March is fraud awareness month, so we would like to take the opportunity to inform you about the hidden dangers of fraud in the real estate world.
Real estate fraud has several aspects. It can range anywhere from the sellers not purposely providing information about the home on the disclosure forms, buyers not actually applying for loans or not providing truthful sources of funds for their costs like down payment or closings costs, to agents purposefully false advertising homes. Being aware of what is out there can help you avoid needless issues.
Sellers should always disclose as much information about their home as they can to the potential buyers. Ethically and legally, it is the right thing to do. Sellers are often nervous when filling out the disclosures and feel that buyers will not want to buy their home if they tell them too many of the negative aspects. Disclosing faults or issues is not bad, it is helpful. A good rule of thumb is: what would you like to know about your new home, neighborhood, or area? If you know something about the home, disclose it to protect yourself.
Falsifying loan information, or mortgage fraud, is one of the most common white-collar crimes in America. Cases often involve eager home buyers who are trying to improve their chances of getting a home loan by inflating their income and assets, or by lying about their sources of down payment. Another example is when second mortgages are undisclosed. Mortgage fraud is quick and easy, but terribly costly when you are caught. Aside from risking the transaction, you could incur legal fees and possible jail time.
Unethical real estate agents are also a possible stumbling block to your real estate transaction. Be watchful for agents who mislead you about the condition of the home, the needed funds, or those who use false advertising to draw you in to a fake transaction.
These are just some of the fraud traps you may encounter in the real estate jungle. Consult your agent for more information about fraud in real estate.
Information provided by Jary Martinson, Caliber Home Loans
Even though Dodd-Frank Act and Consumer Financial Protection Bureau have worked to eliminate mortgage fraud, it remains a major issue in today’s market.
A major type of fraud is called “Fraud for Housing”. This type of fraud centers around a borrower providing false information about employment, income, or assets in order to qualify for a loan. A borrower may fabricate income and/or falsify asset documents to qualify for a mortgage. Typically there isn’t a malicious intent, but, regardless of the intent, it is still a crime.
Some examples of fraud for housing are:
A borrower states that he/she will live in a home as a primary residence, with the intent to never move in and then rent out the home or let someone else live in the home, to gain terms more favorable than buying the home as an investment property from the beginning
Depositing money in a bank account that is from a gift, or loan, from a relative, but attempting to make it look like the borrowers own funds.
Creating tax returns with self-employment income that is higher than what was reported to the IRS.
Typically, a borrower who commits this fraud intends to pay, but lacks the proper documentation to qualify for a mortgage.
Below is an example of Fraud from Freddie Mac’s webpage:
Alaskan Woman Sentenced for Loan Application Misrepresentations (September 2007,Anchorage, Alaska)
In this case, the defendant committed bank fraud by providing false information to the mortgage lender in an attempt to obtain a home mortgage. To obtain a loan, the defendant, claiming to be employed, submitted a pay stub to document the amount of income she allegedly earned. It was later learned that she had been terminated from her employer for unlawfully transferring funds to her personal bank account. The woman was sentenced in federal court to 37 months in prison on one count of forgery, one count of computer fraud and one count of bank fraud.
The bottom line: Honesty is definitely the best policy.
Typically, title fraud takes place as follows:
A fraud artist steals the identity of the legitimate owner of the property.
The fraud artist uses this stolen identity to obtain mortgage financing through a bank or financial institution.
The unsuspecting homeowner receiving notices from the bank or financial institution demanding payment.
The homeowner is then faced with the stressful and costly burden of proving that he/she has been the victim of mortgage fraud and should not be required to repay the fraudulent mortgage.
Fraud in Real Estate
It is important to pay attention to every detail in your real estate transaction to protect yourself from phishing, identity theft, and other fraudulent situations. Below are some examples of how information is compromised:
Emails: Email accounts are never fully secure. Scammers can find your email account by filtering your correspondence with realtors, title companies, and loan organizers. After they have established that you are in a transaction, they will reach out to you pretending to be your realtor/loan officer/title company rep and request sensitive information. What can you do? Pay super close attention to the email addresses of those involved in your transaction. Often scammers will change a single letter or number in the email address to appear legitimate. If the address doesn't match the one provided directly by the agent exactly, it could be a trap!
