Recently, a developer regaled me with a story about a house that seemed to be cursed.
Although he beautifully renovated it and priced it below market, the Oakland bungalow just wouldn’t sell. Deals fell through repeatedly for bizarre and unrelated reasons: Buyers got cold feet, or moved — one was even arrested. By the time the fourth deal collapsed, the developer was in an acute state of financial panic.
So, when one of the mortgage brokers who had helped a previous prospective buyer called with a new one who would close the deal for — get this — $100,000 over the asking price, he naturally jumped at the offer.
“The catch was that I had to give the $100K back to them after the close of escrow,” the guy told me, still looking shell-shocked. “I couldn’t understand why they would want to do that. The place was completely remodeled.” (Most buyers who get cash back after escrow pour that money into repairs. Typically, though, lenders like to keep this amount to no more than 3 percent of the purchase price.)
[…] Real estate fraud is an umbrella term for criminal activity involving real estate – criminal activity that usually amounts to little more than theft. According to new statistics, the problem seems to be getting worse. The FBI reported that in 2005 alone, real estate fraud cost the country at least $606 million. The Treasury Department is tracking 35% more suspicious through 2006. The IRS reports that cases of mortgage fraud that have been brought to their attention have been doubling every two years, starting with this decade. This worrisome trend means that all real estate investors and homeowners should be on the alert. What is real estate fraud? […]
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