Tag Archives: kansas city area

Lease-to-Own Real Estate Deals – Buyer and Seller Beware

26 May

Rent-to-Own (or Lease-to-Own) Real Estate Deals – Buyer and Seller Beware

by Clayton Clossonon July 13, 2007 in Home Buying (still as true today)

Although they’ve actually been around for decades, rent-to-own contracts that substitute for mortgages and conventional home loans are enjoying a surge in popularity in several regions of the country. The slumping real estate markets in parts of the U.S. fuels these deals, where homes can sit on the selling block for months at a time.

Add to this the recent tightening of rules and regulations for bad credit loans and a near perfect storm has been created for rent-to-own scenarios. It sounds like a great way for home sellers to speed up the sale of their home.

Think of it this way: Lots of folks with bad or bruised credit simply can’t qualify for a home loan under current guidelines. So, instead of just renting a place to live, they opt for non-traditional arrangements to buy a home. These arrangements are contracts between the buyer and seller and don’t involve a bank or mortgage company. One of the most common rent-to-own contracts is the land contract.

A land contract is essentially an agreement between the buyer and seller where the seller “finances” the buyer to purchase the home. A payment schedule (monthly amount multiplied by the number of months) is agreed upon, and the buyer pays a down payment as a security deposit to the seller. The title of the home remains with the seller until the buyer has made all the payments. The payment schedule usually covers only a part of the sale price of the home, which means that at the end of the payment schedule, an outstanding balance remains. This is usually paid using what’s called a balloon payment. So, the buyer pays payments for a set period of time, and then must pay the remaining amount to buy the home. For example, the buyer may pay $800 a month for 10 years and have a balloon payment of $50,000 due at the end of the 10-year contract.

Here is the risk: Land contracts aren’t always publicly documented and recorded; rarely a good idea when dealing with real estate and this much cash at risk. Another common rent-to-own scenario is renting or leasing with the option to buy. Such options are different from land contracts in that the agreement is usually filed and is a legal arrangement. They give the renter or lessee the option to buy the property at a set time during the loan. With an option, rent payments become equity in the property.

While the benefits of rent-to-own arrangements may seem strong, both the buyer and seller need to be aware of problems that can result from poor planning. A few of the most common problems faced with rent-to-own scenarios are:

•Repossession can be difficult if the buyer defaults on payments
•The seller is stuck with any repairs, even if the buyer caused them
•The seller may be responsible for real estate tax and property insurance
•If anything goes wrong, the buyer may lose any money paid, including the deposit
•When the time comes, the buyer may not be able to finance the balloon payment after all (remember, the buyer couldn’t get financing to buy the home in the first place)

The most important factor to remember with rent-to-own is that all terms of the contract or option must be spelled out to the smallest detail to avoid any problems. Who is responsible for repairs to the home? Who is responsible for maintenance? What happens if the buyer misses a payment? When is a late fee added? When is the down payment refundable, or at what point does it become non-refundable? Are pets or roommates allowed? Who is responsible for paying property tax and insurance? These are just a few of the important questions buyers and sellers should consider and work out prior to entering into an agreement.

It’s not hard to see why hiring a lawyer to review a land contract or “option to purchase” agreement is a very good idea. There are so many details and potential issues that need to be covered that it’s almost impossible for people to set these up correctly without professional guidance.

A little painstaking preparation setting up a land contract or option-to-purchase will help prevent a lot of problems down the road. And even with proper legal and real estate guidance, know the risks.

A traditional mortgage to buy and sell the home may still be worth the wait.

Read more: http://www.quickenloans.com/blog/rent-to-own-real-estate-deals-buyer-and-seller-beware-5176#ixzz2CsvY7fAH

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View Our Homes For Sale in the Greater Kansas City, Lawrence and Topeka Areas

18 May

Home of Kansas City’s BEST HOME VALUES online and in your neighborhood in the Greater Kansas City, Lawrence and Topeka Areas!

http://www.fsbo-kc.com/homesforsale.aspx

KC FSBO Store
10635 Roe Avenue
(NE Corner of I-435 & Roe)
Overland Park, KS 66207
Phone: (913) 498-FSBO (3726)
http://www.fsbo-kc.com

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Beware of Scams and Other Internet Fraud

7 May

Beware of Scams and Other Internet Fraud in Real Estate

Scams are a reality of shopping online and offline.  One critical piece of information you should take wherever you go:

Always be wary of giving personal information, financial information, if you have an offer on your home, or payments of any kind to people you don’t know personally.

Red Flags for Scams, Use caution with the following:

•    Inquiry contact information not completely filled out.

Take extra care when you receive an e-mail inquiry with missing basic information (i.e. a “First and Last Name”, “No Phone Number”, or one that can’t be verified). There have been scam attempts that ask for information like “sending photos or more photos” when the listing has more than enough photos for an interested buyer (or buyer’s agent) to take the next step and schedule a showing.