Wire Transfers: The prince of Nigeria needs your money? He'll return it with double in interest!? Wow! That's too good to be true...seriously. Wire transfer fraud may be one of the most common types of theft since the birth of the internet. While most of us know that Uncle Joe isn't stranded in Mexico and the prince of Nigeria isn't going to return our investment, are you looking out for wire scams in your transaction? Scammers are becoming even more crafty, posing as your agent/loan officer/title company to request wire transfers that seem to pertain to the transaction. What can you do? Ask your agent if the wire transfer request is legitimate. You should also double check the phone number/email address of the person requesting the wire. Once the money is transferred it usually cannot be recovered.
Take care of yourself in your transaction by verifying contact info, communicating with your agent, and considering title insurance! Ask your agent or title company for more info on this.
Choosing the Right People
Making sure the people you're trusting your sensitive information with are truly trustworthy is the first thing you should do! Choosing to work with a good real estate agentis a great first step. As a REALTOR® Tesha is held to a higher ethical standard than average real estate agents. She works hard to ensure the agents on her team are just as trustworthy, and recommends companies for everything from loans to home inspections that have similar ethical standards as NW Real Estate Professionals.
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Tesha and Team,
On behalf of Donna Brookshire and myself, I would like to thank you all personally for selling my mom’s house. Your professional tenacity in getting the place sold numerous times and dealing with the park was outstanding. Even the times when I thought you would all give up, you dug in and tried harder. This was not an easy transaction and the pay was very low, but you all never took that into consideration and I always felt like I was a million dollar listing.
We appreciate your hard work and dedication!
A heartfelt thank you,
Linda Rehak and Donna BrookshireLinda Rehak and Donna Brookshire
"Tesha and her group have sold a home and purchased a home for me. She is currently selling another home for me now and will absolutely use her for my future real estate needs. Tesha knows the markets and gives advice without pushing. Her team works hard to keep everyone on track. Aside from those essentials, I really appreciate Tesha's straight forward attitude and friendly personality with just enough sarcasm to keep things fun."KELLY BREWER
Real Estate Struggles and the Angel That Helped Me
Selling a home is never easy. I used to be a real estate broker, so I know this as well as anyone. People are very fragile and stressed out when selling their house, and I was no exception. I knew it might be a hassle, but I had no idea how hard it really was until I was in the midst of it. I was a basket case, and the whole time Tesha, and her team, helped me through every rough spot. This is my story about my real estate struggles selling my house, and the angel that helped me.
The whole thing started while I was overseas, in India. I had a renter in my house and I knew their lease was about to expire. I also hadn’t particularly enjoyed being a landlord. So, I decided it was time to sell. I still had a couple of months before I would be back in the states, so I figured the sooner I got it listed the better. There was no one else but Tesha that even came to my mind to sell my home. We had worked together on some transactions over the years, and she was always professional and knowledgeable. So, I picked up the phone and gave her a call. She asked all the right questions and within just a few days I signed a listing agreement, via DocuSign, right from my laptop in India.
Offer and Negotiations
Within days we received a very solid offer. The only issue was that the closing was dependent on the buyers selling their own home first. That made me a little nervous, but we accepted it on the grounds that they would remain “bumpable,” meaning if we got a better offer with a faster close we could bump the first buyers if there home still hadn’t sold. She sent me all the paperwork electronically, and again I signed it all right from the convenience of my hotel room overseas. A few weeks later we received a better offer, so we now had a main buyer and a back-up buyer. I was feeling pretty confident that it was all going to close without any problems.
