Selling a property - the offer is suspicous - Posted by domineaux_Houston_TX

Real Estate Investing Real Estate Law
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Posted by MariettaMike on September 24, 2005 at 10:17:26:

From everything you posted. This looks like a clear case of mortage fraud. I live in GA, I believe we are number 1 in mortage fraud!!!

The state just busted a group of investors/realestate
agents/appraisers/title searchers doing exactly that. It was a large group all working together, which as a previous postee stated will make the lender upside on a loan.
You need to bail, contact local officals and FBI if you want, put the guy out of business.

It’s jerks like that guy, messing it up for the legit investors.

MariettaMike

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Selling a property - the offer is suspicous - Posted by domineaux_Houston_TX

Posted by domineaux_Houston_TX on September 19, 2005 at 20:29:49:

I’ve got a strange offer on a house I selling, which concerns me. I have received letters from investors on properties I’ve been selling, with the below funds disbursement form. I just threw them in the file13, but this is the first time I’ve been face on with a serious investor willing to buy a property and hand me a contract.

The buyer/investor brought me a sales contract with the sales price marked up to 580,000. I’m offering this house at 380,000. The buyer investor indicated he worked for a group of investors. The house appraisal (certified Texas appraisal) two years ago was for $356,000. I kinda got the idea from the way he talked that he planned to get an appraisal for the the 580,000 or even more. Basically, this way he could acquire the property fully funded with money left over.

This is the accompanying form:

Disbursement of funds agreement

I have to agree to the disbursement of funds as follows:

To Me -------------------------- $380,000

Buyer and Seller closing costs-- Determined at close

The Investor-------------------- Remainder of proceeds

In other words, I get my 380,000 and he gets the difference between 580,000 and 380,000 at closing.

The investor said an appraisal would be made within the next few days. I agreed to meet with the appraiser to allow access to everything.

I asked the investor if this was legal, and he said it was. It was just the way they acquired funding to do any necessary upgrades on the property. This property might need $20K to be tiptop, but it’s in a viable selling condition now.

I mentioned I might like to use my own title company since I was seller. The investor mentioned they would be paying for the title policy and my proceeds were NET for $380,000. This seems generous from a guy I’ve met two times.

Curiously, I asked how he could justify buying my property in such fashion and he indicated that he would be offering the property to marginal credit buyers.

The investor mentioned the transaction is legal, But he didn’t mention I might have to pay tax on on that extra 200,000 grand I didn’t receive.

Anyway…this smells fishy to me. I sure would appreciate any comments, suggestions or sage advice.

_Thanks

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Re: Selling a property - the offer is suspicous - Posted by billy

Posted by billy on October 23, 2005 at 18:09:21:

to protect yourself put in the contract what the last appraisal was and that date ,When the FBI asks if you were part of anything fishy just refer to your disclosure in the sales contract

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Re: Selling a property - the offer is suspicous - Posted by domineaux_Houston_TX

Posted by domineaux_Houston_TX on September 24, 2005 at 11:23:18:

I’ve talked with the investor and he assured me everything is on the up and up. In fact he agreed in writing to disclose all documents and agreements associated with the transaction to all parties to the transaction, including the lender and mortgage broker/banker.

This transaction will close in a week. I know this…in the state of Texas if a contract is illegal it’s not a contract. So…if I’m not satisfied the proper persons are aware of all the details of the transaction I can sure as heck balk like crazy during the close at the title company. I know they’ll throw in the towel before they’ll take on a potential case.

In fact…I’m going to go so far as to demand a letter from the principal lender indicating that they know what’s going on and they’re in agreement with it.

=========================

Afterall this is a creative real estate site, and many of the deals that have gone down have often amazed me. I often made some of my best deals when all the flags were up and I should have backed off.

I’m not saying doing illegal acts for sure, but with the stunts the mortgage companies are doing in today’s markets this kind of transaction could be fairly commonplace within a few months.

THis investor indcated he’s got about 6 houses now he’s rehabbing and he bought them in this fashion.

His concept:

He has investors he works with who actually acquire the funds and then his company receives the additional funds at the close. He rebabs or otherwise improves the properties with those questionable disbursed funds and he participates in the sale of the properties with the investor who acquired the funding for the property.

This might be a very good case for further discussion as I’ll be pleased to share the outcome. I’ll also keep notes of discussions with involved parties.

Oh…he indicated at closing I’ll give him a 1099 for the funds disbursed to him, and he’ll pay title policy because the amount is in excess of the price I’m selling for. My tax liability will be for the sum I actually receive at closing.

If you see something wrong with this arrangement so far…let me know. You can also email me, if you don’t want to discuss it on the boards.

THanks for all the responses

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Re: Selling a property - the offer is suspicous - Posted by DoubleJ

Posted by DoubleJ on September 21, 2005 at 08:10:44:

Sounds like he is into some loan fraud to me. Unless you are totally mistaken on the appraised value of the home.

Otherwise he has an appraiser in his pocket, and thats a no-no.

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Re: Selling property - Sounds fishy to Me - Posted by Steve

Posted by Steve on September 20, 2005 at 14:17:30:

I,m just a newbie but it Seems just a little Fishy to me…Maybe even Fraudulent…
If he said He,d have it appraised at 580,000 or higher.Could it mean that he has an unscrupulous Appraiser with his team?..Inflate the amount to make it easier to aquire a loan.I would question it.
As far as paying taxes on funds you did not receive…I know I would,nt.
Steve

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Re: Selling a property - the offer is suspicous - Posted by domineaux_Houston_TX

Posted by domineaux_Houston_TX on September 21, 2005 at 10:25:54:

I guess I’ll never know, because he won’t send an appraiser until I’ve signed the contract.

I’m not about to sign that thing.

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Re: Selling a property - the offer is suspicous - Posted by River City

Posted by River City on September 21, 2005 at 11:54:22:

I assume he is obtaining a loan for this property. If so, tell him that all agreements between you and him must be disclosed to the lender and that you will not do anything that is fraudulent. If the lender is in agreement with the contract, then don’t worry. I believe once this is done, you will not hear from him again.

You also want him to be responsible for any fees that are based on the purchase price of the property, such as title insurance and deed stamps, as those are two big items and will double based on your asking price and his revised sales price. Be sure all agreements are in writing. When he says “trust me” … don’t.

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Re: Selling a property - the offer is suspicous - Posted by domineaux_Houston_TX

Posted by domineaux_Houston_TX on September 21, 2005 at 16:17:14:

Interesting…

He called and we discussed pretty well what you mentioned. I expressed my apprehension about the inflated sales prices with distribution to him of the variance amount between my actual sales price and the sales contract (inflated amount).

He indicated that was the way he would finance improvements on the property. He mentioned the lender would definitely know about all agreements. He even gave me the Mortgage Broker’s name and phone number. I realize that’s not the principal lender, but it’s a start if this is for real.

I’ve got all the contracts and information ready to fax to the FBI if this is bogus.

He mentioned at our first meeting he would be paying the title policy, but he didn’t indicate it was because of the inflated sales price. He also mentioned he would receive a 1099 at closing for the amount he was receiving.

-------------- Strange Brew here