If they are truly a serious buyer (or buyer’s agent), they will give you their Full Name, Phone Number and a reasonable request for information (including identifying themselves as a buyer’s agent, if they are representing an interested buyer) and most requests should be regarding a showing. Also, call them back by “pressing *67 then the phone number they gave you in the request” (blocks your phone number) instead of just responding to the e-mail blindly.

•    Long-distance inquiries.

Take extra care in long-distance situations, especially from users in foreign countries. There have been a number of scam attempts that involve individuals in foreign countries who say they are interested in purchasing or renting out a home.

•    Requests that you send a check or money order, or wire funds.

Most scams eventually involve such a request, and there are many variations. A scammer may have convincing reasons why they need to deal remotely. They may wire overpayment of funds to you and request that you wire back a refund. They may ask you to use a false online “escrow service”. Do not wire funds to anyone you haven’t met personally. Also, do not accept wire funds that you did not initiate.

•    Requests for personal and/or financial information.

With identity theft on the rise, it is a good general rule to provide your personal/financial information sparingly, and only to trusted sources.

•    Offers to facilitate a home purchase or loan or rental by an individual claiming an affiliation with ANY investor or investment group.

Any such offers are fraudulent activity.

•    Suggestions to assist in money exchanges.

Money is handled by the Title companies at closing. Anyone telling you otherwise is trying to scam you.

•    Typos, grammatical errors and inflated stories.

Emails that are filled with spelling and grammatical errors are usually a sign of fraud. Also, the sender might claim the importance of themselves or the person they are representing (“I work with the United nations development program”) and could also weave an involved story about family issues.

•    A buyer’s agent or individual buyer should never ask for personal information or a phone verification code prior to seeing a property.

Any requests for bank account numbers, Social Security numbers, or being asked to provide them with a code sent to your cell phone via text or call are all signs of a potential scam.

Report Scams and Fraud

You may also contact the following authorities to report possible fraud:

•    Federal Trade Commission:  via its toll free hotline: 877-FTC-HELP (877-382-4357) or the FTC online complaint form https://www.ftccomplaintassistant.gov/

•    Federal Bureau of Investigation’s Internet Fraud Complaint Center http://www.ic3.gov/default.aspx

•    Non-emergency number for your local police department

It’s a Big Internet…Be Careful Out There!

Your Friends at The FSBO Store!

Where Are Home Prices Heading Through 2017?

9 Mar

Where Are Home Prices Heading Through 2017?

Daily Real Estate News |      Thursday, March 07, 2013


Home prices are expected to continue their trajectory upward, projected to rise 3.7 percent between the third quarters of 2013 and 2014, according to Fiserv, which used data from the Federal Housing Finance Agency for its projection.

Following the third quarter of 2014, Fiserv predicts home prices to rise an average 3.3 percent annually over the next three years.

“Although some recent real estate activity has been speculative, it seems as if buyers have more realistic expectations about housing market returns after having lived through the largest housing market crash in U.S. history,” says David Stiff, Fiserv’s chief economist. “2012 was the first year since 1997 that the housing market has resembled something recognizable as normal. For the past 15 years, home-price changes and sales volumes have either been boosted by a bubble mentality or crushed by crash psychology.”

In 1997, home prices grew at a 3 percent rate, Stiff says, but from 1998 to 2006, prices started soaring above 5 percent and even saw double-digit increases in some of those years.

By the end of 2013, Fiserv expects that home prices will increase in nearly every U.S. metro area, while some markets may see short-term double-digit price increases.

Source: “Home Prices Expected to Rise at Least 3.3 Percent Annually Through 2017,” RISMedia (March 6, 2013)

View Our Homes For Sale in the Greater Kansas City and Lawrence Areas

9 Jan

Home of Kansas City’s BEST HOME VALUES online and in your neighborhood in the Greater Kansas City area!

http://www.fsbo-kc.com/homesforsale.aspx

KC FSBO Store
10635 Roe Avenue
(NE Corner of I-435 & Roe)
Overland Park, KS 66207
Phone: (913) 498-FSBO (3726)
http://www.fsbo-kc.com

Visit our Facebook Page for the very latest Listing Posts and Updates!

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By Owner Homes For Sale in the Greater Kansas City and Lawrence Areas

24 Nov

Home of Kansas City’s BEST HOME VALUES online and in your neighborhood in the Greater Kansas City Area!

http://www.fsbo-kc.com/homesforsale.aspx

Selling Your Home by Owner – More Than Just a Sign in Your Yard!

KC FSBO Store
10635 Roe Avenue
(NE Corner of I-435 & Roe)
Overland Park, KS 66207
Phone: (913) 498-FSBO (3726)
http://www.fsbo-kc.com

Visit our Facebook Page for the very latest Listing Posts and Updates!

Visit our Pinterest Boards for Great Home Design Features and Ideas!

View Our Homes For Sale in the Greater Kansas City, Lawrence and Topeka Areas

20 Aug

Home of Kansas City’s BEST HOME VALUES online and in your neighborhood!

http://www.fsbo-kc.com/homesforsale.aspx

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