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View Full Version : A house listed as FSBO but then the seller wants to switch it up and bring his agent.


truong81
Aug 7, 2007, 07:14 AM
Ok here is the story. I recently found a house that I really like. It is an end unit townhouse. The sign said FSBO. So I did some research on the property and found out that the guy. It then turns out the guy is an agent and is the listing agent for another house in that community.

So, I went and talked to the owner (his name is Luis) and he said to me that if I was interested in buying this house he would list it on the market and let his friend who's an agent sell it. Is he breaking any law there? Here is the catch - this is a short sale. And I knew this going in so when he said his agent will give him the commission back I said it would be the lender paying the agent. He said yes the lender will pay his agent but he will get the agent to pay him back. I think there has to be a red flag there. Then he goes and tells me that he has a friend who will appraise the house. Wait - if the house is a 'short sale' wouldn't the LENDER be sending one of their people to appriase the house? Am I missing something.

I really do like this house. But it seems like he might be 'price fixing'. His price for his house is 575 and the other house he is listing is 559. But there is another house - on the same street that is listed for 474. Now, I know the market right now is crazy and lots of people are losing lots of money. But wouldn't you base the price on the recent sale. So the other end unit sold for 480.

And Luis is telling me his price is fair market value... blah I know he paid 700 for his house with over 100k in upgrades...

ScottGem
Aug 7, 2007, 07:20 AM
If a house is advertised as FSBO and the owner brings an agent into it then somethingis definitely off. Whether its illegal or not is a different issue. There are false advertising laws and that may cover this.

But your bottomline is whether you want the house and what YOU want to pay for it. Whether the seller uses an agent or not, whether is a short sale or not really has no bearing on you. You make an offer for what you feel is a fair price. If the offer is accepted then fine, if not, you have the option of upping your offer or walking away.

The only thing that should concern you is whether the seller can convey clear title.

truong81
Aug 7, 2007, 07:22 AM
How do I check the titel on the house?

ScottGem
Aug 7, 2007, 07:28 AM
You agree on a price and then go to contract. You pay a deposit. One of the clauses in the contract would be that the contract is voided if clear title cannot be conveyed. You then purchase Title Insurance from an isurer who researches the title and guarantees it.

excon
Aug 7, 2007, 07:30 AM
Hello truong:

As ScottGem said, your FIRST step is to make an offer on the house. If it's not accepted, who cares who's on the title? It costs NOTHING to make an offer - but it costs money to do a title search.

Once an offer is accepted, you HIRE a title company to check on the title. That costs money, so you shouldn't be doing that unless you know you can buy the house.

IF you just want to spend money, hire a title company. You can find them in the phone book.

excon

truong81
Aug 7, 2007, 07:33 AM
Ok. I understand all that. But can he list the house as FSBO and then turn around and say he wants to bring his agent into this game?

excon
Aug 7, 2007, 07:45 AM
Hello again:

He can wear a different pair of pants every day too. That, and whether he hires an agent, has absolutely NOTHING to do with your offer.

The amount you are willing to pay and whether he accepts or not is the ONLY thing that should concern you. What difference does it make to you how he spends the money after you've given it to him??

excon

truong81
Aug 7, 2007, 07:48 AM
I guess that is true. Now I really do like this house. I just don't know what to do. I think he is trying to drive the price in the community cause he is now listing the other house for sale.

excon
Aug 7, 2007, 07:55 AM
Hello again, truong:

Of course he's trying to drive the price up. It's a perfectly proper thing to do. That's exactly what you're going to do when you sell it. And he can drive it up as high as he wants... He can make up all sorts of numbers...

But, if it's MORE than you're willing to pay, so what??

Look. One of the major mistakes buyers make is falling in love with the house. You've made that mistake. Stop that!!

Do this instead: Make an offer on the house based upon what YOU think it's worth - NOT what HE thinks it's worth. If he doesn't accept your offer, walk away. There are a jillion houses on the market right now.

excon

RubyPitbull
Aug 7, 2007, 07:55 AM
truong, first rule of thumb in any transaction, go with your gut. If you are uncomfortable with what he is doing, don't bite. Wait it out. If you feel he is driving up the price because he believes you really want the house, back off it. With the way the market is at the moment, you can afford to take the chance that the guy is pricing himself out of the market. If another home that is equivalent to the one you are looking at, sold for $480K, then he is overvaluing it and won't get the price he is placing on it.

