The present economy has caused several changes transpire in the way a few particular businesses function.
The sector of real estate is not excluded.
Bad credit has left many people unable to qualify for a mortgage. Because of this, lease options and lease purchases have become more and more common. Sadly, this has lead to more and more fraud and scams.
Caution is important when you lease option or rent to own a home. If not cautious, the whole process could be a scam in order to take your money.
In reality, almost every home owner is struggling with mortgage and bill payments. Everyone is interested in ways to cut down on expenses and save money. The theory of desperate times call for desperate measures seems the theme for everyone facing tough times. Many are desperate to keep themselves out of the red financially.
Recently my parents witnessed this. They signed a contract for a Lease Option and were awaiting the move in date on their dream home. The realtor was friends with the out of state owner and was even presently living in the home.
Before the move in date, we requested verification that the mortgage was current as required by the contract. At this time, we discovered that the mortgage was behind almost $16,000 and that the home was in foreclosure. It was eye opening to discover that the owner and realtor were cohorts to attempt to take my parents money. They were planning to collect my parents money, the option fee and rent payments yet still allow the house to foreclose.
The bottom line is that if you renting out a home to own it in the future, you need to be very careful in order to make sure you are not being scammed. Always make sure that the owner is not behind on the mortgage.
One thing you need to be very careful of is making sure that you are actually working with the property owner, or a company that is working on behalf of the actual property owner.
There has been a increase in people advertising homes that when in fact they have no relation or legal right over the property. This can happen locally, through small classified ads or a sign in the yard. Most common, however, is the craigslist scam.
The craigslist scam is becoming more and more common. What happens here is that someone overseas copies the photograph of a home that is listed on the market. They then advertise the property at an extremely low rate to attract the attention of potential buyers. Usually they will use family and religion to try to build a relationship. They will say things like they are overseas on missionary work and all that they want is for someone to take good care of the home. Then they will ask you to send them money directly, without you ever seeing the inside of the home! If this happens to you, start running!
Although Renting to Own or Lease Optioning a home is a great solution if you can not qualify for a mortgage, you need to be careful! Making sure you are working with the owner or their representative and that the mortgage is current are great steps to protect yourself!
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