The crack down on shady short sale deals continues. Banks and government agencies cite instances of flopping, whereby real estate agents fail to disclose other contracts to re-sell property for a higher price.
Florida has a long history of being the epicenter of fraudulent real estate schemes. I have see many instances of flopping in the Tampa Bay market.
In fact, I had to walk away from a million dollar deal when an All-Star professional baseball player wanted to buy a short sale home at what seemed like a great price, but the seller’s agent had a flop scheme in play. The agent disclosed a pre-existing contact whereby an investor would buy the home at a deep discount from the bank. The seller’s agent proposed doing a simultaneous closing and flipping the home to my baseball player. The investor would pocket the difference. The problem was: the existence of the higher offer would not be disclosed to the bank. If you see this happen, run or risk jail time.
As a result of such schemes, Freddie Mac has just amended the Mandatory Short Sale Affidavit Policy to help prevent fraud by requiring everyone involved in the transaction to make various certifications, including that the short sale is an arm’s length transaction and the buyer will not resell within 120 days unless there are improvements. The new affidavit will go into effect January 1, 2012.
Parties to the short sale will be held liable for their negligent or intentional misrepresentations, according to new guidelines. Read the Freddie Mac Short Sale Bulletin.
The “new normal” in real estate is the wild west. Who can you trust? As a Certified Distressed Property Expert (CDPE) since 2008, I have helped Tampa Bay buyers and sellers obtain over 150 short sale approval letters the right way. Call 813-979-4963 today for a confidential consultation.
- Dale Bohannon
