Buyers Agent FeesFlorida Buyer Broker Real Estate Fraud

Florida Real Estate Fraud!    

2023 real estate fraud via wire transfers is on the increase. Almost 50% of loans  in the 3rd quarter of 2023 have at least one risk of fraud. Real estate fraud, mortgage and title fraud are at at their highest levels with $61.3 billion in fraud issues reported.

Buyer beware real estate fraud and wire transfers in Florida!

Real estate fraud and mortgage wire fraud is fairly common and one of the most prevalent cybercrimes in the U.S.  Florida buyers lose their funds or the mortgage company loses their funds when wired to the real estate closing agent.  If the buyer is lucky the closing agent has insurance that may reimburse they buyer.  Even so, the consequences will be disasters for all parties involved in the sale.   The buyers may never see their money again. The sheriffs office will tell you that cybercrime is out of their jurisdiction!

The tactic used most in real estate fraud is for the  buyer to receive a last minute or suspicious email to redirect funds to a different account. 

Real estate fraud on CASH ONLY listings.

Buyer Beware when a listing says CASH ONLY the property is likely to have a big issue, or could be a SCAM.  It may be in very bad condition or have some adverse problem. Never send cash to someone who you have not met at a property. 

Banks will not finance properties with termites, mold, non-permitted additions, leaky roofs or overpriced properties.  (See the page on toxic Chinese drywall.

Many agents will tell the seller to only accept cash offers.  When there is very low inventory, they can get a quick sale and closing for their sellers.  Today, buyers must complete with  large investment groups (REITS) who will pay cash and not inspect properties, to entice the seller with quick closings.  

Buyers and renters are often victim of real estate fraud. 

Con artist posing as owners or real estate agents take rent and or deposit money then disappear.  Properties targeted are usually vacant and include; vacation rentals homes, annual rentals, homes for sale, condos and vacant lots.   

In 2020 more than 13,000 people were victims of wire fraud in the real estate and rental sector in 2020.  Losses then were more than $213 million . Wire fraud in 2023 has losses in excess of  16.3 billion!

Buyer Beware, what you see on line may not be what is on the land!

Buyers come to the area thinking resale properties they find on the internet sometimes offering many photos and are in good condition.  Buyers  don’t realize a “little fix up” can really mean a property is a total disaster.  The photos on the internet do not always paint a true picture of a property.  Buyers can’t smell what a property is like from the internet  photos.  Buyers can’t tell if a property has mold or Chinese drywall when looking at a home on line.

Foreclosures and auctions may have title issues. 

Some cash buyers do not get title insurance when they are planning on flipping properties.  If the property is a condominium the homeowners may be behind in their condominium fees.  Or, the condominium community may have too many investors in the community.   If the buyer is flipping they need to know financial institutions will not finance condos in communities with too many investors.

Fannie Mae and Freddie Mac are doing spot approvals on  foreclosure properties. When they foreclose in condominium communities which have too many investors or owners delinquent on their condominium fees, so they do spot approvals to get them sold.  Sometimes the buyer is required to finance with the foreclosure entity or pay cash for a foreclosed property.  The property condition maybe is so bad or the financial situation is so bad a conventional lender will not loan money to buy the property. 

Investors are competing with banks buying their properties when auctioned at the courthouse.  These investors do not pay off the mortgages or obtain title insurance.  They then flip the property to an unsuspecting buyer who pays cash and who does not realize the property still has outstanding debts.

Many banks require the buyer to use their title companies when purchasing their foreclosure properties.  

Auction buyers may not know there are additional cost.  There may be multiple  unpaid liens against or HOA fees.  And additional fees above and beyond the auction price which must be paid, including real estate commissions to agents.  All due diligence, property inspections including checking the title for liens is usually done by the buyer prior to the auction.

It is real estate fraud for a seller or their agent not to disclose to the buyer known property defects.  

Florida Law requires the seller to disclose if they know there is anything which can adversely affect the value of the property.  However, many foreclosure banks don’t abide by Florida real estate laws.  Some of them will not allow the listing agent to disclose known defects to buyers. 

