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.
You might not want to live in a haunted house yourself, but you’d be surprised by the number of people that do. All around the country, small groups of eclectic real estate investors are clamoring for properties that seem ridiculous on the surface but that are worth more than their weight in gold to the right buyer. If you want to make some serious money in this sluggish market, try looking into one of these ridiculously profitable markets.
If you think selling a house is hard now, just wait until next year. And the year after that. And the year after that. And the … okay, you get the point. According to the latest Goldman Sachs forecast, real estate investing will hit rock bottom in 2013 and won’t recover to pre-crash levels until 2023. If you’re selling a house right now, that’s bad news no matter how you slice it.
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.
Successfully flipping houses in today’s market requires more than a knack for remodeling – you also need to know how to advertise your business. To get your listings the exposure they need, a strong social media presence is highly valuable, but since social media is a relatively new invention, some of you who are currently rehabbing properties might not understand what the craze is all about. Well, we’re here to help you build your social status online. It all starts with a little bit of knowledge and a few simple steps.
They say that great minds think alike, and that’s just as true for real estate agents as it is for other successful people. While there are lots of good realtors out there working the market every day, the best of the best have a few traits in common that really make them stand out from the crowd. If you’re buying or selling a house this season, don’t just settle for “adequate.” Shoot for the stars by seeking out the people who possess these three key traits:
So you’ve painted the walls, installed the carpets and checked all of the windows. Now all you need to do when rehabbing properties is to get your house cleaned up and ready to show. Although detailing and polishing up your real estate investment can be an arduous process (especially if you’ve still got your construction materials lying around), there are a few tricks you can use to make the ordeal much more bearable.
Winter isn’t the ideal season to be selling a house, so if you’re trying to find a buyer right now, it makes sense to maximize your curb appeal. The way a house looks on the outside, after all, is a major factor in convincing a buyer to make an offer. Try these techniques to make your property as pretty as a picture.
Saving money by selling a house yourself is a tantalizing idea for many homeowners, but showing a property without the help of a real estate agent is not the easiest thing in the world to pull off successfully. You’ll have to handle all the paperwork and marketing yourself, of course, and you’ll even have to host your own open houses. If you’re thinking about cutting out the middleman, remember that where there’s a will there’s a way. But you’ll have to be prepared. Here are a few tips to help ensure that your listing is a successful one.
If you’re rehabbing properties in a neighborhood with a lot of pets, it’s a good idea to make sure that your real estate investment is a suitable home not just for people, but for cats and dogs too. Making your house comfortable for Fido and Whiskers isn’t hard if you know what you’re doing. Here are a few ways you can start preparing your home for pets:
