Am I getting scammed?

In My Humble Opinion
1

Okay, here’s the story. A little over a year ago my husband and I were looking to move. I looked at a house and liked it. I contacted the real estate agent, not some flight by night company, but a large well known organization. I told her that I like the house, but that my credit may be a problem. She suggested that perhaps the owner would be willing to hold the mortgage and that I would then make direct monthly payments to the owner. I agreed that this would be a good idea. List price for the house was 30,000 (yes I live in a fairly ghetto area). I gave a 4000 down payment and have been making mortgage payments of 500 per month. So far I have paid 10,500.

When we (only the real estate agent and I were there) signed the paperwork, we agree to 450 per month. She also asked if I would be able to make larger payments of 4 or 5000 occasionally to bring the balance down quicker. I told her that sometimes, yes we may be able to, and that I would when possible, because I would like to not have that additional monthly bill. That is why I pay (although I know it is not a huge amount) more than 450 per month.

So I got an email from her today saying that the house was to be paid off within a year(?), that since I have been paying 50 per month, I have paid 700 to date, and that the owner is willing to settle for, I think it was 24,300 total of 25,000. She seems to think that the 450 was rent that I would pay the 30,000 on top of. That is plain crazy. I can not afford 30,000 in one year, especially on top of the “monthly payment”. If I could I would buy a house in a not ghetto area, duh. I mean how can you pay a mortgage and rent on a house?

Here’s the thing, I’m not paying rent here, I am paying a mortgage, that was the deal we made. It sure seems like now she is trying to change it and I’m not going to lie, I am sure that the real estate agent has a better understanding of the legal paperwork and everything. I am dreading telling my husband because I feel like a fool. It did seem too good to be true when I found a home we could buy, with reasonable terms, even though our credit is not good. I mail the owner a money order each month (no way to mistakenly overdraw my account and make a problem for her) on this, I write mortgage-April, 2011 or whatever month. I do not see how this is even a misunderstanding.

So, what do you think, am I getting scammed? More importantly, what should I do about it? Thank you in advance for your help.

2

What does your contract say?

3

Seriously, you need a lawyer. Toot suite. Immediately, if not sooner.

Good luck.

4

Yes, need to know what your contract says. Was this a land contract? Do you get a monthly receipt stating what you paid on the principal, etc? Who pays the property taxes? That this seems to be a casual arrangement - in that only you and the agent signed paperwork - seems scammy to me, but I’m no expert.

Really it’s going to come down to what the contract you signed says. Hard to say whether it’s a scam or a misunderstanding, but in any case, if you can’t figure this out you ought to get an attorney to look over the agreement.

5

Did you have your own real estate agent? It sounds like you used the seller’s real estate agent. Which bank has the mortgage? Is your name on the mortgage also?

6

I don’t know if it is a scam or a misunderstanding, but you definitely need to read over everything you signed (and I assume the owners also signed the same documents), and hire a lawyer if it looks like you signed a mortgage and the owner is trying to turn it into a rental. What did she think your $4000 down payment was - a security deposit? That’s a hell of a security deposit on a $30,000 house!

7

They obviously view the $4000 as a down payment on the purchase of the home, since they aren’t asking for the entire $30,000. I can’t tell for sure without seeing the interest rate, the length of the contract, and the exact amount they are now seeking.

8

Look in your paperwork for the phrase “ballon payment”. Some deals are structured such that after making a preset number of payments, the balance of the total comes due. That’s called a balloon payment. Often the intent is to refinance that balloon payment into another loan before that happens, unless the buyer was expecting a windfall of some kind.

But like everyone else said, you need to see a lawyer with all your paperwork. And yes, lawyers can be expensive, but you can call their office, explain what’s going on, and describe your financial situation. You may be able to arrange for an hour or two of time to get a handle on what your rights and obligations are, and if it costs you a couple hundred dollars, that’s nothing compared to potentially losing your home.

9

If you are buying from the owner directly, you have a land contract. Where is it? What does it say? Verbal agreements don’t mean anything with respect to real property. Where is the sales contract-a Contract for Deed?

From the sound of it, you WERE renting and just thought you were buying. That’s still pretty low rent so you did not lose much anyway. Who paid the taxes? The owner paid the taxes and that was not you, right?

Again, you were renting and did not get hurt too bad financially. Get everything in writing in the future.

10

Again, there is a down payment. It doesn’t sound like they were renting.

11

I agree with everyone about reading your paperwork. My first home was “owner carried” and I signed a contract that broke down the terms of the sale. My down payment was mentioned, the monthly payment was stated, late terms and everything, just like a “real” mortgage. This was for a trailor and land worth $20,000.

