Don’t become the victim of the next scam! Learn how to rent to own the RIGHT way to save you money, frustration, and to help you become a homeowner!
Rent to own home sales are usually done between two private parties, often without legal or professional assistance on the part of the buyer. For anyone who doesn’t have extensive knowledge in real estate deals, renting to own can put you at the mercy of a less-than-honest homeowner. One such Easton, MA landlord recently plead “not guilty” to accusations that he swindled over $100,000 from potential home buyers in a rent to own scam.
Forty-two year old Joshua Leventhal was arrested on claims that he billed more than $100,000 from individuals and families looking for a rent to own home from 2010-2011. Potential home buyers would find a home on the market that they wanted to live in and inform Leventhal, who would then agree to purchase the property and sell it to the potential home buyers on a rent to own basis.
These people thought that the money they were giving to Leventhal was going towards the down payment on the house he was going to purchase, and that they would in turn be building equity in a home, but that was not the case. Out of over 100 “clients” that Leventhal worked with, not a single one actually wound up purchasing a home through him. In fact, only three potential home buyers even lived in the properties at all.
Luckily, not all homeowners who are willing to offer their homes as rent to own are crooks. In fact, most are honest people who may simply be looking for a way to stay afloat given recent economic events.
However, there are still some dishonest scammers out there, so it’s important to pay attention to these rent to own tips:
- As we learned from the story up in Massachusetts, it’s wise to stay away from “deals” with anyone who does not already own the property. Always do your background research and make sure that anyone you’re working with is on the up-and-up before signing any paperwork and especially before giving them any money.
- Watch out for sellers that are offering you a rent to own home which is in financial distress. While the majority of foreclosures are behind us, there are still a number of properties out there in which the owners are not making payments. Some of these homeowners have moved out of their houses and offered them up as rent to own, all while pocketing the monthly payments until the bank takes possession of the property. Check with local court records to verify that the home you’re looking at has not had any actions taken against it by lenders.
- With real estate prices on the rise around the country, many landlords are trying to back out of agreements on properties which have risen in value since the time that the paperwork was signed. In a lease-option agreement, the homeowner is required to sell the property at the time the contract specifies, if the renter wants to purchase it. Too frequently, uninformed buyers will be lied to or bullied by an unscrupulous seller and waive their option altogether.
These are just a few of the different scams that unsavory people are using to take advantage of buyers looking to rent to own. As economic conditions change, scammers are coming up with more and more ways to rip people off. The only way to minimize your risk of being scammed is by becoming informed on the rent to own process.
Carefully question the seller about any things you are not sure of, and be sure to have a legal professional look over any paperwork prior to you signing, especially when your new home could be riding on the line.
For more information on questions to ask sellers and how to do a rent to own the right way, check out more articles on RentUntilYouOwn.com where we walk you step-by-step through the process and give you tips and resources to use- guiding you to success along the way!
So, what are some ways you’ve found to avoid being ripped off by unsavory home sellers?