By the way, as ScottGem & Excon have stated, don't worry about the FSBO change to an agent. The seller is liable for the paying a broker, not the buyer. AND, your lender will come in and put a value on the property if you choose to enter into a contract to purchase.

rockinmommy
Aug 7, 2007, 07:57 AM
Ok. I understand all that. But can he list the house as FSBO and then turn around and say he wants to bring his agent into this game?

Yes, he can do whatever he wants. I don't know of any law or regulation that would prevent him from doing so. As you stated in your orig post - his buddy is going to kick the commission back to him. That's why he wants to do it that way. As long as the price you and the seller agree on isn't changing what difference does it make? One tip. If he wants to use his friend/agent let him. You would also have the right to use a buyer's agent who represents only you. Then they split the commission, so he won't like that arrangement. But it would give you way more personal service and someone "on your side".

Regarding the purchase in general... I don't know where you're residing - East or West I'm guessing with a price like that for a townhome. The guy is obviously in a dire financial situation and is making some desperate attempts to somehow improve his situation. The price (based on the comps you mentioned) sounds way out of line. (You don't want to wind up upside down in your home.) The kickback on the commission is not on the up-and-up. There's nothing you can do about his intent to do that, and you'd have a hard time proving that it happened. Just lots of red flags I guess is what I'm getting at. I'd very strongly suggest hooking up with an agent. Ask around among your friends and find an agent who has done good work. They could represent you in this transaction, as well as show you other properties. You might even find something you like as well or better that wouldn't have all of this "wierdness" associated with it.

Ok, I've babbled on long enough.
Karla in TX

truong81
Aug 7, 2007, 08:00 AM
OK. I know its my fault for falling 'in love' with the house. Now my concern is... if this house is a 'short sale' I know I can offer whatever I want but I'm trying to think of it as a seller and lender's point of view. He owes 570 on this loan -the small one is for 60. So I'm guessing that is why the lender is even willing to do a 'short sale'. So given those figures, what are my chances that I will even get this house at the price I want.

I know - I should just put an offer. Thanks for all the replies.

truong81
Aug 7, 2007, 08:05 AM
Thanks! I was thrown back when he said he was going to bring his agent into this cause I myself have an agent that will give me 2points back for my closing cost.
I've done the cal. and I hight doubt he will be losing a lot of money out of this transaction.

In 2004 he purchased a townhouse in the community for roughly 450
2 months later he flipped it and sold it for 570
He went across the street and bought a single family home and sold it and make about 50K
In 2005 he came back to the townhouse community and bought the end unit for 700
He put 10% down -70k and took out two loans one for 570 and the other one for 60.
He's owned this house for two years and its been rented out for that long. So he never lived in the house.

Now if he was to sell it at 575 he will just repay the first loan off and walk away. And if he gets the commission back from his friend he wouldn't be losing much.

OK now I'm blabbing and even more confused.



Yes, he can do whatever he wants. I don't know of any law or regulation that would prevent him from doing so. As you stated in your orig post - his buddy is going to kick the commission back to him. That's why he wants to do it that way. As long as the price you and the seller agree on isn't changing what difference does it make? One tip. If he wants to use his friend/agent let him. You would also have the right to use a buyer's agent who represents only you. Then they split the commission, so he won't like that arrangement. But it would give you way more personal service and someone "on your side".

Regarding the purchase in general..........I don't know where you're residing - East or West I'm guessing with a price like that for a townhome. The guy is obviously in a dire financial situation and is making some desperate attempts to somehow improve his situation. The price (based on the comps you mentioned) sounds way out of line. (You don't want to wind up upside down in your home.) The kickback on the commission is not on the up-and-up. There's nothing you can do about his intent to do that, and you'd have a hard time proving that it happened. Just lots of red flags I guess is what I'm getting at. I'd very strongly suggest hooking up with an agent. Ask around among your friends and find an agent who has done good work. They could represent you in this transaction, as well as show you other properties. You might even find something you like as well or better that wouldn't have all of this "wierdness" associated with it.

Ok, I've babbled on long enough.
Karla in TX

excon
Aug 7, 2007, 08:12 AM
Hello again, Truong:

You're outthinking yourself. You're too worried about what's in everybody else's pocket.

