Buying Rent to Own? Make Sure You Go Through a Broker!
If you’re a home buyer who doesn’t have the full down payment and you don’t want to pay hefty mortgage insurance or take a 25-year amortization; or if you’re a home seller who can’t sell their home in today’s slower market, you might be tempted to sign into a rent-to-own deal. And if that’s the case, you’ve probably come across the many different third-party websites claiming that they can match up sellers and buyers who are interested in rent-to-own deals. And if you have, you need to know that these sites might not be working within the laws outlined.
The problem recently had some light shed on it by CBC, who reported that many rent-to-own websites aren’t actually using brokers to secure their deals. When that happens to either buyers or sellers, they are essentially left with no action should their deals fall through. Under legal contracts and agreements, should one party be unsatisfied or want out of the deal for valid reasons, they already have an exit strategy in place – even if they don’t know it. But, if the contract that was entered into isn’t a legal one, buyers and sellers are left with no recourse should something happen.
“Unfortunately, it’s not uncommon,” says Jim Murphy, president and CEO of CAAMP. “It is the second or third source of complaints in Ontario. It sends a message that people should use licensed Realtors or brokers.”
Samantha GAle of Mortgage Brokers Association B.C. says that she agrees. “There’s no accountability with this kind of system,” she says. “You don’t have some kind of standards which are adhered to and you don’t have any kind of recourse.”
But that’s not what these sites would have you believe. In fact, they’ll tell you that they can take care of everything – whether you’re a buyer, seller, or even a real estate investor. In fact, one of these sites states, “Whether you are buying or selling, need a mortgage (or a second mortgage) our sole purpose is to be at your service. If you have some available funds to lend, we will contact you soon.”
But empty promises are sometimes just that and while these sites will be able to get you a home or sell yours, they won’t always be the full-service shop they promise to be. So what can consumers do? Go to a licensed and authorized mortgage brokerage for starters, even to set up any rent to own deals. And, feel safe in the knowledge that CAAMP is planning on doing something about it.
“Certainly CAAMP has a role to help police this,” says Murphy. “And the public needs to ensure they are dealing with professional people.”