In a soft real estate market, sellers who need to sell unfortunately pose a real danger for house hunters who need to buy.
Before buying your dream home, do your due diligence.
With a little research, doctors, attorneys, teachers, pilots and plumbers -- good people wanting their own homes through lease to own -- do not have to become victims of scams and gimmicks.
1.
Confirm ownership of property offered as rent-to-own.
- Who really owns the home offered as rent to own.
Be certain the person or company offering you a lease to own opportunity is legally able to make the offer.
Some scammers who don't have a legal right - that is an "assignment" clause - sublet their option.
If the owner of record finds out and opposes, you may lose.
2.
Don't fall for the "We're not Realtors" line.
- Many knowledgeable and honest "non-licensed" real estate investors help families with home ownership.
However, the unlicensed, honest investors are the exception, not the norm.
Therefore, finding one is challenging at best.
Why is it that many real estate investors without a real estate license and without any accountability for misleading comments or actions think it's okay to state, "We're not Realtors?" Hmm.
If contract problems arise, you may lack a legal foot on which to stand.
3.
Beware of FSBOs (For Sale By Owners) Offering Rent-to-Own.
- Unfortunately, some well-intentioned "For Sale By Owner" sellers don't know the first thing about selling a house.
They simply want to avoid paying a real estate commission.
When their house sits empty with no buyers, desperate (and ignorant) sellers now decide to try renting to own...
something about which they really know nothing.
They know nothing about selling a home the traditional way; now, they're now considering leasing to own can cause you a legal nightmare...
unintentionally perhaps.
They don't know what they're doing.
4.
Don't fall for the "I'm a Realtor; I can help you" line.
- On the other hand, Realtors want to get paid.
Some Realtors will claim expertise in any type of real estate transaction just to get a commission.
Does the Realtor specialize in lease to own home opportunities? Realtors do not take one second of training in putting together lease to own contracts.
They're licensed but ignorant of lease to own contracts.
Dangerous indeed.
5.
Get the future purchase price in writing.
- This is BIG...
don't accept a contract with a "to be determined" future purchase price.
Lock it in before signing anything.
Many families have lost their dreams by not locking in such an important piece of information.
6.
Read all paperwork very carefully before signing.
- This is self explanatory.
Pay a real estate attorney to review the contract and advise you.
If it's a great deal, it will be there in a couple days.
Shocking but true, many people facing the biggest financial decision of their lives refuse to pay a couple hundred dollars for a real estate attorney.
7.
Don't Rush.
- Again, this is self-explanatory.
However, some professional sales people try to create urgency.
Sign now.
Give money now.
Take your time...
don't rush.
8.
Do the math.
- Can you afford the home you desire? Many investors are setting people up for failure by advertising very low monthly payments, luring victims to failure.
The investors know the low monthly payment advertised will get interest.
They also know that the interested people probably won't be able to afford the payment at the end of the lease term.
Presto, they get the house back and keep the money.
Nice racket, huh? 9.
Separate the facts from the "BS".
- Ask lots of "What if...
" questions.
For instance, what happens if you're not able to get financed at the end of the term? What happens if the house is worth more at the end of the lease term than the price on which you've agreed? What happens if the house doesn't appraise for the agreed-upon sales price? 10.
Don't fall for the "rent credit" gimmick.
- It's a GIMMICK, if not a scam with some "rent to own" people.
How? First, the monthly payment must be comparable to the monthly payment paid by a person with a mortgage or the underwriter will not accept it.
Second, the $200 monthly rent credit x 12 months or $2,400 is simply added to the already inflated sales price.
It's a forced savings plan with money paid "upfront.
" Doctors, attorneys, teachers, pilots, laborers, nurses, and pastors know the benefits of leasing to own - they're controlling a home with little money out of their pockets.
Bad credit is not the only reason wise people choose to lease to own.
Do your due diligence (that is research) before pursuing your new lease to own home - avoid the scams and gimmicks.