Here's my last and final piece of advice. It should relieve this entire burden from your shoulders: Pay attention to what's in YOUR pocket, and your pocket only - nothing else!

excon

ScottGem
Aug 7, 2007, 08:24 AM
Excon and Ruby have filled in what I would have said. You seem hungup on this FSBO thing. Sure it seems like false advertising, but it really doesn't affect you. YOU decide what you want to pay for the house and then make an offer. The seller can refuse or make a counter offer. Until an offer is made and accepted and you go to contract, neither of you has committed to anything.

The advantage of an FSBO is ostensibly a lower price because the seller isn't paying a commission. But if you don't like the quoted price, then you make a counter offer or walk away. Forget the FSBO thing and concentrate on whether you want the house and how much you are willing to pay for it.

truong81
Aug 7, 2007, 08:55 AM
I really do want this house and I know I shouldn't let my emotions get involved. This house has it all... well all that I want.

RubyPitbull
Aug 7, 2007, 09:31 AM
I really do want this house and I know I shouldn't let my emotions get involved. This house has it all..... well all that I want.

Truong, this will be your undoing if you aren't careful. You may love it but you need to be smart about this. You have to take a step back and remind yourself that a house is the largest investment of your life. It can give you years of happiness or heartache. It will all be dependent upon the kind of deal you make. Initially, you might be very happy when you purchase it, but if it is done at a price you aren't happy with, that happiness will be fleeting.

truong81
Aug 7, 2007, 09:36 AM
What you said is very true. And I am trying to make a smart move that will benefit me in the long run.



Truong, this will be your undoing if you aren't careful. You may love it but you need to be smart about this. You have to take a step back and remind yourself that a house is the largest investment of your life. It can give you years of happiness or heartache. It will all be dependent upon the kind of deal you make. Initially, you might be very happy when you purchase it, but if it is done at a price you aren't happy with, that happiness will be fleeting.

rockinmommy
Aug 7, 2007, 10:51 AM
Now you've really got me wondering... do you mind telling us where you live?

The high prices (MUCH higher than I'm used to) I know aren't uncommon in some places. But is it common in your area for realtors to kick back $$ to the buyers/sellers? That I've never heard of as standard practice. Just curious.

Karla in TX

RubyPitbull
Aug 7, 2007, 10:57 AM
Rockin, I would hazard a guess he is in New York, New Jersey, Florida, California, or the Boston area. Those prices aren't unheard of in those areas.

And, it isn't standard practice for kick backs, but it does happen frequently enough. Very unethical & illegal practice. The Real Estate Broker business is not monitored the way it should be. We have come a long way in certain states over the past 20 years, but not enough. Just like the construction industry, there are so many ways people can skirt around the law.

michealb
Aug 7, 2007, 11:01 AM
Zillow - Real Estate Valuations, Homes for Sale, Free Real Estate Information (http://www.zillow.com)
Will tell you about what the property is worth. The problem with real estate is that it is worth what someone else will pay for it and you can't move it to a location where someone will pay more for it. He is an investor so he is trying to get the most he can for his house. You may want to consider hiring your own agent, a professional who knows as much about realestate as the seller does. At the very least you should make your offer contingent on a home inspection and an independent appraisal. Many real estate investors make their money taking advantage of the people that fall in love with a house.

truong81
Aug 7, 2007, 11:06 AM
I live in Virginia - Fairfax County.

Now you've really got me wondering............do you mind telling
us where you live?

The high prices (MUCH higher than I'm used to) I know aren't uncommon in some places. But is it common in your area for realtors to kick back $$ to the buyers/sellers? That I've never heard of as standard practice. Just curious.

Karla in TX

RubyPitbull
Aug 7, 2007, 11:07 AM
You know Michael, you bring up a good point with checking out Zillow. For me, they still haven't managed to get housing prices in my area, so I forgot about the. Another site that I find very useful to get an idea of what houses are going for in any area is Trulia - Real Estate, Homes For Sale, Sold Properties, Real Estate Maps (http://www.trulia.com).

I believe truong mentioned that he has a buyers broker. Somehow, I don't think the broker is doing his/her job properly. That broker should be advising what we have all advised.

RubyPitbull
Aug 7, 2007, 11:08 AM
Ah, I missed Fairfax County. Yep. That is another high priced area along with DC.

