Hello BP. I am a Realtor/Investor out of Hampton Roads, VA. During my Open House yesterday I got a strange offer and I'm not sure how exactly to verify what this woman is saying to protect my clients who want to take the offer. Here is the story:
The house is listed retail as well as rent to own because the owners are almost desperate. Open house yesterday a woman said she is in the middle of suing for 3 million and her attorney who she says is the best in the state is telling her in 1 month they will settle for 500k-1mil because who she is suing isn't going to want to take the case public etc. She wants to rent to own the house for a couple months, says she can afford monthly rent, NROC and will pay cash once they settle. She is also an investor and says she is approved for 750k investment loan which she will use if settling takes longer than 3 months. (The house is listed at 329,900). She said she will produce anything requested, allow us to speak with her attorney, and sign any agreements she needs to with no problem.
My question is what should I require her to provide to ensure what she is saying is true before we go through with this.? Also how should I structure it to ensure she doesn't just stay for the 3 months and leave putting my clients in the bad position of having to start all over?
Any advice and wisdom from seasoned investors would be VERY appreciated. Thanks!
Hi @Amberle Farthing . I'm not sure you need to do anything different for this buyer. I'm assuming we're talking about a standard lease-option where she puts up a reasonable NROC. I'm also assuming the effort of evicting in VA would not be huge (e.g., in Georgia, it's about 30 days, fast and easy).
With a lease-option, there's never a guarantee that the tenant/buyer will stay. But, as long as your clients get to keep the NROC (and buyer doesn't do major damage), that's not such a bad deal.
For a house is listed at $329,900, I'd ask for $10-15K in non-refundable option consideration and then see if the buyer is still interested. If so, do your normal lease qualification (credit, income, and rental verifications). If all still looks good, I'd grab their money and head for a signing ceremony.
If the buyer balks at that much NROC, they're probably not serious.
Hi @Amberle Farthing . I would suggest just setting up a regular lease option for 1 or 2 yrs. Do your usual background check to qualify her for rent to own. Get whatever your usual NROC would be and go from there. If what she is saying is true then she can exercise her option to purchase whenever she gets her windfall. If it isn't true then she's locked in for the full lease period and she still has time to come up with a conventional loan. I wouldn't worry about trying to verify all the info with regards to her expected windfall. If she passes your usual background check and qualifies then you should be all set. This, of course, is just my opinion. Hope this helps.
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