A warning to home buyers, a real estate scam is cashing in at your expense. The hot house market has scammers building better business by rebuilding through what is known as property flipping.
Some are finding ugly houses can turn a pretty profit, Homevestor's Mike Brendel says," We buy distressed properties that most of the time needs significant repair, we rehab the properties and sell them." Sound innocent but not all business are on the same level as Homevestors. They are renovating the business into fraud. Real estate broker Dean Gilbert says,"Mortgage fraud generally happens when an investment type goes in and purchases a piece of property and say they are going to do repairs to the home, but he turns around and tries to sell it"
Flipping the industry one house at a time, the property is purchased, falsely appraised at a higher value and then quickly sold.
Brendel says,"there are guys that kind of whitewash it and put it out there and then the unsuspecting home buyer comes along and thinks they're getting something that is worth $100,000 when in fact it's only worth $80,000" Behind these property flips lies the truth within the paperwork and its hurting not only the buyer but it is also flipping neighborhoods upside down.
Now state and federal agencies are cracking down on these scammers offering regulations to protect you and your home.