GoldieMae
Aug 7, 2007, 11:27 AM
1. He is not breaking any law by telling you that he is going to use an agent to sell it.
2. He is trying to get more for his house than he thinks it is worth. Of course he is. Every seller on the face of the planet is.
3. If you want to bid on the house, then offer him what you think it is worth, and put down little to no earnest money (maybe $1000). If you think it is worth 480,000, then that is what you should offer.
4. Your lender will require an appraisal if your offer is accepted. You can't get a mortgage without one. But lender appraisers always appraise homes for $2-3000 above the offer presented on the contract. They are in the business to help the mortgage company get the mortgage. If you want, hire your own appraiser to look at the house before you make an offer.
5. Put every possible contingency in that offer. Make it subject to appraisal, obtaining financing, getting a home inspection with no repairs, payment of the buyer's broker's commission, throw in the refrigerator, stove, and every yard tool in his garage, etc.
6. Do you have a buyer's broker? Get one if you don't, particularly in your area. The seller will have to pay the buyer's broker's commission, not you. He has the right to refuse to deal with anyone who has a broker, but I would not proceed without the aid of a broker in this case. And get one familiar with the area, not some guy from DC who only knows Chevy Chase.
7. Get title insurance. Your lender will require it, but even if they don't you should still get it.

Don't let the seller's self-interest scare you off from buying the home if you love it. Just be shrewd.

truong81
Aug 7, 2007, 11:34 AM
Yes I do have a buyer broker - however this house was advertised as FSBO therefore I did not get my agent involved. But now if the seller wants to bring his agent into it so will I.



You know micheal, you bring up a good point with checking out Zillow. For me, they still haven't managed to get housing prices in my area, so I forgot about the. Another site that I find very useful to get an idea of what houses are going for in any area is Trulia - Real Estate, Homes For Sale, Sold Properties, Real Estate Maps (http://www.trulia.com).

I believe truong mentioned that he has a buyers broker. Somehow, I don't think the broker is doing his/her job properly. That broker should be advising what we have all advised.


Yes I do - and that should be she has a buyer broker not he ;)

RubyPitbull
Aug 7, 2007, 11:36 AM
Truong, I didn't even think to ask if this is your first home purchase. The info Goldie Mae has given you will be very helpful to you. In addition, I like putting into the contract, contingent upon not only a home inspection, but an insurance inspection as well. Insurance companies can have very stringent requirements. Both of those things will allow you the latitude to go back and negotiate a lower price if there are items that must be repaired, replaced, or installed.

P.S. sorry truong, hard to tell gender here.

excon
Aug 7, 2007, 11:43 AM
Hello again, truong:

Do you have a separate buyers broker agreement?? If not, your broker represents the seller.

If you're bringing him in as protection against their broker, you're whisteling Dixie. Your broker should help you negotiate the price and the purchase and sales agreement.

After that, if you want protection (and you DO), hire a lawyer for the closing.

excon

truong81
Aug 7, 2007, 11:50 AM
1. He is not breaking any law by telling you that he is going to use an agent to sell it.

2. He is trying to get more for his house than he thinks it is worth. Of course he is. Every seller on the face of the planet is.

3. If you want to bid on the house, then offer him what you think it is worth, and put down little to no earnest money (maybe $1000). If you think it is worth 480,000, then that is what you should offer.


4. Your lender will require an appraisal if your offer is accepted. You can't get a mortgage without one. But lender appraisers always appraise homes for $2-3000 above the offer presented on the contract. They are in the business to help the mortgage company get the mortgage. If you want, hire your own appraiser to look at the house before you make an offer.

5. Put every possible contingency in that offer. Make it subject to appraisal, obtaining financing, getting a home inspection with no repairs, payment of the buyer's broker's commission, throw in the refrigerator, stove, and every yard tool in his garage, etc.

6. Do you have a buyer's broker? Get one if you don't, particularly in your area. The seller will have to pay the buyer's broker's commission, not you. He has the right to refuse to deal with anyone who has a broker, but I would not proceed without the aid of a broker in this case. And get one familiar with the area, not some guy from DC who only knows Chevy Chase.


7. Get title insurance. Your lender will require it, but even if they don't you should still get it.

Don't let the seller's self-interest scare you off from buying the home if you love it. Just be shrewd.


1. Ok he's not breaking any law but he had it falsely advertised. The signed on the lawn is FSBO but when he got me into the house he's telling me he will get his 'friend' who's a agent to write the contract.

2. Yes I understand that but as a buyer I don't want to get sucked in and pay more than the value for this community. It is not my fault he spent 100k on upgrades. His house was the most expensive one in that community.

3.I'm not an agent so I don't know what it is really worth. I am only going by what the house in that community has recently sold for. And he has a point, no other house will have the same upgrade cause he went above and beyond.


