I just took a heartbreaking call....
A lady contacted us via our website about a home we have available for lease-purchase. They have a home in Phoenix, but wanted to move into a larger home. In March, she called off of an ad she saw for a "lender", who told them their credit was too poor to move up - but he could "help" them. For $2,000 cash, he could improve their credit in 2 months - enough to be able to purchase a home! And wouldn't you know it, he knew JUST the home for them - he referred her to a "client" of his, who had a home in Queen Creek that they could lease-purchase. Here are the terms of the lease-purchase:
Sales price: $330,000
Down Payment: $4,500 at move in; $3,000 in 60 days
Must close by June 8th - no extensions, no contingencies
So they give him $2,000 CASH, and move into this home; they put their home in Phoenix up for rent. It is still vacant, so they are making that payment. They are cash-poor, paying 2 house payments AND putting out $4500 down AND $2k cash to him.
Guess what happened? The "Lender" has disappeared. Number disconnected, nowhere to be found, with their $2k. Bad enough story, but wait - it gets worse.....
They had the Queen Creek home appraised. It came back at $236,000(!). There is NO stipulation in their lease-purchase agreement regarding appraisal; the seller has told them he will sue the appraiser, which they believed he could do. Uh, no. He said he would lower the price to $307,000, but not a penny less - if they can't qualify for a loan - for +/- $70k MORE THAN THE HOME IS WORTH, they are out all of their rental payments AND deposits!!! Keep in mind, they also have until June 8th to close, or else lose all their money, anyways....and their credit is NOT improving THAT fast!
These poor people had blind faith in the "lender" to do what is right. He absconded with their money, and put them in a situation he KNEW wouldn't work out, to benefit an investor client of his. These buyers had NO representation - no agent in their right mind would allow their client to enter into such an upside-down contract. Come June 8, they are out over $12k, and will have to move back into their Phoenix house. THANK GOODNESS they haven't already rented it out...or else they would be homeless. They have NO MONEY for a deposit on ANY home. Totally over the barrel.....
PLEASE PLEASE PLEASE!!! If you do not personally know a lender or anyone else asking for financial info or CASH (WHICH SHOULD IMMEDIATELY BE A RED FLAG), DO NOT WORK WITH THEM!!! Ask family, friends, or co-workers for referrals. Check a company's standing with the BBB. If you are a buyer, GET A REAL ESTATE AGENT TO REPRESENT YOU!!! It costs you NOTHING in Arizona - sellers pay their commission - and they can protect you from predators like this!!!
Sharon Kotula, ABR
Adam Tarr, e-PRO