I received a call the other day from an "Eric". He says he wants to buy short sales. I give him 10 minutes of my precious time to hear what he has to say.
He proceeds to explain that he has a company that negotiates short sales. But he "buys" them - and his company negotiates the short sale. He explains to me that any bank - they're "in and out in a few weeks". They get deals done super fast because they "know what they're doing".
I keep listening. He proceeds to tell me, in his contracts it says in bold print something to the effect: I PLAN TO MAKE A PROFIT FROM THIS TRANSACTION - or something along these lines - this of course "solves" the issue of the Home Equity Theft Prevention Act...of course. Meanwhile he's talking about achieving a 60% "spread" on the equity of the home.
He says, "the home equity theft prevention act....what equity. There is not equity..."
In my head I'm saying, then what's your "spread" mean???? If you "achieve" your "spread" - then there's equity...and you're stealing it.
Anyhow - he tells me he speaks with agents all over the country and so many of them "don't know what they're doing..." He tells me, "...everything we do is totally straight up" (yeah - someone's ars - I'm thinking to myself!).
He tells me if the spread isn't met then I am charged a 1% fee from my commission for their negotiating the short sale. Tells me - "oh it's better if the property isn't listed..." I'm sure it is!
By the time we got off the phone, I knew I wouldn't let this guy near any of my clients, nor would I even think about doing business with him.
Sick.
Now I'm sure there are people out there that are a lot smarter than I am - making a ton of money doing things like this - that may very well be legitimate. Who knows, everything this guy was telling me could be 100% ethical and legit. I'm not as smart as him...I don't know.
But my paps once told me: If it's looks like "IT", smells like "IT"...don't taste "IT".
I hope you took down his contact information to forward to the proper authorities. I would love things like this to be investigated.
Thanks for sharing your post this morning. I am here with my cup of coffee. Please continue to blog more information.
That is the newest crazed investment program going around the country. .check this post
Eric is a busy boy....we have a short sale collection he coveted as well...just say Bye Bye....
Wow-this was an excellent post. I love reading your posts. Keep up the great job on blogging.
Just disgusting, hope you did turn him in. Just makes me sick that people prey on the desperation of others. When someone is down so low, they actually help to make it worse.
You know, I honestly hope I get that phone call on floor time...
It is amazing what people come up with. I have also gotten some strange calls about negotiating a short sale or buying back short sales and at the same time selling them again and fees etc.
Andrea hit it on the head, disgusting, Eric is the type of guy that caused this problem. The worst part is that someone intelligent and full of malice hired a bunch of people that are uneducated and really believe they are doing a good thing. So very sad and just a shot of what is hurting our economy right now.
Thanks for educating us about "Eric", we need to get this into the market and let the market shut these guys down!
You know what they say.... "If it sounds to good to be true...." Need I say more?
I actually got an email from someone with much the same spiel. It definitely smelled fishy to me.
Thomas, I've spoken to these types before and the lenders are trying very hard to crack down on this type of deal. It wouldn't happen if the banks were a little quicker with their short sale negotiations.
Thomas don't know if it is legit or not, but you did the right thing by not getting involved with this guy. If he is so smart, why does he need you?
He found me online - trulia I think. I used to blog very often on there (not half as much as I used to - trulia sends me all sorts of unrelated information - annoying)...anyhow -
he needs "agents who know what they're doing..." - code word for "idiot who doesn't know any better, who understands investment numbers". i understand investment numbers and can spot a "deal" a mile away - I'm just not the first part of that - an idiot.
lol
who knows - maybe I am and this is a good opportunity to make a lot of money - legitimately. It just sounds NOT RIGHT.
I'm all for a straight up short sale - work hard - HARD - get it done honestly. If an owner is looking to do something underhanded - i walk - period. That's my schtick - even if it bankrupts my business.
thanks for all the comments. keep'em comin'.
THOMAS,
Many times these schemes involve an "Option" contract or it is referred to as an "A to B to C" transaction. The option contract gives the investor the right to cancel the contract at any time, for any reason with no penalty. The Seller, on the other hand, is tied to this contract and no way to end it. As a matter of fact, this scheme is getting more difficult to pull of because of several measures the lenders are adhering to. Some of these investors are then recording these "option" contracts with the local courts and just walking away. In the event the Seller can find someone to purchase the property, make an offer, submit it to the lender and negotiate an approval...the investor reappears. His "option" contract has now become a cloud on the title they actually charge a fee to release that cloud...Man o man!
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Unbelievable. Like I said, there are a lot of people out there that are "smarter" than me. But I think many of these "smarter" people are going to find that they not that f*$^%& smart!
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Well here you go folks! The largest title insurance underwriter in Florida, The Fund, has sent out this release toeliminate their participation in "Option" or "A to B to C" sales.
FUND ALERT: SHORT SALE PROGRAMS
The Fund has become aware of several "short sale programs" advertised on the internet and elsewhere that promise to make the investor lots of money with little or no work by purchasing and selling property through short sales. The programs involve the investor entering into options or similar contracts with the homeowners for the exclusive right to purchase their property for a period of time. The investor negotiates a short sale with the lender, convincing the lender that the price they are offering is the market value of the property. The investor then finds a buyer for the property at a much higher price. Once the buyer is lined up, the investor buys the property from the seller, pays off the seller’s mortgage at the short sale rate, and simultaneously sells the property to the buyer at the higher price, pocketing the difference. In most cases the original lender is not told that the buyer is flipping the property on the same day for thousands more than the lender has been told is the market value of the property.
In the cases we have seen, the investor has not put any of his own money into the transaction, and uses the new lender’s money to fund the entire deal.
A variation of this program involves the investor having the seller convey the property into a "trust" with the investor as "trustee".
The Fund has made a business decision not to insure these types of transactions.
Before you insure any kind of transaction involving a short payoff to the existing lender, or a simultaneous closing, make sure that the following requirements have been met:
1. There are no violations of any restrictions listed in the short sale payoff letter or closing instructions.
2. There have been no misrepresentations as to the value or ownership of the property to the existing lender, the new lender, or the purchaser.
3. All disbursements must be made exactly as stated on the HUD-1 settlement statement, and only to parties involved in this specific transaction.
4. Each half of the simultaneous closing must be kept separate and stand on its own. The sale from A to B must be fully funded and disbursed with money coming from and going to all appropriate parties. The sale from B to C must also stand on its own. The money from C’s lender must not be used to fund any portion of the A to B transaction.
If the circumstances of your transaction do not meet the above requirements, you must contact a Fund underwriting attorney for approval prior to insuring the transaction.
That's what kills me - this guy who called me based his whole "straight up" approach on the fact that he would "buy" the property for .65 cents on the dollar.
I don't know about you - but I'm there to price and sell any short sale at MARKET VALUE. That's what I'm supposed to do.
I'm glad this company is wising up to this type of scheme.
Now this is a pretty darn good thread - currently relevant to the times - some reallly good feedback (thanks all) and does AR recognize it as a quality post - enough to put it on as a featured listing?
Naaahhh...
These AR guys really baffle me - they do.