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The sign says 'We Buy Homes' - be very careful....

The sign says 'We Buy Homes' - be very careful....
by Kaushik Sirkar, Chandler REALTOR®
Chandler AZ Real Estate

We all know about the subprime meltdown. We know about the increase in forclosures. As more and more people get into trouble with their homes there will be more and more predators out there looking to take advantage of them. All consumers should be aware.

So when you see a sign on the street that says 'We Buy Houses' or something akin to this, be very, very leary. Are all these folks scammers? No. But some of them sure are. Check out this article in today's Arizona Republic.

"Instead of throwing them a life jacket, they are throwing them an anchor," according to a member of a group that fights against predatory lending. What are the types of scams out there? Simple -

Bailout - scammer offers to purchase your ome for less than its value. You then rent and buy back eventually, maybe. More than likely, you'll never be able to and the scammer gets to sell at current market value.
Fake Home Sale - scammers convince you to hand over the deed before they've actually paid the loan off (which they claimed to do).
Bogus help - the most common one where a scammer simple demands up-front money to help you with your foreclosure. Guess what, there probably isn't going to be any help.

Tips for homeowners to avoid becoming victims?

Don't pay any fees upfront.
Talk to a lawyer before signing over your deed.
Don't just trust the person and sign a contract without a thorough review.
Get everything in writing!
Don't fall for pressure tactics
Talk to your lender first, before talking to a potential 'vulture'
Consult with a lawyer
Consult with a non-profit organization designed to help people in trouble.

Please read the article for more details. And think twice before you call the number from the sign at the highway on ramp....

Thanks for Reading :)

Kaushik Sirkar, Chandler Realtor®
http://www.homesphx.com

Posted by Kaushik Sirkar on 04/02/2007 11:45 PM

Comments (42)

arizona real estate, phoenix, real estate, chandler real estate, mortgage fraud, bailouts

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42 Comments on The sign says 'We Buy Homes' - be very careful....

APR

2007

So true! Another "We buy homes" we have here in Colorado is the Lease to Own type - You sign over your right to sell to the "Middleman" - who then finds a tenant. The tenant usually has 2-4 years to buy the property. If the tenant does not buy, the middleman gets to keep the tenants downpayment and extra monthly payment and the original owner still owns the home. Usually quite a bit out money due to rent often not covering costs.

APR

2007

This is so huge Kaushik! I see these things all over the streets in our fine city and it is getting to be ridiculous. There are so many people who get to be just desperate and don't know any better so they assume someone is trying to help them. Little do they know that there are more people out there trying to steal their homes and take their investments. It's sad but it happens all the time. Thanks for the post!

I always wonder about those dumb signs, they are everywhere around here!! This is useful information for consumers, especially with so many foreclosures! Great post...

The crummy thing is that there are investors out there who do look out for the person in distress. Yes, they give a lowball price (they need to profit somehow), but they don't make false promises, they don't mislead and they don't leave the people out on the street without a penny. But unfortunately, the bad apples who do screw people over drag down the 'good' investors. Overall, I'm glad the article is out because I've heard too many bad stories and maybe this will help weed out the scammers.

- Tchaka

Sabine - Oooh, a middleman, there's another twist to watch out for!

Jacob - You are absolutely right. Its the desperate that these folks pray on (those that are scam artists, that is).

Patricia - Thanks!

Tchaka - There are some good folks out there who are legitimate. I can't help but think that in this segment of our 'industry' there are a higher percent of scammers!

Kaushik,

Good advise to consumers :) thanks for bring it ,

There are many doing that.

Liked your blog very much. I just think it is funny that people out there really do just sign over there deed. Unreal.

Ben

Kaushik, this post is a great 'head's up' for consumers and some basic, but usefull tips. way to go!

Wow, this is a timely post.

A client who currently has his home listed with me saw a sign from one of these companies in his neighbourhood and was asking me about it. He was surprised because the sign didn't seem to be associated with a real estate company.

Who would've thought it was likely a scam? Wait, too sarcastic? Just checking.

I wonder how many decent people get sucked by these vultures? Sad.

Jerry

I definitely agree with you. Homeowners do need to take precautions to avoid becoming real estate scam victims, and the tips you offer are great ones. There are a lot of scammers out there. But there are also many honest investors out there who actually help homeowners facing foreclosure. Take the bailout for example.

A homeowner has defaulted on their loan, and if they don't pay the past due amount, the home will be sold at foreclosure auction. They truly want to find a way to keep their home, so they don't list it for sale (which is what the majority of homeowners facing foreclosure tend to do). They spend 2-3 months struggling to come up with solutions, but typically only fall farther behind. Auction time is creeping up on them, just a few days away, what do they do now?

Option #1 - Let the house go to auction, be forcibly removed from it, lose all their equity, have no place to live, destroy their credit, and potentially lose their job in the process? Or...

