New Jersey Short Sale Investor Fraud and Scams

New Jersey Short Sale Investor Fraud and Scams

Many New Jersey Homeowners have been affected by New Jersey Real Estate Investors and Real Estate Agents partnering up to buy and sell New Jersey short sales.  With the New Jersey short sale inventory on the rise, New Jersey Homeowners must be aware of the short sale scams, misrepresentation and potential fraud.

Here is one of the most popular New Jersey Short Sale Real Estate Scams today:

A Homeowner gets behind on his/her mortgage payments.  Her mortgage balance is $250,000.  So she calls a real estate agent to sell the home.  The real estate agent determines the house is worth $200,000 and the real estate agent tells the Homeowner that she should short sell the house.  Short sales have become increasingly common due to difficult economic times.

At this point the real estate agent is representing the Homeowner and has a fiduciary responsibility to sell this house for the highest and best price and negotiate with the bank to relieve the Homeowner of any potential deficiencies.  In this case the mortgage is $250,000 and the value is $200,000 leaving a deficiency in the amount of $50,000 plus closing costs that will be the responsibility of the Homeowner unless the real estate agent negotiates a full release of any deficiencies owed to the lender.

Here is where the problem occurs:

There are investors trying to buy New Jersey short sales at fifty cents on the dollar and one of their methods is approaching real estate agents with short sale inventory.  The investor tells the real estate agent he wants to buy the agent’s New Jersey short sales; and, if the real estate agents works with the investor, the agent will not only get the full commission on each short sale he closes but the investor will list the home for sale again with that real estate agent so the agent can get paid a second time on the same house.

Once the real estate agent is on board, the investor tells him that in order for this to be successful the investor will have to take over the short sale negotiations with the bank.  Now the real estate agent allows the seller to sign everything over to this investor or the investor’s negotiator/attorney.  To get the seller excited, the investor will sometimes tell the Homeowner that she can stay in the house and pay cheap rent once the investor takes possession of the house.

Fiduciary relationship is terminated:

While this all is occurring, what happened to the fiduciary relationship between the real estate agent and the Homeowner?  There is no relationship because the real estate agent and investor are looking out for their wallets at the Homeowner’s and Lender’s expense while the fiduciary responsibility has been broken.   

These investors may have 10 or more of these transactions happening simultaneously hoping for 10% of them to successfully close leaving the other 90% of Homeowners facing foreclosure.

Call a Certified Distressed Property Expert (CDPE):  What is a CDPE?

If you have been approached by one of these companies or individuals posing as an investor that claim they are going to buy your house, give us a call today.  Our team of New Jersey CDPEs have many years of experience handling the most difficult New Jersey Short Sale cases with incredible success.

 

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