It can work, sometimes. Here’s an article detailing some of the pros and cons. Just don’t be as stupid as this dummy profiled in the story.
“I did it because I couldn’t sell my house” in Rocklin (Placer County) using conventional methods, said Leo Stewart, 48, a Pacific Gas and Electric Co. employee who now lives in Auburn. Putting his 15-year-old 3-bedroom, 2-bath home on the market in 2006, he found himself cutting his asking price as the market began to tank. After several months with no offers, he decided to try a lease-option sale using a Sacramento firm called OptionPlus Homes that specializes in such deals.
Another compelling reason to change tactics was that he didn’t want to pay the sales commission and fees associated with a traditional sale through a licensed agent, he said. [emphasis added]
So far, Stewart’s sale remains unconsummated, but he remains convinced that he’s on the right track. After one would-be buyer moved out without completing the purchase, OptionPlus found a second candidate who is currently renting the home for about $1,700 a month under a contract that calls for him to buy the place for $450,000 next year, Stewart said.
I don’t expect him to buy,” Stewart said, because the home has continued to lose value and may be only worth $350,000 now.
I don’t know what his house was worth in 2006 but even deducting a real estate agent’s 5% commission he could have received some good advice on where to price it and sold it then, rather than lose $100′s of thousands in 2006 and 2007 and an additional $100,000 in value in 2008. “Sure, I’m still stuck with a house I don’t want, and sure its value’s dropping like a rock, but at least I didn’t pay no goddam commission!”
“but he remains convinced that he is on the right track.”
Can’t argue with stupid.