Tuesday, November 17, 2009

A Snake is a Snake is a Snake

There are two sayings that you've probably heard a million times but they always bear repeating:

"Caveat Emptor: Let the Buyer Beware"
"Some people will do anything for a buck"

Often these two phrases go hand in hand especially when it comes to real estate.

By now you've probably heard of the "We Buy Houses for Cash" scam but just in case you haven't here's a little background.

Andrew Dunn reported the following in his article, "Home Scam Stings Owners":

"Typically, this is how the scheme works: A distressed homeowner, who can't sell his house and may be facing foreclosure, agrees to sell his home to a company in exchange for a small cash settlement and the title to the house. The homeowner doesn't realize he is still named on the mortgage. The company brings in a renter, who pays a significant deposit. The company may or may not continue to pay the mortgage. When it can no longer find a renter, it abandons the property, for which the original homeowner is still liable.

It's the latest in a number of schemes that regulators are battling as distressed homeowners look for a way out of an overwhelming mortgage or impending foreclosure. The N.C. Department of Justice has been cracking down on foreclosure “rescue” outfits that require an upfront payment and promise to work with a lender to modify a delinquent loan. Now it's also taking aim at businesses that promise to take over mortgage payments if the homeowner signs over the deed or title.

The businesses often start by sending letters meant to look handwritten that offer to buy the house and pay off the debt. They count on the stressed home seller to not thoroughly review the deal or hire an attorney to vet the contract."

Now here's the new twist on this scam.

The "We Buy Homes" snakes are now working with service contractors in order to get information on the homes that they want to buy.

For example, a homeowner may hire a painter, cleaning service, or handyman to perform routine services. That contractor then has access to the home and, in turn, feeds information on the condition of the home back to the individual/business who wants to buy the home. And in the age of the camera phone, the contractors can often supply pictures. The scam artist then mails the intended victim a letter stating that they will buy homes that have the specific flaws in the home. And of course, the majority of the targets for this scam are senior citizens.

Evil? You bet.

Well, I know that if you're a regular reader of my blogs you're never going to fall for this scam. But here's a little information that you can pass on to a friend.

"How to Protect Yourself From Scams" from HomeBuyersNetwork.com
"If you need to sell a house fast, here are a few rules for protecting yourself from falling prey to a scam like these.

Only Work with Professionals

The best way to protect yourself from scams is to work only with professionals who have an established history of home buying. These days, anyone can order a book from an infomercial and become a "professional home buyer," but real professionals have been in business for many years and have closed millions of dollars in real estate transactions. Their primary concern is the health of their business, and they will not risk that by cheating you or otherwise treating you unfairly.

Check Out the Buyer

If you have any concerns about the buyer, don't hesitate to check them out. Contact your state Attorney General's office, your state's Real Estate Commission, or your District Attorney's Consumer Fraud Unit. If they are an established business, also check out the Better Business Bureau.

Always Understand What You're Signing

Not asking questions because you are afraid of looking stupid could end up costing you tens of thousands of dollars or more if you end up in a deal that wasn't what you thought it was. A lawyer or even your mortgage company can help you if you want professional advice from a third party. Never, ever sign a contract that you don't understand.

Get All Agreements in Writing

If a disagreement arises about a verbal agreement, the issue becomes your word against theirs and often must go to a court of law to be settled. Don't risk that. Insist that all terms be in writing, and don't agree to anything that isn't.

Be Willing to Walk Away

If you have any doubts about the buyer or the contract — or if it just doesn't feel right — just walk away. It's never worth the months (and maybe years) of future headaches to sell your house a few days sooner."

If you believe that you, or someone you know, is being targeted by "We Buy Houses" scammers, report them immediately to your state real estate regulatory board.

And just as a point of common sense, don't let just anybody into your home. I know, it's really a shame to live like this but the failure not to could have terrible consequences.

Related posts:

Caveat Emptor: Beware of Mortgage Modification Scams

Beware of Mortgage Leopards Trying to Change Their Spots

Everybody Takes Advantage of An Opportunity, Right?

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