TO LISTEN TO A PODCAST ON THIS TOPIC, click here to listen to our episode
on REAL Smart with Cheryl King and Maura Neill on Apple podcasts, or find us wherever you listen.
There's an alarming new real estate model targeting homeowners and preying on those who may be in financial distress, and the results of being taken advantage of in this scenario can be long-lasting. Decades long.
Here are the basics: let's say you're a homeowner and you have found yourself in some financial uncertainty. You receive communication -- maybe it's a letter in your mailbox, perhaps it's a cold call and you happen to answer. It seems like the answer to your prayers -- you can apply for homeowner's assistance through a company that sounds reputable. You can apply online, and if you qualify, you don't even have to leave your home; they will send a representative to your home with a few documents to sign. They send you a link to the application, as well as their FAQs (Frequently Asked Questions) -- everything seems legitimate and almost too good to be true.
Here's the catch: it is. Too good to be true, that is. Because unless you're thoroughly reading the documents before you sign them (and as a REALTOR®, I can tell you so many people do NOT read before they sign -- contract documents, loan documents, closing documents -- despite our instructing, asking, practically begging them to do so. What you've signed may get you access to quick money -- up to $5,000 (but likely not close to that number) -- but you have also signed an agreement to list your home with the company providing the money, and the agreement lasts for the next 40 years.
Let that sink in.
40 YEARS.
Four decades. Longer than most homeowners will be in a home and 10 years longer than your probable mortgage.
A lien may be put on your home and filed with the county courthouse. At the very least, a "memorandum" will be recorded at the courthouse, officially filing the signed and notarized document, and associating it with your home. The company will set up searches and alerts on your property to make sure they know when you list it or sell it with any other agent. And then they will try to put a stop to the sale or, if it has already sold, come after the commission. The agreement may or may not be tied to you, personally, meaning it may stay with the property for the length of the time period, affecting homeowners in the future, as well as any future buyer's ability to obtain title insurance. Additionally, the agreement may also outlive you -- the executors of your estate may also suffer financially or with legal hardship as a result of you signing this type of agreement.
If this sounds scary, it doesn't have to be. Here are a few ways to protect yourself from this and similar scams:
- Read before you sign. Always. This sounds not only like sage advice but also like a no-brainer, but I'm not passing judgement on those who have signed these agreements, because I don't know their circumstances, nor do I know the distress they may have been feeling in the moment. The best we can do is to learn from their situations and try not to make the same missteps.
- If you need funding and you are a homeowner, remember there are likely other, possibly better ways to get it. Some options might be a Home Equity Line of Credit (HELOC) or a cash-out refinance. If you have questions about these options or others that might be available to you, reach out to your mortgage lender, loan officer, or the toll-free number on your mortgage statement. Or of course, you can feel free to call me and I can put you in touch with a reputable loan officer who will look at your specific circumstance and offer suggestions that may be able to help (and not tie you up in a long-term agreement).
- Don't ever feel pressured to sign anything on the spot. Request time to read and review the documents, which will also give you time to have someone else read them and give you their feedback -- like a real estate attorney, your REALTOR® (I'd be thrilled to help you!), someone who can help wade through the legalese. If the party asking you to sign is NOT okay with giving you this time, that is a huge red flag.
- Remember the old adage: if it seems too good to be true, it probably is. I often joke that I am a born cynic, that I expect the worst and then I am pleasantly surprised when it doesn't happen. In situations like this, I am grateful for my cynicism and that it leads me to question everything. Even if this doesn't sound like you, let me be cynical for you -- refer back to number 3, above.
As with any communication about your home, your real estate deed, or anything else that appears suspicious, please be cautious, be wary, and reach out to me anytime with questions or concerns. Unfortunately, homeownership records are often public record, so communication to the homeowner can appear to be very official and reputable, simple because the information is publicly available. Call us at 404-994-2181 or email us at Maura(at)BuySellLiveAtlanta(dot)com if you have questions.
TO LISTEN TO A PODCAST ON THIS TOPIC, click here to listen to our episode
on REAL Smart with Cheryl King and Maura Neill on Apple podcasts, or find us wherever you listen.
