Flippin’ Short Sales

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I will never forget reading a sign that was posted on the Venetian Causeway a couple of years ago. The pitch was something along these lines – “Do You Have Excellent Credit? Need Fast Cash? Help Us Buy Real Estate. No Risk!”

Unfortunately, Miami continues to suffer from real estate fraud, and flipping a short sale has been the latest craze for several months now. Whether Medicare fraud, mortgage fraud, insurance fraud, it’s all here. Then months ago, one of my agents was personally involved in flipping a short sale deal, and after catching wind of the scheme, I had to spend days to skillfully work my way out of it. As a result, I terminated our relationship with the client and agent in the same week.

So finally some good news came across the wire this week to help us put a stop to this “flip your short sale” bonanza. According to a recent article published by Florida Association of Realtors, titled “Home short sale flips nixed,” Attorney’s Title Insurance Fund will no longer provide title insurance on deals made with closing flips of short sales.

The formula is simple – the buyer and seller work together to convince the existing mortgage holder to sell the property at a low market value. The buyer, or investor, then resells or flips the property at an inflated price to a new buyer and closes on the same day. The sale occurs simultaneously and the investor then pockets the difference.

So what is the issue? There are several, including defrauding the original mortgage holder, defrauding the new mortgage lender (if there is purchase money financing involved), the end buyer paying an inflated price over market value (memories, anyone?), collusion, professional liability, and the list goes on.

Flipping short sales is not good for anyone, it’s just more of the same. Kudos to Attorney’s Title Insurance Fund for taking a stand.

If you would like further information in regard to buying, selling or renting Miami real estate, please do not hesitate to contact us at info@miamiangelproperties.com.

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