The sharks have had their fill...................

By
Real Estate Broker Owner with Bryant Tutas-Tutas Towne Realty, Inc BK607690

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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Comments 37 New Comment

Anonymous #33
Anonymous
Sally Rockrise, Broker

Even after 35 years as a licensee (including 27 years as a Broker) I got taken yesterday!!!! Here's the scam:  an agent lists a property in MLS for $120,000 stating it is a "short sale". My buyer makes an offer of $125,000 cash one (1) day after listed in MLS. .  I prepare 3 copies of the contract and required addendums and get a $5,000 escrow deposit check.  I deliver all to the listing broker who screams that he has a better offer and throws the contracts back in my face. I fax the contract (13 pages) together with a cover letter, to the agent  when I return to the office.  In the meantime I research the property and find that the buyer purchased it for $298,000 with 100% financing.  That means that the agent is expecting the lender to take a bath for $173,000 (almost 42% of the mortgage).  Can you say: "There's a new scam in town".  Who knows, maybe the agent got a fish who agreed to let the agent represent him and he paid the agent to find a property for him and/or represent him in the "short sale" transaction? 

Be afraid guys....be very afraid!!!!  This chicken is going to come home to roost when the Feds finally get a grasp of what's going on.  Remember the late 1980s and the RTC?  That was controlled and legally handled....the scam in short sales is NOT!!.

February 26, 2008 03:10 PM
Rainmaker
1,080,090
Bryant Tutas
Broker/REALTOR, Tutas Towne Realty, Inc
Bryant Tutas-Tutas Towne Realty, Inc
Sally, Thanks you for stopping by. I fear lawsuits are going to flying over these "short sale" listings. The folks that are listing these are truly clueless. Sounds like you need to take your buyer and go elsewhere.
February 26, 2008 03:59 PM
Rainer
900
Rey Delgado
Coral Way Realty, Inc.

Sally,

My experience with short sales is that the listing agent can (mistakenly) list the property for $1. The value is usually dictated by the banks BPO agent(s). Once a value is reached by the bank's BPO agent then the negiations usually start. Even then most BPOs come back at higher values than comprable (non-short sales) properties readily available on the MLS for less.

May 16, 2008 05:07 PM
Anonymous #36
Anonymous
Christine DeLong-Huver

Great post Bryant, thanks for putting this out there! I have gotten calls like this one over and over again in the last 18 months. It is upsetting to me that in many cases like the one you describe, my hands are tied and there is nothing I coulddo to sell these homes. I have clients who called me in a similar situation. They bought a condo from a builder for $165,000 in 2006 and the builder started selling them 8 months later for $130,000. Now the community is full of short sales which are priced under $90,000. This is a newly wed couple who should be embarking on the best time of their lives, instead they are in financial ruin.

September 05, 2008 09:57 AM
Rainer
3,293
Jaime Tejera
Corner Lot Properties

Brian...why don't you short sale it. If you don't know how to "properly" negotiate a short sale, have the homeowner pay for a negotiator while you list it. Then there's no loss to anyone except the bank.

May 30, 2009 06:42 PM
Rainmaker
1,080,090

Bryant Tutas

Broker/REALTOR, Tutas Towne Realty, Inc
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