Buyer beware any property which has been under contract and comes back on the market.  There are any number of reasons why this can happen.  It is not always because the buyer did not qualify for a mortgage.  The property may not qualify for the mortgage because it is overprice, or may have an adverse property condition, like toxic Chinese drywall.   It could be a short sale heading toward foreclosure.  It is not uncommon for listing agent or seller’s not to make full disclosure to buyers.  

Sometimes, listing agents won’t do their homework.  They will let the buyer be the Ginny pig.  Leaving it to the buyer to find out whether the property will pass inspections,  qualify for financing, have toxic Chinese drywall or an unacceptable financial situation with the condominium or homeowner association fees.

Buyer beware all agents won’t disclose to the public when a property is a short sale.

Some agents are taking short sale listings and using fictitious buyers or investors to flip the property.  Then they sell the property to another buyer at a higher price as soon as they close the short sale. 

Unlike the brokers purchasing their sellers listing for themselves and flipping them, it is considered fraud when a broker or investor is cheating the bank out of equity via short sale flipping.  Banks don’t like being cheated out of equity. 

 (See Short Sale and Short Sale Fraud on my homepage.)

Buyer beware builders advertise their lowest priced product.

It is best not to plan a trip to Florida based on prices you see for new properties on the internet.   Typically, when the buyer arrives,  the lower priced properties are no longer  available from the builder.

Some builders start new developments then file bankruptcy. They leave the new developments with partially build homes.  Sometimes with no clubhouses built for the existing homeowners.  Investors will buy the left over inventory in some bankrupt communities.  Investors may not be build the rest of the community.  Sometimes they hold the vacant land until the prices come back or until they can resell their interest to another developer.  That developer may or may not build the club house promised to owners already living in the development.

There have been incidents of real estate fraud when dealing with dishonest attorneys who underwrite title insurance policies for builders.  They will provide title commitments when there are still sub-contractor liens on a new property.  When buying a new home consider using a different title company than the builders.  The builders offer buyers discounts to use their title companies so this is a hard decision for some buyers to make. 

Sellers beware: Some real estate brokers buy the listing from their seller, increase the price and flip it to a buyer or investor.

Is this real estate fraud?  Are real estate brokers stealing equity from sellers when they buy a property for cash and flip it to another buyer in short time after closing?  Or, in some cases, with a simultaneous closings?  Could the seller have made more equity, if they waited for the buyer who planned on using or renting the property?  Most properties being flipped have had $30,000 to $100,000 or more in cost added to them between 2020 and 2023.  It is no wonder real estate prices have increased as much as 100% (and more) in some areas! 

Financial institutions with foreclosures or short sale properties do  not allow assignments of contracts or simultaneous closings to flip their properties.

No one else questions this as unethical behavior by real estate brokers. Since 2019 the fox has been guarding the real estate hen house!

REALTORS® make money off commissions, the higher the price, the higher the commission. 

The State of Florida gets a great deal of income from real estate taxes.  The higher the price of the property, the more taxes the State, county and city can collect. 

Buyers say this; If you find a good deal, I’ll get on a plane and fly down.

It is the sellers real estate agents job to talk you into coming down to buy their listing.  Another buyer might make an offer while you are on the plane coming to see the property!  The seller does not have to wait to see if you will make an offer when you get here.  You may end up in a bidding war.  Or if the property was a good deal it won’t last until you get to Florida.

Buyers think agents represent them when they don’t represent anyone!

Buyers discloses their financial status and motivation to the sellers listing broker or associate thinking the will represent their best interest.  In Florida all real estate brokerages are considered to be transaction brokers who do not represent anyone exclusively. 

When you are considering making one of the largest investments of your life…ask Beverly Howe first!

Florida Buyer Broker is a broker buyers can trust, with a proven track record of assisting buyers with honesty, integrity, negotiating skill and professional experience.  Florida Buyer Broker represents buyers only.

REALTORS® have confidence in buyers who obtain the services of   Florida Buyer Broker.   

  Beverly Howe, Florida Buyer Broker

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 As stated by AARP and the Federation of America in REALTOR® News.

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