations during the lease term. This arrangement can be particularly appealing for those who are not yet in a position to buy the property outright but are interested in a future purchase.