Sale Scams and Real Estate Broker Frauds

There are many types of problems a client may discover he or she suffers from when hiring a real estate broker to include short sales, loan fraud and other real estate fraud scams that a broker may engage in to steal from the individual. Avoiding and preventing the complication is often possible with foreknowledge and caution.

When the client requires money or is having issues with a mortgage, he or she may consider a short sale. When the person seeking a broker needs the short sale to occur, he or she wants the property to sell quickly. The balance of the mortgage is not fully covered by the sale, but this may provide sufficient profit to catch up in the amount he or she is behind in with the mortgage company. However, if the broker who engages in fraud performs certain services for the client, he or she could bank more money from the deal that is legitimate and valid for the short sale.

The Undisclosed Payments

Real estate brokers may engage in a short sale scam through fraudulent behavior and activities that the seller and buyer are both not aware of in these situations. The lending financial institution may also suffer harm through the broker’s actions. Some of the signs are payments that occur outside of the necessary and mandatory escrow period or if there is a settlement statement that does not appear correct. Through selling the property by short sale, the owner is able to avoid the foreclosure process and avoid more losses. With capped payments or reduced amounts, those involved may want to receive money outside of the escrow period. This is where the scam starts and harms those included in the situation.

The Flopping Scam

The scam of flopping could affect the real estate agent and buyers in deals. The signs that could exist in these situations include double escrows, a buyer through a limited liability company or some form of fictitious entity involved in the transactions. There may exist another opportunity to resell the same property. The flopping scheme happens through a short sale where the broker misrepresents the value of the selling property. The person committing fraud in these circumstances is the buyer. He or she buys the property from the seller affecting the short sale. The real estate agent could become the buyer in some flopping instances. The buyer then presents to the agent or seller a low offer with a false low valuation of the building.