OK it's time for me to repost an "oldie but goldie". I was sitting down to write a post today, based on conversations I had this morning, with two potential Sellers. As I started writing, it was sounding very familiar. Then I remembered I had written about this same scenario almost 2 years ago!!!! Funny how things remain the same. This particular post also happens to be the one that has had the most "clicks" out of the 469 posts I have written. As of today, 12,319 people have clicked on this post. That's "clicks" not "views"! What does that tell you about the state of the market? Anyway....I hope you enjoy it.
THE SHARKS HAVE HAD THEIR FILL.......
First posted 9 September 2006
I just got off the phone with Mr. Ive B. Screwed. Seems like a nice young man from South Florida, I could hear babies crying in the background. Mr. Ive B. Screwed bought a house in Poinciana, January of this year. He's never been to Poinciana but based on advice, he received from one of his neighbors, he decided Poinciana would be a great place to purchase a new home, then turn around and sell it for a small profit. Well, unfortunately for Mr. Ive B. Screwed, he was connected with a builder, WeRipOff, Inc. who just happened to be building homes in Pionciana. Not only would they build you a house but they would finance it as well, with only $5,000 down and pay all the closing costs. What a deal!! And to sweeten the pot even more, they work hand in hand with a Real Estate Company named GetRichToday, LLC.
This Company, Realtors by the way, promise that when your $225,000 house is complete they will sell it at $265,000, before the first payment is due, and you get to keep the $40,000 profit minus selling expenses! Man what a deal! How come I didn't buy me some of these gems. Let's see, for $50,000, I could have bought 10 houses and made $400,000 before expenses. Wow! I could almost retire or pay cash for my dream home.
Ok, flash forward to my conversation with Mr. Ive B. Screwed today. According to him, WeRipOff, Inc is now out of business. GetRichToday, LLC, even though apologetic, have told him they can't sell his house and have decided to withdraw the listing. Mr. Ive B. Screwed is now desperate. His mortgage payment is $1,800 per month and he has been borrowing money against the equity or his primary residence to make the payments. So he decided to call Broker Bryant to see what I can do for him. Being the good little Realtor that I am, I tell him to give me an hour and I will do a little research on his house to see what his options are and what I feel I can sell the house for in 60 days or less.
This is what I find out:
- His house is worth $219,000, maybe, if we get lucky.
- It was probably worth $199,000 when he bought it.
- There are 200 homes, just like his, for sale, in the same neighborhood.
- If I can sell it, he will have to bring at least $20,000 to closing. On top of the $20,000 he has already dished out. Remember, this money has been borrowed against the equity in his homestead.
Needless to say, Mr. Ive B. Screwed is not a happy camper. Then I asked him if he had a prepayment penalty. After checking, he does. Ok, another $8,000 to $9,000 out of his pocket. So maybe, if I get lucky, he can cut his losses for about $50,000. You do remember this is money coming from the equity of his homestead? Did I tell you about the crying babies in the background? Folks, I have to tell you, I feel like crying too. And I'm sure Mr. Ive B. Screwed feels the same way.
So the way I see it, here are his options:
- Rent the house for about $800.00 a month and hold it for a few years to see if things change.
- Sell it and take the loss.
- Let the bank foreclose on it.
- Pray.
Except for the name changes, this is an absolutely true story. And there are hundreds, just like it, in my market right now. This transaction reeks of loan fraud. This young man's life and family have been damaged and it may take years to recoup his losses. And I'm sure, WeRipOff, Inc is now called OutToSrewU, Inc and is in another area doing the same thing again. And the Realtors? Well, shame on you. I hope you spend a lot of nights thinking about the lives you have ruined.
The sharks have had their fill and moved on to better feeding grounds!
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I really am amazed that this post is as relevant today as it was 2 years ago. Do you think the folks in Poinciana will start setting fire to their homes? :)
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