Flopping, Short Sales, and Broker Price Opinions
Perpetrators are conducting short sale property flipping schemes using distressed properties of homeowners who are unemployed or facing foreclosure. The perpetrators collude with appraisers or real estate agents to undervalue the property using an appraisal or a broker price opinion to further manipulate the price down (the flop) to increase their profit margin when they later flip the property.68 They negotiate a short sale with the bank or lender, purchase the property at the reduced price and flip it to a pre-selected buyer at a much higher price.
Here is a link to the FBI mortgage fraud page.
I am grateful on your advice. I didn't know this is bad news. I will do my comps and homework before getting involved. It is definitely NOT worth my headache if this is a scam. Your advice is definitely WELL taken. I would NEVER get involved in something like this :--))
Getting a solid fair market value offer on my short sale listings has been my priority since the beginning of my Short Sale Real Estate career.
Besides the fraud issue, there are other reasons getting a solid fair market value offer should be your priority as well:
1) Most loans are packaged and sold on Wall St. to retirement fund, mutual funds and such. That means that the investors on the loans are your friends and neighbors. If you do not try to mitigate the loss, then you are probably hurting people who are close to you.
2) Selling a property for less than fair market value brings down the value of other homes in the neighborhood.
3) Getting the highest offer possible helps your short selling clients limit the amount of their 1099 and increases the chances of short sale approval.
4) Participating in this type of scam means you will be exposing the original seller, someone who has trusted you to help them out of a bad situation, to possible prosecution for fraud.
As Realtors, we all want people to know who we are and what we do. You said you are just starting out. You don't want to be known as that Realtor who was convicted of committing fraud, do you? Good luck to you and the best advice I can give you is to learn everything you can about the ends and outs of short sales. The more you know, the better you can help your clients, and the more listing you will get.