Do I need contracts, a lawyer, property manager or is it just a person to person thing where we have a loose agreement?

If you loose the bid, your cc is not charged. 

This is the only scenario that clearly benefits the original owner but the benefit is typically only some high rent amount.In summary, the downside for the current owner is so much greater (loosing out to huge appreciation) and more likely to happen (historically the appreciation has been outstanding) than the upside (that the tenant does not exercise the option and the owner has been able to collect higher rent than a traditional rental).I did know a couple of tenants in San Diego that had a lease options. 

One thing this time around compared to last cycle is Vegas was ground zero for all the loose loans and speculation last cycle.

Proof of funds is needed and many times you will loose your deposit if you can not close 

But when we turned on the water on the kitchen sink they had not hooked it up right, the pipe was loose and water got all over the floor and ran down into the basement through the drain lol. 

It's a loose loose anytime an out of state investor buys a property in East Cleveland.

Do you just use a “high interest” (I use that term loosely..) savings account?

What I do now is have my realtor setup a few different searches with loose criteria.

Only "improvements" add to your basis.The check you get when you close has only a loose relationship with the taxable gain.