You might know all about flipping houses, but have you ever heard of flopping houses? This devious short-sale maneuver has become incredibly popular with the unscrupulous real estate investor demographic in the past few months – but be warned. If you get caught flopping when you should be flipping, you could spend some serious time in jail.
Flopping houses is all about fixing prices, and real estate agents are the primary cogs in the machine. When a short-sale or foreclosure is listed on the market, a felonious agent will value the house far below its actual market price. They’ll convince the lender that the house will never sell for what it’s actually worth, and once the lender agrees to list the house at the lowered price, the agent will recruit a “straw buyer” to make an offer. The agent will “hide” every other offer on the home so that the straw buyer ends up taking the title. Then the straw buyer and the agent will turn around and sell the home for what it’s actually worth, turning a profit that can exceed $80,000 for a flopped luxury property.
As you can imagine, this is illegal on so many levels. First of all, a buyer and an agent must disclose any relationship they have to the seller under federal law. Second, by withholding bid information from the seller, an agent is committing fraud. Finally, it’s illegal for a buyer to resell a home purchased under the Home Affordable Foreclosure Alternatives Program within 90 days of closing.
Despite all these laws – which exist to prevent flopping – the scheme is disturbingly easy to pull off. Lenders are so waterlogged with distressed properties that they don’t have the time to investigate every short-sale as thoroughly as they should. According to research firm CoreLogic, one in every 52 short sales last year was a flop, and Freddie Mac reported that the scheme was the focus of 50% of its investigations.
While we support cunning real estate investors, we will never condone breaking the law to make a buck. If anyone you know has been raking in an exorbitant amount of cash from flipping houses, there’s a good chance that a few of those properties were flopped. You can report any flopping in your area to Fannie Mae’s investigative team by calling 1-800-7-FANNIE or emailing mortgagefraud_tips@fanniemae.com.
Not only are floppers committing a crime, they’re making the market more difficult for everyone. If we work together to report illegal short sales as soon as we see them, we can put a stop to this practice once and for all.
Head north out of Manhattan for about 60 miles and you’ll come to a little Connecticut town called Trumbull. It’s not the biggest town in the Constitution State, or the wealthiest, or the quietest, but it’s a lovely place to settle down and raise children. In fact, all the things that Trumbull isn’t explain why so many New Yorkers end up buying a house in Connecticut, and in this particular town.
Buying a house used to be easy. You found a home you liked, applied for a mortgage and then paid it off over 30 years. That’s not the case in today’s market. Mortgages today are harder to obtain, and favorable terms are more difficult to come by. That’s why many Americans are choosing to just rent a home and wait until the housing crisis improves. In some cases, they’re actually saving more money than they would with a mortgage. 
Carmel Valley, the upper-class coastal community with the delicious-sounding name – isn’t just a sweet place to live. It’s also one of the most well-educated and beautiful neighborhoods around, the high-water mark for anyone buying a house in San Diego. If you’ve got the cash to burn, it could be the site of your next dream home.
If you thought wholesaling real estate was dead, think again. Though many investors gave up on the business after the crunch of 2008, a new effort by the Federal Housing Authority to unload millions of foreclosures to private investors has given the market a much-needed kick. Urban properties that were left to crumble have value again. Young families are clamoring for a spot in master-developed communities. Cash is flowing.
Someone must have forgotten to tell America’s wealthy that we’re in the middle of a housing crisis, because in this bear market, luxury properties are selling well. To the upper class, buying a house is like picking up a new set of golf clubs, and that’s good news for house flippers. Although we typically recommend sticking to affordable properties when flipping houses, it might be time to upgrade the merchandise if you’re struggling to pay the bills. But before you go and spend your life savings on that abandoned mansion, there are a few things about flipping luxury properties you need to know.
Are you selling a house that isn’t worth as much as the balance remaining on your mortgage? Then it may be time to walk away. With the real estate market not expected to recover until 2023 and foreclosure rates abysmally high, more and more Americans are choosing to let their lender repossess their home even though they’re ahead on the mortgage. It’s a strategy that the lending industry calls “strategic default,” and if you’re struggling to build equity in your home, it might be worth a closer look.
A coastal gem located in southern Connecticut, Madison has just about everything you could want if you’re on the lookout for a piece of prime Connecticut real estate. Here in Madison, the beaches are scenic, the boutiques are cozy and the chowder is divine. It’s a real seaside treasure.
Raising a family in San Diego can be hard, especially if your work requires you to live within the city limits. Luckily, there are a few friendly neighborhoods that make family life easy on anyone buying a house in San Diego. Among the best of these is Tierrasanta, a residential community in the northern hills of the city that provides a safe environment for children but which is still within walking distance of downtown.
Successfully flipping houses depends in no small part on the location of the property. Although the housing industry is still in a slump, a few markets around the country have turned into hotspots for real estate investors, retirees and young families. If you want to make some real money selling a house this year, you should definitely look into one of these laudable locales.
