A recent question was posed about the alternate forms of "Rent-to-Own" or "Seller Financing" and that got me thinking about several problems buyers face today. First of all, the times always seem to be right for scammers and profiteers to take advantage of those people who are just trying to figure a way into a home with the only financing choices available.
I have witnessed agreements that, although they were legal (in my state and many others), were very restrictive toward the buyer's ability to actually complete a purchase considering their situation. Although many seller-financed agreements are handled without a hitch, there is also (as most are aware) the ability for the unscrupulous to take clear advantage of a buyer when they are at their weakest.
As DPA (Down Payment Assistance) programs go away October 1st, we may see Seller Financing, Rent-to-own and others become increasingly popular.
However, upon entering this arena, buyers should be very careful of what is being offered - especially by - you know - "that friend of a friend who has a house to sell you."
Remember, when it comes to real estate, the friend of a friend is not necessarily your friend so you may want to tell your friend to keep their friends to themselves and you are more likely to keep the original friend that you had! (I'm exhausted)
Make sure you read and fully understand the terms of ANY contract. If you need help, call your favorite (and competent) agent to help you look for red flags (actually, you should have an agent prior to this for many reasons , but there are times when we are presented with an offer before we are prepared). After you sign and communicate an agreement, you will be bound to it in court - especially if either party decides to litigate (By signing and dating, you are stating that you agree too all of the terms written within that document at that time. And unless there is an addendum attached - as they say, "It is what it is!"). So be careful.
If you are the buyer, you must ask yourself: "Just what is being paid when you make your payment to the seller?" "How will YOUR money be applied to the purchase you are making?" And in this market, an additional hazard would be if the seller of your new purchase is in pre-foreclosure unbeknownst (I always wanted to use this word somewhere) to you. What rights do you have then?
So you buy this house, get all your (now former) friends to help you move... buy furniture... set-up house... decorate... make a glass of iced tea... turn on the ball game on a Saturday afternoon... settle in... and WHAM! You hear a noise cloming from the front of the house - specifically the front door.
Who wants to have a foreclosure notice pasted on the house that they just bought? www.RealtyTrac.com is a good source to explore the foreclosure scene.
If the house DOES look like a good deal in your opinion and you (or your agent) has done due diligence to uncover potential problems - PLEASE take any agreement/contract to your real estate attorney for their review. Attorneys have nothing to gain or loose for either party in a transaction to begin with - but when you hire him/her, you are paying them to represent YOUR best interests. Of course he/she will charge you a fee, but its the best money you'll spend!
Oh and if you are the seller - same advice! Level the playing field and everyone wins.
Hope this helps!
Joe
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