Option #2 - Make a quick sale to an honest investor, for a price they know is below market value, and salvage their credit and their dignity while paying off the loan and putting some cash in their pockets so they can make a move?

I would definitely have to go with option #2.

Very well put, Bonnie. You're right on the money.

- Tchaka

APR

2007

Ray - my pleasure!

Ben - I try not to judge others....I mean, imagine the stress and hardship they are going through under the duress of potentially losing their home?

Nick - Thanks for the comment!!

Gerald - Unfortunately, too many fall prey in my opinion...

Bonny - Option # 2 is certainly the 'acceptable' solution to the troubled homeowner. They just need to make sure they pick someone legitimate that will guide them to option # 2. thanks for your comment!

Did any of you attend the Arizona Real Estate class on foreclosure at the Marriott in Phoenix this past Friday? There are so many scams that it's unbelievable. I am continually trying to give a head's up to my clients either on my blog or in my email newsletter. I have this article you wrote about as I continually watch the papers for up to the minute information.

Recently one of my sellers got frustrated with not selling their home, and went another way with a lender that would buy their home. I had just returned home from the class on Foreclosures and tried to explain what was going on. This fell on deaf ears. Sellers are so unaware of the fraud and scams that are frequenting our industry.

I'll report on the Foreclosure class in another thread..................

APR

2007

You can see "I buy houses sign" everywhere and ads in the newspaper. The author of these ads and signs for the most part are people who have taken a real estate seminar. The problem is that they are rank amatures. They have no clue on how to put together an honest transaction.

Charles Parrish

APR

2007

Teri - I did not but i'm guessing you were able to learn quite a bit!

Charles - You make an important point here...even if their intentions are good they just don't know what they are doing!!

APR

2007

Thanks for the heads up Kaushik. We see more and more of these signs popping up in Virginia. I'm going to print the article and add it to my investor 'must reads'. Thanks for posting.

APR

2007

Great post Kaushik. Thanks for making people aware of this. -Tom

A friend of mine was approached by one of these companies. They offered him less than 70% of the homes value. They didn't know he was an investor who was aware of the market value. He just laughed at them. Unless you're in some insurmountable bind, beware!

APR

2007

Debbie - No problem - please distribute to as many as possible!

Tom - My pleasure!

Alex - Thats what these folks do. At least the people in the example you are bringing forward were 'honest'....

JUN

2007

Great Post. I have seen this as well. Thanks for your thought.

JUL

2007

I have a client that negotiates short sales for people and then I list them in Summit County, Ohio. We are in the top five in the country facing foreclosures due to predatory lending and such. Ohio passed a lending law in January and most of them have gone bankrupt or left town. The mess behind is unblievable. My client is very ethical and really wants to help the people. When I go to meet them, they are for the most part just wanting to move on. But, you should see the literature and calls these poor people receive! All I say is; what goes around comes around! Regards and thank you all, DavidC

JUL

2007

Educate, educate, educate...this is the mantra of all real estate professionals so this is what I will attempt to do here.

In NJ we are on track to see a record breaking 34,000 homes in preforeclosure in 2007. How many REALTORS are interested in this market? How many REALTORS are trained in this market? It is my experience that 10% of all agents I speak to want to work the preforeclosure market. So what happens to these homeowners?

Many homeowners in preforeclosure are in this state because the mortgage products they received a few years back are adjusting today. Some mortgage products known as “option-ARMS” actually left many of these homeowners in a negative amortization situation. How many agents out there are willing to work for little or no commission? How many REALTORS know what options the homeowner has at this point?

What happens in the case where a homeowner in the final months of preforeclosure (in NJ it would be the 11^th, 12^th, and sometimes 13^th month) reaches out to the local real estate office? Can an agent or a broker do anything? What options does a homeowner have at this point? It is my experience that the final stage of the proceedings is when many homeowners in preforeclosure seek We Buy Houses type companies for help—often times because for whatever reason the home did not get sold through a traditional real estate agent.

What happens when a homeowner is in a situation where the cost of repairs and improvements actually exceeds the current market value of their home? Or if market value drastically declined? Will an agent work weeks for not money while attempting to negotiate a short sale with the bank? I know only a small number of agents who do this.

What do you do if a homeowner in preforeclosure or any state of distress tells you they will do anything to continue living in their house? Can an agent draw up a “lease purchase w/ leaseback option” agreement?

In NJ over 1200 real estate investors have organized themselves into formalized Real Estate Investors Associations. There are different chapters for the different regions in NJ. These associations are guided by ethics principals very similar to what is set forth by the NAR. It is sad that a minority of unsrupulous individuals have ruined the good name of residential real estate investors.

Incidentally, I have met several homeowners in my brief career in real estate that have actually begged me to take their home from them for nothing down at all. Often times these people are faced with issues and problems related to their home that are so incredibly substantial that they have no other option but to transfer ownership at a fraction of retail value. Should an investor tell a desperate homeowner that they can not help?

