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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

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!


10635 Roe Avenue
(NE Corner of I-435 & Roe)
Overland Park, KS 66207
Phone: (913) 498-FSBO (3726)

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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!

An Open House can Close the Deal

4 Apr

An Open House can Close the Deal

Spring is in the air and right now, many homeowners begin to consider putting their homes up for sale.

If you are one of those homeowners, it’s time to prepare your home for market.

You’ll have to examine your finances, begin to de-clutter, clean your home and repair and replace where necessary (but keep it simple).

Also consider the advantages of an open house.

Here are five common reasons an Open House might close the deal.

Eyes on the prize – And open house attracts potential buyers who would otherwise be too casual, lax, or unmotivated to book a showing.

The event also has one up on a simple listing.

Your friends and family can mention the event to every potential buyer they know. Neighbors who drop by might be angling to have someone amiable move into the neighborhood. Advertising and signage will catch the eye of both casual lookers and serious buyers.

You direct the drama – Some home shoppers give little if any notice if they stop by your home for a traditional showing.

It can be stressful keeping your home show-ready for the entire time it’s listed. It’s also time-consuming to keep wastebaskets emptied, floors routinely swept, vacuumed or mopped and the laundry washed.

Not so with an open house. You decide when the curtain goes up.

You can schedule the event and prepare for an event with the potential to bring in throngs of prospective buyers – all in one fell swoop.

There’s less stress to deep clean and stage when you know exactly when potential home buyers will arrive.

A scheduled event also gives you time to sweeten the deal with some fresh-baked goodies and aromatic vases brimming with fresh flowers.

Second time’s a charm – Typically there’s a limit to the number of times even the most interested buyer is willing seek for a private tour.

If your house already caught the eye of a potential buyer, he or she might feel less overbearing and be more willing to come back for a second look in a less formal setting.

An open house also gives buyers the opportunity to bring friends or family for their input. Walking through an open house also provides guests with plenty of time to look around – during your open house hours.

Buyers compare apples and oranges – On any given weekend, buyers are likely to visit several open houses in the same general location.

This gives buyers looking in your area the opportunity to comparison shop by attending several open houses. That gives you the opportunity to make your home stand out from the crowd.

Time is on your side – Many open houses are available some weekends, others, not so much. Springtime weekends are big.

This year April 20th and 21st is Nationwide Open House Weekend when you can bet it’ll be one of those big open house weekends.

April 20th is also the start to this years KC FSBO Spring Homes Tour 2013 which coincides with the Kansas City Spring Parade of Homes, April 20-May 5 making for the ideal time to get out and view the best homes, builders, neighborhoods and HOME VALUES in our area.

Make sure your listing is one of them!

Excerpts by Kim Clark-

Spring Cleaning Tips

3 Mar

Homeowners want to know what they can do to ensure that their homes bring top when they are ready to sell.

With Spring nearly here, why not tackle those projects that you have been putting off all Winter!

The list below offers a great start to keeping your home in great shape and at maximum value!

  • Remove and donate unwanted items
  • Reorganize and clean attic and garage
  • Power wash exterior walls, porch floors, deck, patio, driveway and sidewalk
  • Clean outdoor furniture, umbrellas and outdoor light fixtures
  • Clean out gutters
  • Clean our refrigerator and freezer, making sure to vacuum the grill
  • Reorganize closets
  • Wipe down baseboards, walls and ceiling fans
  • Steam clean carpets, area rugs and upholstery
  • Clean windows; inside and out
  • Reseal natural stone surfaces
  • Reseal and repair grout in bathtubs and showers
  • Clean window treatments, blinds and shutters
  • Remove all items from selves; dust and clean
  • Oil hinges

When you’re ready to know the value of your home, please give us a call!

The FSBO Store


“Kansas City’s Trusted Leader in Private Home Sales Since 1996”

Flat Fee MLS Listings

23 Feb

Kansas City For Sale By Owner is now offering Flat Fee MLS listing options that complement our FSBO-KC.com home real estate marketing packages!

Time to List your Property with The FSBO Store at www.FSBO-KC.com

12 Jan

Time to List your Property with The FSBO Store

Snow covered house

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