I recently received a call from a person seeking info on a listing my office has. She was very nice and very eager to know all about this property until I told her the list price. She said that the house was perfect, but about $100,000 more than she wanted to spend. No problem! I asked specifically what she was looking for and told her that I would be glad to fax, email, mail or deliver the property info that met her criteria. She gave me her address and phone number and said that she and her husband preferred to preview the neighborhoods alone, but she would contact me if they like any of the houses. I, of course, mailed the info ASAP.
A few days later, she called me and got more detailed directions to one of the properties. A few hours later she called me to say that she may want to make an offer on the house! Great! I asked her if she had spoken to a lender (no). I asked if she currently owned a home (yes). Is it on the market or under contract (no) It is a FSBO, but they have not put up a sign or advertised it yet.
The listing she loved is a bank owned property. I advised her that she certainly could make an offer, but needed a pre-qual letter and since there would be a contingency regarding the sale of their current home, the bank could require more earnest money or may not be willing to agree to that contingency.
She then wants me to list her house! I set up a listing appointment. I asked her what ball park figure she wanted to list the house for. $170,000 she replied.
I went to the tax digest to find the house was valued $75,000 less per county records. Warning sign. It was purchased three years ago for $114,000. Upon completing my CMA, I found the listing price range would be only $125,000 to $135,000 for the property.
Needless to say, the listing did not happen. They decided to stay there until they built equity back up.
YIKES!!! How many homeowners are "upside down" because of inflated appraisals, eager lenders, and home owners wanting to "cash out"? This situation is far from uncommon. Do you think the 40% of homes in some way touched by mortgage fraud (inflated appraisal in particular) too high or too low?
It scares me to death! Many of the closings I had over the past year have been 95% to 100% loans. Has this fraud (by other transactions) set my clients up to be "upside down" in 2009 or 2012?
I am certainly not a gloom and doom person. I see the bright side of almost every situation. Would any of you like to show me the pot of gold at the end of the rainbow on this?
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