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Real Estate

2006-03-30 14:20:00

Thieves...how do I protect myself?

ANSWER: Marvin had seen several "For Sale By Owner" signs as he drove around town, and thinking he himself was a pretty knowledgeable fellow, decided that he too could save himself the commission and sell his house himself. So he put a sign in the yard, and made up some flyers. He could do this, right? After Marvin's house had been on the market for five months and he hadn't gotten a single offer to purchase, he was just about to call a Realtor he knew and list the house with him, when, out of nowhere, Bruce drove up. He offered Marvin something he hadn't expected... a long-term rental agreement. Bruce was a traveling salesman and said that he needed to move to this city so as to be centrally located in the geographic middle of his sales territory. Bruce was very nicely dressed in a three piece suit, drove a really nice car, and used the language of someone who has had very professional training. Because Bruce spent so much time traveling his territory, he wanted to simplify the move for his family by paying Marvin a security deposit and six months' advance rent. What joy! He also expressed to Marvin that he would prefer to sign a three-year rental agreement, eliminating the need to keep re-signing new lease agreements.  Needless to say, Marvin was beside himself with excitement. He hadn't really wanted to sell his house in the first place, and a three-year rental agreement from such an obvious professional was an unexpected dream come true. Bruce and Marvin signed the agreement, Bruce then advanced the money and Marvin headed to the bank. That is when the real estate fairy tale ended, and the bad news story began.As soon as Bruce gained control of the house and Marvin left, Bruce placed a for sale ad in the local paper. He was advertising the home for sale at an unbelievably low price. In fact the price was so low that Bruce received several hundred calls. He scheduled dozens and dozens of showings. Each time, he would give the person the same story about how he had lost his wife and family in a car wreck the previous year. He told everyone that he was being forced to give up thousands of dollars of his equity in the family home in order to pay off his bills from the accident. He then convinced the buyer to give him a $2,000 earnest money deposit to hold the house for him. The buyer's greedy nature told him he would never find another deal like this one, and he gladly forked over the $2,000 to Bruce. As a matter of fact, 48 buyers put up $2,000 earnest money each. With $96,000 in cash, Bruce headed out of town, leaving behind 48 contracts for sale on Marvin's house. Can you imagine  the legal situations Marvin was facing when all of the buyers' attorneys tracked him down? What do you do in a situation like this? Just when you think you've heard it all! The title companies are having no fun with this one. How could you keep this kind of thing from happening to you? If you're out of your field, you're taking chances you probably shouldn't expose yourself to. Remember this, investors. If someone wants to advance you a large up-front deposit and pay the rent far in advance, be very cautious. Ask for several credit references and then check them out. Get referrals from the renter's previous landlord and verify that he is moving into the house immediately. Make sure the water and utility services are transferred into his name. Drive by your property often to inspect it. If you see a lot of unusual type activity...investigate why. And remember that if something sounds too good to be true, don't be surprised if it isn't. More next month...