About three years ago, Honolulu was inundated with an avalanche of "No Money Down" seminars. People like Robert A***n, Carlton Sh**ts and others made a killing on the hot market frenzy in full swing at the time, and filled up venues at the Hawaii Convention Center and the Blaisdell Arena.

The evidence that these seminars had come to town would be hard to miss in the following weeks. Just as mushrooms sprout in the pastures after a long soaking rain, the "We Buy Houses" signs, purposefully scribbled in crayon on cardboard, would sprout along roadsides and at neighborhood intersections.

This year however, there was something different. At my open houses, I did not have the usual influx of "investor" clients handing me their new VistaPrint business cards, affirming their status as serious "investors". There was none of the dialog formatted to convince me, the real estate agent, that this "investor" would be bringing me big business; I just have to find him the "right" properties, and soon we will both be rolling in dough. This year, I only noticed two such seminars that came to town, as I could not miss the full page ads in the Sunday papers. But there was no explosion of "We Buy Houses" signs in the weeks that followed. 

For this, I give thanks. I am thankful that people seem to have wised up to these snakes in the grass. I am thankful that the public has not wasted their hard earned money chasing the pipe dream that these late night TV Seminar Evangelists have poisoned the airwaves with. Most of all, I am thankful that there will be less misinformation and propaganda to counter in the weeks and months ahead.

For example, I will name two of my favorite (or should I say, least favorite) examples of the type of damage these seminars promulgate.

Example 1. Seminar students are encouraged to purchase properties using the "Subject To" clause, as in subject to the underlying mortgage. This is legal, but it is extremely high risk to the property seller. In this situation, the seller relinguishes title to their property, and the "investor" promises to make the payments to the seller's underlying mortgage. The "Investor" may, or may not make the payments. He probably will sell the property to someone else, and actually convey legal title. The Seller is still liable for the original mortgage, which may or may not have been paid. Also, most mortgages today have an alienation clause which entitles the lender to demand payment in full if the homeowner transfers his interest in the property. The seminars actually tell their students not to worry about this, the lenders don't care who pays as long as they get paid. What do you think?

Example 2. Students are encouraged to become bird dogs for the Seminarians. And the students are actually paying for the privilege. Imagine that; they pay to go to the seminar, then the host "graciuosly" asserts that if the student finds a true deal on a property, but does not have the cash to get the property tied up, the host will generously fund the purchase and give the student a finders fee. The teacher gets the deal; the student gets a few crumbs.

There are lots of other crazy tidbits that could be mentioned, such as students taking options on properties, then trying to sell them for a profit before the option expires, sandwiching, trying to get escrow companies to go along with their schemes, writing their own contracts, etc. But for now, it seems as if Honolulu has wised up, and for now "No Money Down" seems to have left town. Good riddance!

P.S. I do wonder if the legitimate 100% financing may have put a dent in these schemes. If so, GREAT!