Buy Houses Fraud, Rip-off, and Scams…
Are there people out there claiming to do what we do?: Yes
Sometimes they are wholesalers (valid) and collect information from people in hopes they can turn around and provide us a lead to purchasing a home and we in turn will pay them a finders fee. Other-times, people claim to be wholesalers (scam) in order to collect information for other uses. How to tell the difference? See Below.
Realtors claiming to buy houses/sell fast:
While many realtors continue to be middle parties to 6% of the transaction; many don’t like that we can buy homes without them.
Simply put, we can make better offers without the need to pay 6% to a broker for nothing. Over the past 5-years, we’ve noticed more realtors using the same phrases ‘We Buy’ and ‘Sell Fast’ simply to get a lead to put under contract. The ‘Law of Large Numbers’ for the realtors is, the more people/houses they can get under contract, the better their odds are of collecting a check; even if someone else sells the home.. they still get half (3%) of the commission from the sold price for someone else doing the work. NOTE: We are not realtors.
One of the most common types of scams allows the ‘buyer’ (her/him/them) to make off with most or all of your equity.
- The ‘buyer’ has you make payments to them-self instead of making payments to the mortgage.
- The ‘buyer’ has you move out so they can rent the house.
At this point, there are several ways the ‘buyer’ can skim from this:
- They receive partial/full payment from the seller
- They receive partial/full payment from the renter
- They can use the equity in the house to secure other equity lines or financing
- Sell the home without satisfying the outstanding mortgage
NOTE: We have done transactions very similar to this; however, we don’t fall into the topic of this thread. While we have assumed houses subject to the owner’s financing; we have also paid out equity: up-front, via installment payment(s), and/or balloon payment (on the back-end). In these cases we have time frames wrapped around the transaction for when the home must be rolled out of the owner’s name and into our portfolio. In all such cases we promote transparency in allowing access to the numbers.
Contract Bait and Switch:
There is a reason why scammers use the techniques they do; because they are very similar to real transactions. One of the above examples includes a person we reference as a ‘wholesaler’ and in such case a wholesaler knows the market and knows the numbers that may work for us. In such a case the wholesaler may use the term ‘as assigned’ to allow the contract to be assigned to us. Although this is a change to the contract, this is not the same as a Bait/Switch Scam. A Bait/Switch scam occurs when the initial contract and the closing contract are so drastic that you are either choose to lose the home and/or get tangled up in legal battles for months or years to get out of the contract.
If you found someone advertising by bandit signs; do they adhere to city ordinances. We have also seen ‘wholesalers’ turn bandit signs into bumper stickers (purple, yellow, etc.) and post on public property (poles, mailboxes, and utility boxes), which is a direct violation of code. If they have a blatant disregard for such things… odds are they will not adhere to the best interest of all parties involved; maybe a red flag.
How to tell the difference?
- Accredited (A+) Better Business Bureau (BBB): GRGP
- Actual Office Address (Not just a PO Box or UPS Store Suite #):
1755 TELSTAR DRIVE; Suite 300
- Business License: GRGP
- Business Relationships: Zillow Pro
- Domain Name: SSL Certificate (Matches Domain; NOT Shared)
- Email: Certificate Signed Emails (Matches Domain)
- Length of Time in Business: Greater Than 5 Years
- Phone # is Branded: 844-GRGP.com (4747.266)
- Hours of Operation: M-F (Open-Close)
NOTE: ALWAYS OPEN (24/7) might be a red flag and/or an ambulance chaser.
- Notary and Title Company
- Other: Bank, Business Cards, Letterheads
While some ‘buyers’ have a good story… much of the above is hard to forge and a good indication of whom you might be dealing with. If it seems wrong and/or your being pressured into making a decision… this may be a warning flag of a scam. Ultimately, don’t be afraid to walk away.
Contact us if you have questions.
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