Leases with an option to buy allow sellers to rent homes in down markets when they may not be able to sell. Real estate agents also benefit because they earn commissions both when the buyer pays the option fee and when the home sells.
Buyers benefit from lease options because they can start living in the house before they can afford to purchase it. This gives the buyers time to improve their credit and save money for the down payment. If they find that the home is not right for them, they can choose not to execute the purchase option and simply move on when the lease expires.