Short Sale Scammers We Buy Houses

Aug 14, 2008 | Posted by: Hopkintonrealestate | Full story: metrowestmarealestate.blogspot.com

Have you ever seen the signs posted on telephone poles in the Metrowest area that says something to the effect "We buy houses" . The headline usually reads do you need to sell your home quick? Are you in financial trouble? Do you need cash fast?

Be on the lookout for a new Real Estate scam taking place in the Metrowest area.

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Jon Christopher

Bethlehem, PA

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#1
Sep 3, 2008
 

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Some of these "i buy houses" people are actually legitimate real estate investors looking for their next deal. Others are predators looking to capitalize on a homeowner's financial problems in any way they can. People looking for information about short sales can go to http://www.shortsaleway.com .

“Metrowest Real Estate”

Since: Apr 08

Hopkinton Massachusetts

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#2
Sep 3, 2008
 

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Jon your right there are legitimate companies that so purchase homes from people who find themselves in a difficult financial situation. The company described in this post is doing some things that are VERY unethical. This company represented to the seller they wanted to purchase her home. They told her they would be presenting a short sale scenerio to the back for her. The offer they submitted to th bank would never ever be accepted. This company then put the home on the market without an MLS agreement from the seller. Putting someones home on the market and then reducing the price of the home without telling the seller is grounds for speaking to the better business burea.
Jeff Coga

Los Angeles, CA

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#4
Jan 5, 2009
 

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This is the new wave of doing a short sale. The option contract gives them the right to do it. That's if they are using the same type of option contract that we use. Nothing un-ethical about it, except that you don't understand it.... As the old cliche saying goes... "a confused mind always says, NO".

The offer they submitted will never be accepted... OF COURSE. It's easier to start low then to start high. The MLS issue...the option contract allows them to do it.

Bottom line... the homeowner wants the house sold, they will buy it. Of course the only thing you might object is the deficiency judgment issue... but of course you should look after the best interest of the homeowner.

“Metrowest Real Estate”

Since: Apr 08

Hopkinton Massachusetts

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#5
Jan 5, 2009
 

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Jeff - In Massachusetts nothing allows a person to list a persons home without their consent. You need a signed contract to do that. The option contract you mention is nothing more than a scandalous piece of garbage that these bozo's have people sign without the person knowing what they are actually getting themselves into.

It is just the opposite when you are in financial difficulties...a confused mind says YES. Unfortunately people don't understand these documents otherwise they would never sign them.
Grant Wade

Little Rock, AR

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#6
Jan 26, 2009
 

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I agree with Jeff. The home owner wants the house sold period. They also know that they will not be receiving proceeds from the sale. All of the short sales we have done, the bank required that the owner did not receive and money. That being the case, it doesn't matter what offer you make to the bank since the owner will not receive proceeds. We get around this by offering the owner $2500 as "cash for keys" to assist them at moving into a rental. Regardless if you do the short sale, or we do it, the end result is the same.

“Metrowest Real Estate”

Since: Apr 08

Hopkinton Massachusetts

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#7
Jan 28, 2009
 

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Grant you are missing the point. The seller thought the person was interested in buying the home. She was not interested in signing a listing agreement with them. There is no point submitting an offer for 25 cents on the dollar in a short sale either. The bank is never going to go for it. This person was never interested in buying the home unless they could steal it. They were interested in having the owner sign a listing agreement. This was flat out WRONG!
Brett Jennings

United States

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#8
Jan 28, 2009
 

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Hopkin real estate- I dont know what MA laws are, Im an agent here in CA. The option contract is showing up here in the CA market so I wanted to know if it was legit or not. I asked my broker, he wasnt sure so I took it to 2 different real estate attorneys locally for review and they said its totally leagal in CA so long as the agent also isnt the investor at the same time and the seller understands and is disclosed what is going on.

Sounds like the seller you spoke with delt with an investor who didnt explain thier intention to resell the property or she didnt understand that they were going to.

The short selling lenders are approving these as well and the agents and investors doing them are helping to move our distressed inventory so I think these are here to stay for a while.
Tommy

San Marcos, CA

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#9
Jan 29, 2009
 

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They are all scammers. Noone is going to buy just any house. I used this site to sell my house. http://www.mlsisland.com its good in Mass. And there is no BS.

“Metrowest Real Estate”

Since: Apr 08

Hopkinton Massachusetts

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#10
Feb 9, 2009
 
Brett the person who got them to sign listing contract represented that they wanted to purchase the home....NOT list the home as a short sale. There is a huge difference. Option contract or not this was fraud!!

“Metrowest Real Estate”

Since: Apr 08

Hopkinton Massachusetts

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#11
Feb 9, 2009
 
Tommy that site is a joke! If you think selling a home in a challenging market like the one we are in is going to be accomplished by just throwing it in MLS you are sadly mistaken.

“Metrowest Real Estate”

Since: Apr 08

Hopkinton Massachusetts

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#12
Feb 9, 2009
 
Brett by the way the person was an investor with a Realtor as a partner.
Chris Hawkins

Azusa, CA

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#13
Feb 26, 2009
 

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Option contract is becoming the norm. Just like any contract... you have a right and wrong way to do things.

I don't know the details but the option will give legals and equitable rights to purchase and market the property.

If your MLS has the remarks area you must state that a member has "equitable interest" or holds an option.

I don't know you personally either but you are presenting yourself as a short sale specialist? Why because you have a RE lic?

