Real Estate Flipping
PETER HOLLAND: If you see a house that sold for $20,000 and they are now asking 100,000 dollars that is a huge red flag.
STEVEN MILLSTEIN: Because that might be considered what is called a flip or a transaction, where the purchase price is being artificially inflated and you might be getting ripped off.
STEVE LOVEJOY: Buy low and sell high; that is how you make money isn't it?
STEVEN MILLSTEIN: Lets say, that I buy a house for $100,000 and I want to sell it you for $250,000.
STEVE LOVEJOY: There is really nothing wrong with that unless the value of the property really is lower than telling you are telling the lender.
PETER HOLLAND: Unscrupulous people will buy a house and make minor cosmetic repairs and they will then flip it to an unsuspecting buyer for a much higher price.
IRWIN KRAMER: Figures don't lie, but liars can figure and that is what often happens in a real estate flipping fraud scam.
PETER HOLLAND: How can you say that a property that sold for $15,000 is worth a month-and-half later, $70,000?
IRWIN KRAMER: It is the appraiser, who is willing to say that these higher priced properties are comparable when in fact they are not, as a means of artificially and fraudulently inflating the price.
STEVEN MILLSTEIN: And then, we are going to use that appraisal to induce your lender to loan you, way more money than that house was ever worth.
IRWIN KRAMER: There were many red flags that might clue you in, that you may be a victim in a real estate fraud scam.
STEVEN MILLSTEIN: When it seems like it is too good to be true, often times, it is. If the lender tells you, you are going to have to bring money to the table, but the seller or the seller's agent says, do not worry about it.
IRWIN KRAMER: I know that you do not have 10,000 in the bank right now, so I am going to give you that money at the settlement table, just be between us.
STEVEN MILLSTEIN: It is good indication that they are trying to lead you down the path of what I would call some type of a fraudulent transaction.
STEVEN MILLSTEIN: They are doing it, so that you look like a person with the means to buy a house that is valued far in excess of what it truly ought be valued at.
IRWIN KRAMER: If you are asked to sign a blank loan application, I will just sign it and we will fill in the rest later. That seller is going to fill in inaccurate income information to make you look more credit worthy.
STEVEN MILLSTEIN: Is the person who is offering to sell you this house, not the owner of the house?
IRWIN KRAMER: He is going to get it from Joe the same day and then flip it over to you.
STEVEN MILLSTEIN: Someone is going to be misrepresenting to someone else what is suppose to be taking place here and you are going to find yourself the party to fraud.
IRWIN KRAMER: If you see any of these signs, you need to be very careful, back away from the table, see an attorney, get the facts to see if this really is too good to be true or not.