My payments weren’t rent, they were applied to the loan and interest. It was very clear that it wasn’t a rental agreement and all repairs were my responsibility.

12

What you write on a check isn’t important; what’s in a signed contract is. As others have noted, you need to immediately refer to this, and should almost certainly have experienced help in so doing.

13

If that down payment isn’t noted on the contract itself, there could be trouble.

14

I see there are a lot of question here and I’m not the best at quoting so I’ll just try to answer all of them here.

My paperwork is quite a bit more than a lease. A lease, in my experience is maybe two to three pages, mine is about twelve to maybe fourteen pages. There are lease-like papers and buy-like papers. When we were signing the paper, the agent, who was the selling agent, told me that it was an unusual deal and she did not have forms for our specific agreement. I did not worry particularly about a scam for a couple of reasons. First, this is not some unheard of agency, it is large and well known. Second, while it is a good deal for me, that is not to say that it is a bad deal for the owner. The house needs some work, it may be on on better street, but it is still in a bad area. But the main reason I was not suspicious is because it was the agents suggestion, it doesn’t make sense for her to set up the deal only to now insist that the deal was completely different. Don’t they get paid to find a buyer who actually buys the house?

The way the agent explained it to me, the owner would remain on the deed until I paid her the total of 30,000. At that time, we would have the deed transferred to my name. It has been quite clear that repairs are my responsibility. There was some issue with the boro where the real estate agent called me. She said that the boro insisted our agreement be treated as a rental unless my name was on the deed. I told her, well I am not sure what you should do, I am not renting, which she agreed. I asked if I should call and tell them the situation, which I did. The boro still insisted that the house must be inspected, which was fine with me. As a result of the inspectors report there were some repairs necessary. There were three things. First, I needed more smoke detectors, second two bedrooms needed plaster repair (a lot), and third is that the porches and siding will need replaced. The outside work does not have to be right away but within I think six months. The owners husband came by with smoke alarms one Saturday morning, which I thanked him but said that I had already taken care of that. That is the only time I have seen anyone besides the agent. The plaster was another story. My husband made a deal with a guy he knows, who does plaster work exclusively professionally, to do it. I am not sure how much he paid him, but it was some cash, some trade (my husband is a mechanic ). This was not a cheap job, I know that the materials alone were at least 400. Anyways, my point is any repairs are clearly my responsibility.

I guess my main fear is that this agent, for whatever reason, has set me up. I think it is safe to assume that she knows the paperwork better that me. I think I will wait until Monday morning to talk to my husband about it, since we really can’t do anything but get upset until then. I will have to call a lawyer I am sure.

I would just like to add to Al Bundy who says I was just paying rent and am not out that much and thats a cheap rent anyways. Al, thats what I am afraid to hear, but I have to say it is totally wrong. Here’s why, first off, this is the ghetto, 500 may be a reasonable rent, but theres no way in this world you would get 4000 for what is that supposed to be, security? Also, I feel I am out quite a bit, the fact is the agreement we had was for me to buy this house. I have paid well over 30% of the price for it, and so I am out that much equity, no?

Also, Xema, I know that may not make it legally a mortgage, my point is, this can’t be a misunderstanding, in my opinion.

Thanks everyone for your opinions and suggestions.

15

Didn’t you have your own attorney review the contract before you signed? If not, why not? And if not, why aren’t you doing so now?

16

The agreement not being a scam does not mean that it was in your best interests. She wasn’t representing your best interests, she was working on a deal that would earn her a commission.

You really should have had a lawyer review the paperwork before you signed to make sure you were getting what you thought you were getting. It sounds like you were doing rent to own, with 450 going towards rent and 50 towards the purchase price.

Good luck with your situation. I hope it works out in your favor.

You need to make an appointment with a lawyer who does residential real estate and have him review the contract.

17

Damn, patronize much? Most people who live in $30,000 houses don’t exactly think about attorneys before every single contract signing. Is this actually surprising to you? Really?

18

I didn’t intend to be patronizing, but she clearly doesn’t understand the deal. So that’s why she and her husband need to spend perhaps the equivalent of a month’s rent/mortgage to have someone review it and tell her what she agreed to.

19

Buying a home is the single largest financial transaction most people will make in their lifetime, no matter what the purchase price. Her 30,000 is just as much a major big deal to her as a 200,000 or 600,000 or whatever house would be to others here.

For the biggest financial commitment a person will make in their lifetime, you think expecting someone to have an attorney look at the paperwork is patronizing?

20

The whole deal sounds like a lease-option to me. Presumably at least part of the monthly payment goes to interest, or to the equivalent of a rent payment, with only a portion to principal. Check the agreement for a statement about what portion (if any) of the monthly payment goes toward the principal.