Recently, here in Oregon, we had a lady that was finding vacant homes that were for sale and posing as the owner. She was advertising that she was doing lease options and meeting potential buyers at the home. She would collect a large upfront option fee and first months rent and let them move in. The problem is, she wasn't the owner, and at the next showing it was found out that she wasn't the owner and the dream of home ownership was gone along with their money.
How could this be avoided? First, if the buyers had been working with an agent, that agent would have done a little work, like doing title searches, and gotten a disclosure form from the so called owner. That in itself wouldn't have been complete protection, but since these homes were being represented by an another agent, we would have found out by talking to the other agent, that this person claiming to be the owner was, in fact, not the owner.
Now had this been a "For Sale by Owner", the buyer, being represented by an agent, would have had the protection in that the buyer would not have written a check to the seller directly, and the money would have gone through a title company that would have required proper identification to close. During that time, in most cases, the truth would have come out. If they had an agent that set this up properly, they agent would have required the option money to be paid in to an escrow fund that would only be allowed to be dispersed at the end of the option, so the con-artist wouldn't have gotten that money. Then the escrow service would be paying the mortgage, taxes and insurance for the owner and after that had all been paid, only the remaining amount would have been given to the seller. So the most the con-artist would have gotten of the money would be a couple hundred dollars instead of $5000-$6,000 from the buyer.
As you can see, if any of these buyers would have used the representation of a qualified real estate professional, who understands lease options, they would have been protected all the way down the line, making sure that even it had been the real owner, it would have been set up to so that the first thing that is paid is the mortgage and taxes before the seller!
So protect yourself and use a qualified real estate professional and you won't lose your money and your dream of home ownership. Lease options are a great way to build equity and credit while realizing your dream of home ownership.
For more information on lease options or owner financing, please feel free to contact me anytime via e-mail or by phone.
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