Home Inspection Problems
My optimistic bubble was quickly burst after the home inspection. Due to the fact that my home had been a rental for some long, there was a good deal of deferred maintenance that needed addressed. What was worse was that there was standing water in the crawlspace and the buyers wanted me to fix that, and a bunch of other things on the report. I could see my slim profits quickly vanishing and got a little panicked.
Tesha and her team went right to work helping me gather bids for repairs. I didn’t even have to ask her. Also, since I was overseas she met the contractors and let them in. She has great contacts in the industry and was able to get me some fabulous prices on everything from a HVAC maintenance company to a pest company. She even negotiated with them so that they agreed to be paid out of proceeds at closing. That way I wouldn’t have to go through the hassle of mailing a check to them from India.
I finally made it home in time to move everything out of my house in time for closing. Again, Tesha was helpful, asking me if she could help, if I needed boxes, etc. A couple days before closing she checked in with me to make sure I was still on schedule. She wasn’t calling to pressure me, but to just check in and see if I needed anything. She really is an angel. The house sold and I’m so relieved it’s all over. It was not easy, but I know that without Tesha, it would have been much more difficult. I can’t thank her enough for all of her hard work and outstanding service.
"Tesha was referred to us by the realtor we worked with in buying our current home. We were looking for someone experienced in selling homes on acreage. We couldn't have met a more knowledgeable realtor. She has extensive knowledge of the area, and was so responsive to our questions you would think we were her only clients. We would recommend her in a heartbeat."
Laura McGuire just left you a new recommendation!
"I needed to sell our dream home due to a divorce. Tesha and her crew were very empathetic, knowing that time was essential. I asked if it would be possible to find someone who would buy the upper level and possibly let me rent in the mother-in-law unit. I hoped for interest in someone wanting 4 bedrooms , deck with a view AND income from me. It worked. This was unheard of in the realty business but I thought "why not"? Tesha kept me informed every step. Put me on an app that buzzed me every time I had to leave the house for a visit. This difficult time in my life was blessed with Tesha's help and knowledge. THANK YOU!"Laura McGuire
“Couldn’t have done it without you and the team. Purchasing Real estate is a very convoluted process, thank you for everything. Couldn’t have done it without you and the team.” MITCH PASKIN
“If you are trying to find a great Realtor, look no further… Tesha Perry will help you sell your house and find the perfect property for your new home. She listens carefully to what you need and want (both in the selling and buying) and will be an incredible help at every step. She is very customer focused, knowledgeable and will take great care in all the paperwork and negotiations… your Real Estate Advocate! Tesha is fun to work with and will make the entire process enjoyable.”BRAD DANIELSON
"You will not find a harder working agent, she is always going above the call of duty."BEN HILL
“Tesha is a wonderful, hard working, and honest person! She took us step by step in the home ownership process. We went through so many houses and took up so much of her time, I felt bad when I realized how picky we were actually being. However, she found us the perfect house…one that we have been able to call our home. I would recommend anyone I know who is in the market to buy a home to go through Tesha. Our experiences with her were spectacular!”BRIANA STEINER
“After a job change required me to relocate several hours away, I needed to sell my home. Over the course of five years, I listed the home twice using two independent real estate agents. In both cases, their efforts produced little interest and certainly no bona fide offers. As a result, the home sat vacant with the exception of brief periods where the home was rented. Tired of subsidizing the payment and the landlord headaches, I contacted Tesha who, in less than a month, obtained an offer on the home. Even better, through her tenacious efforts, she obtained a second offer ten days later significantly higher than the first. Tesha effectively and efficiently managed every detail and aspect of the sale and closing. I am very grateful for her hard work, attention to detail, and always going the “extra mile.” I would highly recommended her to any potential home buyer or seller.”KEITH LUCKEN
“We have had such an amazing experience with Tesha Perry! She was so knowledgeable, professional and patient with us as we searched for our first home. We ended up with our dream home and it was because of her hard work. Thank you so much Tesha! If anyone is looking for a realtor, SHE IS THE ONE!”RJ AND KACY STRICKLAND