11–13 minutes to read

Is Your Rented Home A Future Foreclosed Property?

I recently visited Charlotte, NC, a city that has been hit extensively by a great number of foreclosures, and consequently has plenty of bank-owned properties. My mission was to a find a home to rent in a nice looking and safe community. After a couple of hours on the Internet, I came across several homes, but one in particular stood out.

The home was a two story detached home, had four bedrooms, two and a half bath rooms, and had a 2 car garage. The home was only four years old and was on a large lot with a fenced in backyard.  Also, the home just so happened to be located on a street with a dual cul-de-sac, that would have allowed me to feel comfortable that my son could ride his bike from one end of the block, turn around, and ride to the other end of the block while staying within my sight. Furthermore, the community that the home was in had a large playground with up-kept lawn maintenance and a community Olympic sized pool. It was prime-real estate, and thanks to the low cost of living in Charlotte, NC, the rent would have been only $1000 per month.

After making a call to inquire about the property, I was in touch with the home’s property manager in minutes. We made arrangements to meet at the home, and after walking through it, I was sold. Immediately after the walk-through, I filled out and signed my rental application, gave the property manager my $40 application fee along with my $1000 security deposit, both of which were money orders. The only thing that needed to occur from that point was setting the actual move-in date, when I would pay my first month’s rent.

I was pretty excited about the transaction, and quickly called my eight-year-old son to tell him the great news about the property that we had just retrieved. After informing him about the backyard and pool, he was just as excited as I was.

The Realization

Later in the night, for whatever reason, my mom was looking for homes in the Charlotte area that were soon going into foreclosure (I had told her earlier that if she had found a home that she loved and that was big enough for all of my siblings that lived with her, I would attempt to purchase it for her. But it just so happened that my momma decided that she would search for foreclosed properties over the Internet eight hours after I suggested to her that I would buy one).  In her search, she came across a local government website that had a listing of several hundred homes in the Charlotte area that was soon going into a foreclosure auction. Out of curiosity, I guess, my mother had asked me the address of the home that I had secured earlier in that day. I wondered why she cared, but after a minute of trying to get an answer why, I gave her the address. After entering my address, sure enough, the home was listed to be auctioned beginning February 8th, 2011, despite the fact that I had just put down a security deposit on January 30th, 2011. My mother contends that the find was due to the grace of God, and at this point I have no other choice but to agree.

The Aftermath

Questions ran rampantly in my mind: Is this correct?

Did the property manager know about this and is trying to dupe me? Is the property manager a scam artist trying to take advantage of people who have recently moved out of their homes by quickly marketing their properties, only to bail with the security deposit? Will I be able to get my deposit back before I leave the area two days later? Wait a minute, I used money orders, would I be able to cancel them and get a refund if it turns out to be a scam? What about all the paper work that I gave with my social security number all over it? Will I be able to find a home in the same area now that I told my son about this great prospective property? It was a mess!

I quickly searched on the Internet for the name of the property manager and was quickly convinced that it wasn’t a scam on her part; I saw her profile on Linked In, her personal website with her contact information and picture, and several other properties that she had listed that were not on the foreclosure list.

Next, I shot her an email that included a message for her to call me as soon as she could, and I also attached the link to the website that had the property listed as a foreclosure. There was no immediate response being that it was Friday night, so I worried and was angry at myself all at the same time.

Stuff like this does not happen to me, I exclaimed to myself. I’m too careful. How did I miss this?

This is where I realized that my personal skepticism would only get worse in the future. Still, I went to bed, and waited anxiously for the morning so that I could contact the property manager to inquiry about this event.

The Conclusion

To make this long story shorter, in the end I received my security deposit back in the form of a business check, but not the application fee. I have not deposited the check yet, but I feel confident that the funds are available seeing as how the check was written from an escrow account (and after calling Bank of America to verify that the account actually was valid); I’ll deposit the check today.

I also used the Saturday morning to look for and acquire another property in the same area, without the fenced in backyard, but actually more reasonable for one adult and one child.

I have learned that we can never be too careful in this real estate market downturn.  We may be able to get great deals when renting great homes, but it may come at an expense. I couldn’t image the frustration that I would have had if I would have found this information out after moving in all of my furniture.

I remember a story of a bank calling a co-worker’s pregnant wife who had four kids and two pets to tell them that their home was being foreclosed on almost two years ago. The co-worker was two weeks from getting deployed, and would be leaving his family of six to fend for themselves if the situation did not get quickly resolved. Turns out the bank eventually let them stay in the home, but it wasn’t without plenty of scare and hassle.

I don’t think that the property manager was in on this scam (clearly the property owner knows that the home is about to go into foreclosure) but this does bring up an interesting question, “How can we protect ourselves from such events?” Although I’m confident that my newly acquired home is not currently in default, “How would I know for sure?”

Readers: Have you heard of any of these horror stories? Has such an event happened to you?

Comments

  1. What an interesting and informative story. I’m glad your strory had a happy ending. Just imagine how many people have similar experiences, but without your resources, knowledge, and skill to deal with the problem.

    Your experience illustrates how we have to look out for our interests, and if a deal seems to good to be true, it probably is.

    Good post!

  2. Good thing your mom searched the address to find out this property was going to auction. It would have been a mess if you actually moved in then forced to move out once the property was sold at auction. I have heard that it is harder for banks to foreclose on a home if there is a tenant residing in the property, I can’t recall where I heard or read that though.

    • I too heard that it’s difficult for the bank to get people out of the house AFTER it has been rented. However, with a child that will be is school that is based on street zoning, I didn’t want to take a chance.

  3. Wow! That is one hell of a scary story! Imagine had you moved in there! In this economy, cannot be too careful.

    Glad your loss was limited to the application fee.

  4. That sucks! What I want to know is the URL that your mom used. was it foreclosure.com? Anything? I seriously want to know.

  5. Wow – I never stopped to consider that either. I’m glad to hear you had a happy resolution to this, but it could have easily turned out differently.

  6. Nikole says:

    I’m going through something like this except my two kids fiance and I have already moved into the home and haven’t been able to get a hold of the landlord. We just got foreclosure notices and now have til June 16th to get together the money to move. Does anyone have any idea what legally we can do and how long we will have to move????

    • Sorry, Nikole. I don’t have any definite answer for you. From what I understand, your lease is a signed contract between you and your landlord, which means that you should be able to at least stay for the length of your lease in spite of your notices. I believe the best person to talk to would be a real estate attorney. Sorry I couldn’t be more helpful.

      Had I not found my rental listed for foreclosure on a website and then quickly passed it up, I would have had a better answer. If you don’t mind, please let me know how things turns out. I know it’s a pretty stressful time for you right now and an unfortunate event.

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