Come on now, you have no idea of the "ins and outs" of a short sale.

To say that WOW the $131 offer which is 65% of FMV is not good? You're probably the type of agent who asked for the "highest and best offer" and struggle to close deals.

My question is who is it NOT good for? Not good for the homeowner who avoided a foreclosure? Not good for the investor who will re-sell and make a profit? Not good for your market because now you have 2 comps that went up? or maybe.... Not good for a realtor such as your self who didn't get the piece of the pie?

Whatever the reason... I recommend for you to partner up with that investor.

Chris

PS
Nothing wrong with having a realtor as partner.

“Metrowest Real Estate”

Since: Apr 08

Hopkinton Massachusetts

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#14
Mar 4, 2009
 
Exactly you don't know me and I do know my way around short sales Chris. It is obviously you that is clueless if you think banks generally accept a 35% discount on the market value. Sorry pal it doesn't happen!

The home owner did not avoid foreclosure because they got involved with a scam artist. The person came off as someone interested in buying her home and then put her home on the market without her knowledge illegally. I am not going to explain it again.
Peter Knight

Noblesville, IN

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#15
Mar 15, 2009
 
Here in Indiana, we have seen the purchase option contract, and the home is listed in the MLS by virtue of a legitimate listing contract. The method is sold and promoted by Cory Boatright. There are a couple issues I'm not clear on however: the purchase option does not appear to include a price (because investor needs to learn what the bank will accept), and secondly, will the eventual buyer's lender go along with this "quick flip" at the closing? Can anyonme familiar with the approach explain?
Chris Hawkins

Azusa, CA

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#16
Mar 16, 2009
 
Banks do not discount 35% off of FMV... but they do discount depending on who the investor on the loan is.

ex. simple numbers for you... so you can understand...

FMV:$100k
BPO:$85k

Lenders will take 85% of BPO value if its conventional, 82% if FANNIE/VA/FHA typically...

So...$72,2500 NET to bank... NOW you have a discount over 15%

The 35% is usually on shabby beat up properties...

The fact that you say SORRY PAL on the 35%...you don't have to explain anything buddy... most realtors have these horse blinders on... and think this is the only way... you can lead them to the water but cant force them to drink it.

Peter: The end buyer must use a lender who does not care about seasoing issues. Typically bankers are the only one (portfolio loans). Keep in mind most states now cannot do a "wet close" and the a-b transaction cannot come from b-c.

“Metrowest Real Estate”

Since: Apr 08

Hopkinton Massachusetts

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#17
Mar 16, 2009
 
Chris of course they discount. Banks don't want to hold property but everyone assumes incorrectly that the norm is what you see on the late night infomercials where they say you can buy bank owned property at 50 cents on the dollar. As a general rule this is not the case.
Jeff Coga

Los Angeles, CA

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#18
Apr 14, 2009
 
Where you at the s.s. boot camp few months back?

Jeff@shortsalesbuyers.com
adamus29

Minneapolis, MN

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#19
Apr 27, 2009
 
Hopkintonrealestate wrote:
Grant you are missing the point. The seller thought the person was interested in buying the home. She was not interested in signing a listing agreement with them. There is no point submitting an offer for 25 cents on the dollar in a short sale either. The bank is never going to go for it. This person was never interested in buying the home unless they could steal it. They were interested in having the owner sign a listing agreement. This was flat out WRONG!
It is amazing to me how people want to start pointing fingers right away!

I am an investor who uses the option contract to make an offer to the bank and sell the homeowners house for profit.

Let's look at how this helps everyone involved
1. Homeowner- doesn't foreclose and debt is considered settled.
2. Lender- A short sale (even with an investor) saves banks money. If it goes to foreclosure they end up losing 10-30% more.
3. Market- Short sales keep the market from bottoming out even more. If all the houses went to foreclosure we would see values drop more than they are now.

Perhaps before you call people who use the option contract as scammers, you should understand the process of buying short sales as an investor.
There is an ethical, legal way of doing it.

The homeowner you described may or may not have been told about their intention of reselling the house. I explain this to homeowners and have them sign an affidavit of understanding, so they can't come back and cry wolf.
life_aquatic

Kent, OH

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#21
May 1, 2009
 
I'm involved in something like this myself right now from the ultimate buyers perspective. It stinks of rotten eggs. The contract they want me to sign essentially gives the investor zero risk, while I have to sit waiting, for a deal that could potentially fall through, unable to make other offers on better deals.
Let's look at adamus' assessment.
1. Homeowner - doesn't foreclose - this is probably a good thing
2. Lender - loses because a buyer was willing to pay more than the short sale negotiator offered
3. Ultimate Buyer - loses because the bank was willing to sell for less than what they offered.
3. Market - loses because home prices remain artificially inflated.
4. Only clear winner is the negotiator. And it is not clear they're really needed to begin with. I would have no problem paying a negotiator a flat fee, but they are not going to be in the middle of any home buying I do.

“Metrowest Real Estate”

Since: Apr 08

Hopkinton Massachusetts

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#22
May 1, 2009
 
Adamus29 - 1st of all there is a big difference between disclosure and non disclosure!

A home owner who gets caught with their home tied up with an investor who will never get a bank to approval their deal is asking for a foreclosure.

In the above scenerio there was no chance the bank would ever approve the deal. A bank is not going to give away a home for 50 cents on the dollar.

Short sales can be slightly under market value and the bank will work with you in most cases. Banks DON'T give properties away in short sales.

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