Chances are you’ve likely seen all sorts of advertisements for rent-to-own homes and have thought whether or not they’re a gateway to owning your own home. Unfortunately, this is where the old saying “if it sounds too good to be true, then it more than likely is” comes into play. This is because there are plenty of scams involved with rent-to-own homes that are designed to steal your money, the most common of which involve scammers purporting to sell property that they don’t actually own. They collect fees upfront from the tenant, then disappear completely.
Here are three ways to protect yourself from even the most common rent-to-own scams.
Identify the owner
Take the time to determine who really owns the property that you’re looking at. Before you pay any amount of money to anyone, request documentation showing that the person you’re speaking with actually owns the home. You can even view this information online in most cases. You should also try to obtain a title report before entering into any kind of formal contract, as this will ensure that the seller actually owns the property and can also legally sell it.
Read the contract
Prior to signing a contract, make sure that you understand every single detail of the contract itself. There are many rent-to-own contracts that allow for stiff penalties in the event that a buyer is late on a lease payment or if they miss a lease payment completely. Some contracts can also become completely void because of this. As a result, the buyer will officially forfeit their claims to the property, as well as all down payments and other funds they’ve invested in it.
Hire a home inspector to take a look at the property and look for any potential physical issues and health hazards. Many rent-to-own agreements will include a contingency for some type of professional evaluation, not to mention that a home inspection will uncover all sorts of repairs that may be needed. You will be able to then negotiate a better price or better terms as a result.
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