4.Yes, but this is a short sale. I went under the impression that his lender will have the house appraised. Now he is telling me that he knows a friend who can and will appraise the house.


5.-Very good point.

6. I do have a buyer broker.


7.In today's market I think you have to get the title insurance. I think it might even be
required by the lender.


I'm only worried because this is a 'short sale' and I do not know much about short sale that I don't want to make an offer and then have his lender just refuse it right off the bat.

truong81
Aug 7, 2007, 11:52 AM
No this is not my first home purchase. I have purchased several in the past which are all rental properties now. This townhome however will be the first for me to live in :)



Truong, I didn't even think to ask if this is your first home purchase. The info Goldie Mae has given you will be very helpful to you. In addition, I like putting into the contract, contingent upon not only a home inspection, but an insurance inspection as well. Insurance companies can have very stringent requirements. Both of those things will allow you the lattitude to go back and negotiate a lower price if there are items that must be repaired, replaced, or installed.

P.S. sorry truong, hard to tell gender here.

RubyPitbull
Aug 7, 2007, 12:00 PM
Okay, so you know what you need to do.

I would most definitely avoid allowing him to have a "friend" give you an appraisal. That puts up red flags to me all over the place. Get your own estimate either before, if you prefer (probably cheaper), or pay for the lender's appraisal if you go into contract.

I have to say that if this was me, I would wait and watch. You mentioned that he went "above and beyond" in his upgrades. He put himself on the line with that. Sounds like he lost his head a bit and was getting greedy with the market the way it was, and now has boxed himself into a corner with wasteful upgrades. Not smart on his part.

P.S. I understand your concern about the short sale. You can't control what his lender will do. But, you can control how much you are willing to pay. Just remember, a lender can and will reject you because it isn't worth what you are offering.

ScottGem
Aug 7, 2007, 12:01 PM
Whether it's a short sale or not doesn't really matter to you.

You want the contract drawn up by YOUR attorney or representative, NOT his.

But the bottomline is still that, if you want the house you make an offer that YOU are comfortable with. If the offer is accepted then you go to contract.

michealb
Aug 7, 2007, 12:03 PM
Truong81, I'm just south of you in Prince William. So if you decide you need a real estate agent let me know. I use to run Coldwell Banker's computer network. So I know some of the best agents in the area.

truong81
Aug 7, 2007, 12:06 PM
I know what I'm willing to offer. I honestly do not like the attitude the seller was giving off from the jump start. He kept saying 'put in any offer you want, it is not my decision.'


Whether its a short sale or not doesn't really matter to you.

You want the contract drawn up by YOUR attorney or representative, NOT his.

But the bottomline is still that, if you want the house you make an offer that YOU are comfortable with. If the offer is accepted then you go to contract.

GoldieMae
Aug 7, 2007, 12:14 PM
1. Ok he's not breaking any law but he had it falsely advertised. The signed on the lawn is FSBO but when he got me into the house he's telling me he will get his 'friend' who's a agent to write the contract.

2. Yes I understand that but as a buyer I don't want to get sucked in and pay more than the value for this community. It is not my fault he spent 100k on upgrades. His house was the most expensive one in that community.

3.I'm not an agent so I don't know what it is really worth. I am only going by what the house in that community has recently sold for. And he has a point, no other house will have the same upgrade cause he went above and beyond.


4.Yes, but this is a short sale. I went under the impression that his lender will have the house appraised. Now he is telling me that he knows a friend who can and will appraise the house.


5.-Very good point.

6. I do have a buyer broker.


7.In today's market I think you have to get the title insurance. I think it might even be
required by the lender.


I'm only worried because this is a 'short sale' and I do not know much about short sale that I don't want to make an offer and then have his lender just refuse it right off the bat.

1. Yup, he can do that. It may technically be a FSBO, and the friend may be just helping him out as a favor. Don't worry about that. As far as writing the contract, you and your broker will present an offer that will become the main part of the contract. The contract is a form document. They all look very similar. You and your broker should have the most control in writing that contract, not the seller. Don't let the seller control anything except showing up to the closing ready to sign his house over to your bank.

2. As a buyer, that is always a risk. But you are buying on a downturn in the market. That should give you some comfort, particularly if you plan to live in the house for a number of years.

