A Rental Property Horror Story

Thought I’d share a horror story with you that I came across a few months ago. Jimmy’s house had been on the market for just over three months and he hadn’t gotten a single offer to purchase as of yet. Finally, one day Henry drove up and offered Jimmy a long-term rental agreement. Henry was a traveling salesman and needed to move to this town to be centrally located within his sales area. Henry was very nicely dressed, drove a respectable car and talked very professionally. Because Henry was on the road so much of the time, he wanted to simplify the move for his family by paying Jimmy a security deposit and six months’ advance rent. He also wanted to sign a three-year rental agreement. Needless to say Jimmy was excited. He didn’t really want to sell and a three-year rental agreement from such a professional was a dream come true. Henry signed the agreement, advanced the money and Jimmy headed to the bank. That is when the real estate horror story began. As soon as Henry gained control of the house, he placed a for-sale ad in the paper, advertising the home for an unbelievably low price. In fact the price was so low Henry received hundreds of calls. Henry scheduled dozens of showings. Each time, he would give the person a real sob story about how he had lost his wife and family in an accident the previous year. Henry told everyone that he was being forced to give up thousands of dollars of equity in order to pay bills resulting from the accident. He then convinced the buyer to give him a $2,000 earnest money deposit to hold the house. The buyer’s greedy nature told him he would never find another deal like this and he gladly forked over the $2,000. In fact, 30 buyers put up $2,000 each. With $60,000 in cash, Henry split, leaving behind 30 contracts for sale on Jimmy’s house. Can you image the horrible situation Jimmy faced when the buyers’ attorneys tracked him down? What do you do? I’m sure the title companies are having fun with this one. How could you stop this from happening to you?

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