The $10 Option Contract Short Sale Scam

SHORT SALE SCAMS EXPOSED - "THE $10 OPTION CONTRACT"

Hopefully that title got your attention!

If you are reading this, you fall into three categories:

You are with me - You are likely an agent who values fiduciary duties and ethics over money, or a consumer who does not tolerate rip off artists.

You are against me - You are likely an investor or agent who disagrees with me, who would likely value money over ethics and fiduciary responsibilities.

Or you have no clue what I'm talking about!

If this blog post is angering you already, I definitely know which category you fall into! Those of you who know me, know that I'm not in the business to make friends with the world. I do have great friends and people I'm close to in my life. But, I am not always the most polite person on the face of the Earth, especially when I see injustice going on or the subject is something I feel passionate about. I say it like it is. I am going to state my case, and then I challenge ANY "short sale home buyers", investors, or Realtors(R) who disagree to a debate, right here, right now!!

For those that don't know what I'm talking about, the option contract seems to be the most common instrument that investors use to try to "buy" short sale homes. There are other ways investors purchase short sale homes, I've heard them all. Pretty much all of which I believe to be unlawful and unethical in some way, but the $10 option contract seems to be the most common scheme I run into.

Here is how it works:

In a nutshell - The investor puts signs up around town saying something like "we buy houses" or "stop foreclosure" or "John Buys Homes - CASH". The investor also may start websites claiming to offer solutions to home owners in hardship. Either way, the investor puts himself out there as a "cash home buyer" ready to buy your home TODAY!!. Unsuspecting home owners who are upside down on their homes and in hardship call the investor looking for some kind of solution to avoid foreclosure. The investor then asks the home owner to sign a $10 option contract, giving them the OPTION to purchase the home for an extended period of time. Once the option is recorded, it is basically another lien on the property! The investor considers this to be "ownership interest" and "equitable title" to the property. Once the home owner is out of the property, the goal of the investor is to basically manipulate the situation in ANY way to get the home approved as a short sale by the home owners lenders as cheaply as possible. Once approved, the investor tries to find a buyer to flip the home to PRIOR to purchasing, then ONLY buys the home (using cash/hard money funding) if they can put the deal together and flip it to a REAL buyer by buying and selling at the same time.

Here is why the $10 option contract is not only unethical, but illegal:

1.) These investors do NOT buy homes like they say they do! They are really "transaction coordinators", not a "short sale home buyer", right?? I mean after all, they ONLY buy the house if they can find somebody to flip it to right away. If they can't find a REAL buyer to buy it, the property goes into foreclosure, destroying the borrowers credit (could still be liable for money owed!). The investor is out a whopping $10. I have talked to MANY sellers who were under the impression that the investor/con artist was the person actually buying their home!

2.) The law has determined that "token consideration" ($10) doesn't constitute a valid contract, period. This means you can't legally say you own a home, and can't make decisions like an owner could when offering token consideration.

3.) What if the lender asks that the short sale deficiency be repaid by the home owner?? This is a very common occurrence. What if, the investor tries to manipulate the lender and steal a home for $150K, instead of the $180K it may fetch if sold in a legitimate transaction. What if, because the home sells for less, the lender asks that the home owner repay $40,000, instead of say $20,000 or nothing if the home had sold for a higher price. Who's best interest is that in? What about agents who agree to hide offers that come from legitimate buyers from the sellers lender, only to present to an investor who is not the REAL seller? Also what about agents who misrepresent the value of the property? I challenge ANY agent who claims to have ethics or values to tell me why they should be allowed to have a real estate license if they approve of this.

I'll save some other reasons for anybody who cares to debate with me!!

Because of my involvement in the short sale industry, I am constantly bombarded by these con artists trying to recruit me into their gangs of schemers. It is people like this in my opinion who are the epitome of "American Greed", and are the reason half the world despises our country. When approached by these people, the first thing they ALWAYS go after with me is, "You'll make 6% on the buying side, and 3% or 6% on the selling side". They come at me very hard, and its always ALL about money with them. Probably heard that statement 100 times. They are an extremely aggressive and manipulative bunch.

I'm not for sale, sorry to disappoint.

Realtors, we must stand for something, or we will fall for anything! Don't let one of these investors talk you into selling your values.

Sellers!! If you are in financial hardship and considering a short sale on your home, beware of short sale scams out there! The $10 option contract is just one method these guys use to tie up properties, rob your lender, and play games with home owners credit and financial future. There are MANY others!

ONLY use an agent who will look out for YOUR best interests, NOT their own! Common sense would likely say that it is impossible for anybody to look out for your best interests, while trying to profit from your misfortune as much as possible!

If you are looking for a good short sale specialist in your area who is pre screened, very experienced, and must agree to the strictest ethical standards and practices, visit www.short-sale-specialists.com.

Mike Linkenauger

First Coast Realty Associates

(904)733-4911

Find Jacksonville FL Real Estate on our local website, or subscribe to my blog at http://activerain.com/blogs/mikelinkenauger