3. Agents can't tell you what a house is worth. They're not allowed to tell you what they think a house is worth. It's in their code of professional conduct. However, I wouldn't count upgrades as part of the house value becaue you are unlikely to get the full value of that money out of the house if you sell it, so don't pay much more for it. 100K worth of upgrades is not worth 100K in the Fairfax market right now. It may be worth 50-60K, though.

4. Your lender will have the house appraised, not his. It is part of getting the mortgage. If your lender says the house is not worth your offer, then make sure the contract allows you to back out of the deal without losing your earnest money. His representative could say the house is worth $1 or $1Million. Either way, the opinion is not worth anything to your lender. Don't let his friend appraise the house. Your mortgage company will hire their own.

7. Yes, title insurance is required by the lender.

In a short sale situation, this is really important. There can be "no encumbrances" on the property or you will not be able to get a mortgage. His lender cannot place a lien on the property. You need to make sure that his lender, if any money is owed on the house, is taking the debt as "unsecured debt." The seller will be required to pay off the mortgage at the time of the sale. If he cannot, then the lender has the right to refuse to allow the sale to proceed, and you will get your earnest money back. Unfortunately, you have no control over the situation, unless you are taking over his mortgage, which I strongly urge you to not do that.

rockinmommy
Aug 7, 2007, 12:23 PM
4.Yes, but this is a short sale. I went under the impression that his lender will have the house appraised. Now he is telling me that he knows a friend who can and will appraise the house.



I'm only worried because this is a 'short sale' and I do not know much about short sale that I don't want to make an offer and then have his lender just refuse it right off the bat.

Regarding 4: The seller can have whoever he wants appraise the house as long as he's paying for the appraisal. It will be up to your lender who performs the appraisal they will use for underwriting purposes. The seller has no say-so whatsoever who 'WILL' do YOUR appraisal, as you're the one who pays for it. Once he (his lender, actually) accepts your offer you and your lender basically drive the process from there. He just shows up where he's told for the closing.

Regarding short sales: Is the seller claiming to have already negotiated a short sale with his lender? For you, there's really no difference in the process. Are you pre-approved? Get with your broker. Figure up a fair price for the property. Have your broker write up and offer for less than that amount (leave yourself bargaining room.) Write in that the offer is contingent upon you receiving something in writing from the seller's lender/s. Have your broker present offer to his broker along with your pre-approval from your lender. (If the lender is considering a short sale, you being pre-approved will make them more likely to go along with it.) Go from there, just like you would with any other transaction.

If you know of other properties in the neighborhood that the guy has rehabbed it wouldn't hurt to just stop by and have a quick visit with the owners. Tell them you're thinking of buying a place done by the same guy and are just curious how they like their places? How are the improvements he did holding up? Etc,etc,etc. The guy definitely sounds like he's got some questionable practices, so you might want to check out his actual craftsmanship, as well. Rehabbers can definitely make a place look spiffy - like they spared no expense, but that doesn't mean that the work was well-done.

You'll have to keep us posted.
Karla

truong81
Aug 7, 2007, 12:56 PM
I want to question if this house is a 'short sale'.

I have already gotten my credit score pulled and have been pre approved for a loan and I have the letter in hand.

I will def. keep you guys updated :o

LisaB4657
Aug 7, 2007, 01:13 PM
I am going to go against the tide on this one. I say that unless you absolutely positively have to have this house, then you should run away from it as far and fast as you can.

This seller has openly admitted to you that he intends to commit fraud. Once you know that, you are no longer an innocent buyer. If the lender ever chose to investigate the transaction after closing they may decide to prosecute him for fraud. They may also possibly be able to prosecute you for assisting him in committing this fraud. That doesn't mean that they'd be able to prove it, but they could definitely accuse you of it. The fact that you had knowledge of his intent to commit fraud doesn't help.

There are millions of townhouses for sale. Try looking around a little longer before you commit yourself to this one.

GoldieMae
Aug 7, 2007, 01:27 PM
I am going to go against the tide on this one. I say that unless you absolutely positively have to have this house, then you should run away from it as far and fast as you can.

This seller has openly admitted to you that he intends to commit fraud. Once you know that, you are no longer an innocent buyer. If the lender ever chose to investigate the transaction after closing they may decide to prosecute him for fraud. They may also possibly be able to prosecute you for assisting him in committing this fraud. That doesn't mean that they'd be able to prove it, but they could definitely accuse you of it. The fact that you had knowledge of his intent to commit fraud doesn't help.

There are millions of townhouses for sale. Try looking around a little longer before you commit yourself to this one.


