This entry was posted on Monday, July 9th, 2007 at 9:34 pm and is filed under Investment. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
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July 9, 2007
Not too long ago I came across an ad on Craigslist for a nice home in a somewhat desirable neighborhood for a good 20% under market value. I examined the ad several times over and was almost put off by the natural feeling that if something seems too good to be true…
I mean really, a home is generally priced slightly above market value. That’s what Agents recommend, that’s what clients want to get. While homes at 20% off do exist, they generally take a fair amount of work to actually find.
The ad painted the classic SOB story, the bank is going to foreclose, and I have to sell this home by the weekend of I’ll lose it. Knowing the foreclosure process generally takes a VERY long time I doubted the veracity of this claim, but again, my greed forced me to investigate further.
I called the number listed and received a happy answer from a young lady who explained that she’d been barraged with calls and would be showing the home all the next day. Apparently the price was just right to attract lots of attention from home buyers and investors alike, and not so low as to warn people off to the scam that was being played.
We cased the neighborhood the next day and were reasonably impressed. We noted that the home across the street was a good 20% higher in price, and wondered what this quick sale at such a lower price would do to their chance of selling.
We were greeted by a large woman who explained that she ‘helped’ people in foreclosure sell their homes. (Just like an agent, except no pesky license!). She showed us the home, which we found to be in fairly rough shape, though not suffering from any particularly notable damage. This woman told us all about the home, gave us a flyer, and told us how she regularly shows homes and sells them for a commission from people in distress.
She left my wife and I to ourselves at one point and we conversed. I decided that while the price was reasonable for the current condition, it would certainly need to be about 10 grand less in order to be in any way profitable to purchase.
Our Unlicensed-Agent returned and I asked straightly if, considering their time restraints, they were willing to work with me, I could arrange a quick close for around 15k less.
Her response left me stunned. “Oh no, we won’t go any lower on the price, in fact, we’re just gathering email addresses. Next week we’re going to contact everyone and run a round-robin auction starting at the listing price.” (Apparently the foreclosure was just a lie to get people in the door, like flies to honey…) “I imagine we’ll sell it for quite a bit more. Unless you’re willing to go higher, I will not be contacting you. If you like, you can call me next week and maybe we can talk about a slightly higher price, but only if it doesn’t sell to the highest bidder”
Apparently, this is a strategy increasingly employed by flippers and Fake-Agents to generate dozens if not hundreds of showings by listing a property for an unusually low price. This brings everyone in the door, and often results in the novices being convinced they want the home. A bidding war ensues and these places frequently sell for much more than they are actually worth. The beauty of the scam, is that if for some reason the home doesn’t sell to the top bidder, the seller generally has several other high bidders to fall back on.
So moral of the story, if it seems too good to be true (or at least too easy), then it is. I should have walked away the second I met the Fraudulent-Agent. I certainly didn’t call them back.
read comments (5)
July 10th, 2007 at 5:39 pm
You should file a complaint that she’s working as an unlicensed real estate agent.
It’s not uncommon to advertise a low price hopping for a bidding war. However, in this market, I just don’t see it happening. It’d be interesting to see what it actually sells for.
July 10th, 2007 at 6:03 pm
Do you ever see agents pulling something like this lady?
November 2nd, 2007 at 4:41 pm
Wow, i’m surprised she’d openly admit to being non-licensed and expecting to receive a commission. I thought that was illegal.
November 6th, 2007 at 10:08 pm
Scam: How to Sell your House in 5 Days…
I came across this story today on Realty Pupil.com today. If the author of the Blog had not actually been the one that found this scam, I never would have believed it. This is his first hand account of how an unlicensed group of people put a house, i…
March 17th, 2008 at 10:25 pm
At least she moved something in the market place! Get a clue people. Buy low and sell high!