Anthony

www.jerseypreforeclosures.com

jerseypreforeclosures1977@gmail.com

The best advice we can give to people is to see an attorney before signing anything related to pre foreclosure . I am sure there are are many good people, but the consumer may not understand the preforeclosure process and may not have money to seek legal help.

Gita, at least in my experience I have not found an attorney who understands the preforeclosure market well enough to distribute non-biased council.

I have been working with a particular attorney who finally after 4 years understands the needs of homeowers in preforeclosure. In 2003 when I first met him he thought that I was scamming my clients into signing over their homes to me as well. His position was, "I would never sell my home for less than what its worth so why would anyone just sign over their home to an investor?"

The bigger picture here is that the majority of homeowners will never be faced with circumstances so severe that the thought of selling their home for less than market value will even enter their minds. However a minority of homeowners actually have no other choice.

I believe that we need to establish a criteria to certify investors in order to regulate their activity (because of con artists and other shady individuals). In fact I believe the New Jersey Real Estate Investors Association is contemplating this idea as we speak.

Anthony

Anthony makes very good points. Some of my clients have lawyers for help and advice in this process. I cannot believe the bad advice some of them received. It was not the lawyers fault, they thought they were giving good advice. They just do not really understand the process and they are not out there everyday in this arena, as we are. No one can understand the stress these homeowners are under and for such a long time unless you have been there. I was. In Ohio, it can take a year or more to go down this road with a lender and the courts. That's a great burden for most people, especially if they love their home. Not to mention the hit in someones pride and ego. (These things are public knowledege and posted in the papers at the end)

Lastly, I agree with Anthony, the investors must be regulated and some laws need to be on the books to weed out the thieves, as I call them. In Ohio, predatory lending laws passed last January has effectively driven the bad, unscrupulous lenders literally out of town, THEY are gone!!! It would work here too. Regards to all and Happy Independence Day. God Bless our Men and Women in uniform! DavidC

God Bless America

JUL

2007

To regulate or not to regulate, that is the question. All this focus on the scammers really takes our focus off the real bad guys in this situation: the lenders.

Action needs to be brought against these lenders. Give the people some hope and some time. Don't let them foreclose if they haven't attempted a work out first.

Maybe we have to "force" these lenders who sold neg am option arms to roll back their interest rates from the beginning of the loan. I'm talking about the real rate not the payment rate. Some of these neg ams have 8% or higher real rates from a time when market rates were in the 4s and 5s.

This is unconscionable. "Sue the Bastards." Most lawyers have this saying somewhere in their office. If you can't sue them, get congress involved.

This situation should not be an excuse for so called "honest investors" to shoot fish in a barrel. Give me a break! And give the defaulting homeowner a break while you're at it.

Bill Roberts

JUL

2007

Thank you for your post ... as I read in an earlier comment - those "We Buy Houses" signs are everywhere in Virginia! These scammer are preying on people's misfortunate - how horrible!!

JUL

2007

Interesting post! I've seen these signs and ads for years. Unfortunately these are desperate times for some of the people that bought houses that really can't afford to.

I've seen these signs for years - it's unfortunate that there are bad apples out there. I have some partnerships with a legitimate foreclosure company whose purpose is to truly help people. This article makes me mad, but then again it's from the media so we don't really know how much research was truly done.

OCT

2007

People in distress are so much more vunerable. They need someone to look over their paperwork and help them make smart decisions. Some investors are legit, but many are sharks or wannabes.

Kaushik,

Anyone who advertises out o the streets should be considered a likely scammer. A legitimate company that wants to help doesn't do that. Probably the best places for this kind of help come from the local state institutions. Good reminder for the consumer.

OCT

2007

These "we buy homes" ads pop up here and there around here and the news constantly tells us to stay away from these places. I wish everyone would listen....just a scam waiting to happen!

OCT

2007

....thanks........I've often wondered about these signs and ads...........often.

OCT

2007

Why do people prey on those when they are down? I guess it's because they know that people aren't thinking clearly. I see the ads all over the place and they scare me!

APR

2008

Check out causs.org for details on removing illegal street spam.

I agree with the previous post about CAUSS. I was in New Hampshire last year and there was a group of citizens putting big 'LITTER' stickers over the phone numbers on these types of signs. Brilliant!

APR

2008

I see signs like " We Buy Homes" at every freeway exit and driving down the street - They sit right next to the "Make a VP Salary from Home" signs both to me are just trash cluttering up our city. I love the idea of putting a litter sticker over the numbers....Thats great but I would just rather not see them in my community.

I must say,I use -I Buy Homes -signs and I know of a few other investors (we are actually in a RE club together)and we are honest upfront investors who are simply trying to purchase homes at great prices. The average seller is usually behind in mortgage payments and need quick relief before a foreclosure or the owner has inherited a home that they want to get rid of quickly. We simply make offers based on a formula which would include closing cost for both purchase and sell of the home and repairs. I am not saying not to beware but from my view my sellers have been very happy and relieved to get rid of their properties.