No industry is more plagued by crooks, scammers, B.S. and underhanded practices than real estate...seminars, auctions, anonymous marketers, email blasts...the desire for fast or easy riches makes you easy prey for those wanting to separate you from your money. The scammers have been at it for decades but the internet seems to have energized them as never before, as has the run up in values that we have seen in the last five years. Here are a few of the more notable topics that come up in my discussions with clients:
Seminars: You have seen them on TV for decades offering to show you how to buy homes with no money down or with seller financing or perhaps by lease option...maybe even put cash in your pocket at closing. Without a doubt these are the most common of garden variety of snake oil salesmen. The techniques they promote have not worked in California for many many years, if ever. Buying any property with a monthly ownership cost far in excess of operating income is a sure road to financial ruin. To suggest that someone would sell you a home with no money down AND TAKE BACK A NOTE FOR THE ENTIRE SALES PRICE IS DELUSIONAL. There is no free lunch, and the only one making money in that deal is the crook who took you for a few hundred dollars. Remember, there is no free lunch.
The seminars in some instances encourage very questionable business practices which end up in litigation for those who can afford to fend off the shysters. Those who cannot afford to hire lawyers sometimes lose a home. If you should find yourself needing an attorney please call me and I will refer you to someone who can get you straightened out. But first...NEVER SIGN ANYTHING...ANYTHING...WITHOUT HAVING AN ATTORNEY OR TRUSTED ADVISOR REVIEW IT.
As a warning for sellers...if a buyer approaches you with an offer to purchase and has his or her own forms be EXTRA cautious. The California Association of Realtors and Professional Publishing have developed pretty good forms for just about all possible scenarios...buyers with their own forms are dangerous.
Foreclosure Consultants: If you could see the stuff they peddle to owners in distress you'd know why the California legislature has enacted laws to protect homeowners in distress from them. These rodents have been around for years but the recent uptick in foreclosure activity has breathed new life into them and their wacky and usually illegal schemes. You may have seen their plastic signs at freeway exits and such. Every now and then I see a new twist on the same old crap but I have yet to see an offer that really does favor the defaulting owner. If you are approached to engage in one of these transactions in any fashion you are advised seek a legal opinion IMMEDIATELY. There are certainly opportunities in foreclosures but the immoral schemes I've seen promoted rarely pan out except for the schemer.
Auctions: Generally speaking if you want to see lots of people pay 110% of full retail for property...go to an auction. Whether it's the County Probate Commissioners yearly auction, a tax collectors defaulted parcels sale or some company schlepping raw land in a hotel banquet room, the opportunity to get taken here is very real. The raw land may or may not be developable, the tax sale parcels are nearly impossible to insure with proper title insurance and come with no warranties of any sort. The Probate Commissioners sales are safer but are so well advertised and attended that the opportunity for real deals is very low.
Oddball Ownership Schemes: Tenants-In-Common, Limited Partnerships, Nominees...all are legitimate business styles but generally NOT in residential real estate where they typically run afoul of consumer protection laws, Department of Real Estate regulations or common sense. The use of clever or arcane entities is not usually necessary for a residential sale transaction. If the promoter of the "scheme" cannot explain it to you in plain english then it is probably a scam. By and large there is no need to reinvent the wheel to buy or sell a property. If the reason for an oddball deal is tax savings or privacy then you are advised to be extra cautious. If you should happen to hear the term "Land Trust" be extra cautious...they are the newest of the scammers techniques to take you. Of course there are good estate planning and asset protection reasons to have a property held in a trust, but the types of trusts used are not unusual and most attorneys can explain them in 5 minutes or less. They are well established and never are "secret" or "new". They are solid entities that have been around for decades and have stood the test of time.
Any Ad with the Word "Secret" In It: There are no "secrets" to buying a home. Anytime you dial into an 800 number your number WILL be captured and you WILL be marketed to. There may be an offer of a "Free Report" or a list of foreclosures or an "Insiders Secrets Report"...this is the latest ploy in the real estate industry that allows them to telemarket you...SINCE YOU CALLED THEM FIRST THEY ARE LEGALLY ENTITLED TO CALL YOU. This is not so much a scam as it is slimy way to get around the Federal Do Not Call List. The majority of these "report" peddlers are plain old real estate agents trolling for clients. They will rarely, if ever, include their name, business address, desk phone and other identifying information because they know you wouldn't call them if they did. These are the same agents who put out flyers for properties but don't include a price...thanks for nothin'.
Over the years I've seen the seminars and schemers come and go and typically the damage is less than a few hundred bucks (and some wasted time) but I've also met folks who got really fleeced...in some cases for many thousands of dollars, in other cases for an entire property. You're dealing in transactions in the many hundreds of thousands of dollars...before you commit to anything that smells funny GET SOME PROFESSIONAL ADVICE FROM SOMEONE WHO HAS NO DOG IN THE FIGHT. There is a sucker born every minute. Don't be one.
P.S. The "secret" to buying real estate? Save some money, pay your bills on time, keep your debt in check, report all income for two years and get ready to pay more to own a home than you do to rent one. Want some good news? Good credit (crucial to getting the best interest rates) and lack of debts (high debt KILLS qualifying) will take you farther, faster than a larger down payment...it's true. No charge for the advice! |