It went from flipping to "flopping" as the latest scheme in short sale transactions that's popping up around the country costing banks millions of dollars. I personally have contacted listing agents of active short sales who actually had offers pending (for less than the MLS published price) and were looking for concurrent closings.
The process is simple; an investor makes a low offer, many times "CASH OFFER" on a short sale property and convinces the bank that the offer is "market value." Once the deal goes through, they turn around and sell the property to another buyer at a higher price using concurrent escrows. Why is the happening?
Many banks depend on the BPO (Broker Price Opinion) to determine the market value instead of a full appraisal. By doing so, this allows a chain of (potentially) unethical agents to manipulate the value, making it look lower than the real market value.
Guess what? Not only is the FBI cracking down on this, but many lenders and title companies are now taking pre-cautionary action by having all parties involved in the transaction complete an "arms length certification" stating that they have "no interest" in the property or will profit in any way from the sale of the property.
Do you believe this practice is ethical? Whose interests are being served? There seems to be a degree of fraud being perpetrated casting yet another dark cloud over the RE industry. Trust us! Really?!?
“The true value of my success is measured by the people I influence positively on a daily basis.” R.S.
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