I'm not seeing the "fraud" part of this situation. I may be completely wrong. Can you let us know what part you think is a crime? Because if there is a crime being committed, that would be very useful information for the OP. I don't see a crime here. Short sales are legal. His using a broker is legal, etc. Am I missing something?

truong81
Aug 7, 2007, 01:44 PM
I see red flags all over the place, but I have truly fallen in love with this house and this community. Sure there are a lot of TH on the market but this is the only corner lot in this community - and with all the upgrades he has put into this house. It truly is a beauty.

I think the fraud would be working with his agent who is a friend to make some money off this deal. The money would be coming from his lender if this house is really a 'short sale'. So he said to me last night that he has already lost a lot of money on this house. I think that is just a bunch of crap.

Lets play with the numbers...

He bought the house for 701
He takes a loan for 630 - 570 big loan 60 for the small loan. So he down 10% for the house.
Now it has to be in favor for the lender to agree to have him short sale this house so they (the lender) can recoup from the lost - maybe I'm wrong but I am under that impression.
There for he's asking 575 for this house which will make up for the big loan with the lender and only be out of the down payment of 70k and the 60k for the small loan - and yes he will have to pay the taxes on that.

LisaB4657
Aug 7, 2007, 01:47 PM
I'm not seeing the "fraud" part of this situation. I may be completely wrong. Can you let us know what part you think is a crime? Because if there is a crime being committed, that would be very useful information for the OP. I don't see a crime here. Short sales are legal. His using a broker is legal, etc. Am I missing something??

The townhouse was advertised as FSBO. After he found a buyer the seller decided to bring in a realtor, who was a friend, and then admitted that this friend would collect the commission from the lender and then kick it back to the seller. That is an action that is intended to defraud the lender.

BigCat
Aug 7, 2007, 02:55 PM
I am a recent homebuyer of a FSBO in the state of Virginia and the seller and I worked out a mutual sale 3% below the listed comps in the neighborhood. I would expect that the benefit to a FSBO sale is a little money in the pocket of both buyer and seller compared to having agents involved. However, your seller is intent on possibly other gains from this sale. You indicated he had other properties in the development and was hoping to make this sale to increase the valuation of his other properties. He is also linked with some other agent that he has confided in you will be involved in some sort of kickback that in the event this is a short sale involves milking extra money from some lender for his gain. I recommend, if you really want this place, in this case that you find an agent willing to represent you in light of all of these facts and make an offer. I would use all the contingencies you have in previous suggestions and any new ones you can think of to avoid being hung out by this nut.

RubyPitbull
Aug 7, 2007, 03:08 PM
truong, LisaB is a lawyer and a very fine one at that. Her advice is always spot on. I didn't want to scare you by outright stating that if you are aware of what this guy is up to you could get into trouble, basically for the reason LisaB brought up, it will be tough for them to prove. Your word against his. But, it doesn't mean that he won't do everything possible to hang you out to dry if/when he gets caught.

I know you love this house. As I said earlier, it will be your downfall if you aren't careful. You really need to stop for a moment and take under advisement what LisaB is stating here.

truong, I know that it is a matter of public record how much he actually paid for the townhouse but, how do you know what kind of loans this guy has on it? Is this what he has told you? How do you know how much money he has put into this property? Again, is this what this guy told you? The more information you are relaying the more nervous I am becoming for you. Honey, it can be the Taj Mahal, but I wouldn't have any dealings with this guy if HE paid ME to take it off his hands! You need to look at what the other properties are priced at and what they have sold for recently. His upgrades don't make a bit of difference to the basic value of the properly and you know that. Look at those websites that both Michael & I gave to you to get a good idea of what this property is worth.

P.S. BigCat has also brought up some valid points.

georgek88
Oct 26, 2007, 01:16 PM
You did not mention if he is already listed with the agent. If it is , get your own agent, there is no cost for you and your agent will take care of the offer, title clearance, escrow, inspection, loan, advice you on the market value, etc. Again there is no cost for you. On a short pay, the seller does not accept the price, is the lender his agent has to deal with. Another question is what is the loan on this house? Is he trying to get more money then his loan? You should definitely get an agent to represent you.

georgek88
Oct 26, 2007, 01:31 PM
There is no fraud. He can use anyone, a friend, an agent, or anyone to help him and he can pay them. Do not forget, on a short pay, he does not get any money from the lender, there are also tax implications he will have to deal with later.