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I finally have a developer in the crosshairs

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JCONNOR3

Thread Starter
Sophomore Member
Joined
Apr 6, 2007
Professional Status
Certified General Appraiser
State
Florida
Fraud from the getgo- As an appraiser I have seen a lot of fraud but for the first time I am in at the beginning. I have been asked to appraise a number of condos and I know them well as they I drive past them in my PUD everyday. In fact I lived in one as an apartment.

They converted about 2 years ago and sales have been dead slow. Suddenly I got these appraisals in and there are 2 people buying a bunch of them. How about that.
After my shock wore off I began to review the contracts and noticed that the sales price was at least $50 per square higher than anything I had seen in my area. The contract stipulates that 2 commissions are to be paid. 1 of $12,000 and 1 of $37,000 to brokers in far flung places. Whoa-now that is the business I want to be in.

As part of the research effort I pulled the sales in the project and found that suddenly this year units started selling for over $50,000 more than last. Huh?....it seems that apartment dwellers living 200 miles from here are buying investment condos like crazy.

Next step was to pull the developers site. He has none. That is weird. Craigs list has a place for me to go tho. I pull it up and it is under a brokers name whose address is the same as the sales office in my project.

Clearly the first line is this- 21% of sale to be given back to the buyer to use as you see fit. Back to the contract I go. 21% of the purchase price adds up to the exact amount of the 2 commissions. Wow!

I begain to look thru the mortgages already closed on the units sold this year and everyone is 100% financing for the full $240,000. Do you think the lenders knew about this commission part? It is in the contract surely they read it. BS....my guess is there are 2 sets of contracts. Here is the rub. The appraiser was given this contract and should have deducted the usurious part of the commission to adjust for favorable financing which would kill the deal altogether and bring the units to market.
 
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Willie

Senior Member
Joined
May 30, 2002
Professional Status
Certified General Appraiser
State
Tennessee
edited as the original thread was edited....now advice not relevant
 
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TJSum

Elite Member
Joined
Nov 12, 2007
Professional Status
Certified Residential Appraiser
State
Maryland
Good points Willie. Don't forget the spot light will be focused on you as well as all the criminals involved. We are not talking about chump change here. I too would turn the assignments back and then alert the proper authorties while staying in the shadows. Pam might be greatly interested in this and she might be able to tell you how to handle all of it.
 

Mike Boyd

Elite Member
Joined
Jan 18, 2002
Professional Status
Retired Appraiser
State
California
Sounds to me that they are all STRAW BUYERS. Owner will finance his way out of the slow moving project and leave the lender holding the bag.

I would contact the President or owner of the lending company. NOT the mortgage broker as he is probably in cahoots with the builder. Tell the prez what your research shows and ask if you should continue. I would not be afraid of retribution. We risk that with EVERY report we do that comes in below a sale price. If that is your fear, you should probably not be in this business.
 

Karl

Elite Member
Joined
Jan 15, 2002
Professional Status
Licensed Appraiser
State
Arizona
Cash back through financing is the BIG ONE JC contact someone!! ASAP Go to your AG & ask for the RE Fraud Division, for your state. IF they have no intrest go to the IRS & FBI here in AZ they now have a special force dealing with this. I'm sure your state does too.
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
Please go to efanniemae.com, follow the mortgage fraud links, and enter the data. Thanks.
 

Joyce Potts

Elite Member
Supporting Member
Joined
Feb 6, 2005
Professional Status
Certified Residential Appraiser
State
Florida
You're Late to the Fraud Party

http://mfr.mlxchange.com/Pub/EmailView.asp?r=1213726383&s=MFR&t=MFR

What is suggested in the original post has been going on for YEARS, but has become increasingly worse over the past few. I've been told by many sales agents that the developers are paying a hefty finder's fee to oversees companies who find them unsuspecting foreign buyers. I had one property that sold in the high $200's where a $30,000 finder fee was paid. That was the explanation given to me when I asked about the vast disparity in sale prices for the same floorplan in the same development. I've found this to be predominant with buyers from the United Kingdom--with the current exchange of the British pound to the U.S. dollar adding more fuel to the fire (2:1 for a while)

I've come across this so much that I ended up writing a standard 'Multi-tiered Market Addendum" which I include in my appraisals whenever applicable. This is the type of thing that gives a whole new meaning to the concept of concessions and despite that I can't prove that any of that went back to the buyer for plane tickets, accommodations, DOWNPAYMENT, furniture, etc., I'm still backing it out as a concession. Aren't I popular?

So the question I have to my fellow appraisers is--do you consider the sale that I've linked above and below to be legitimate? Please note the list/asking price at sale of $179,000, 228 total/cumulative days on market with a final selling price of $290,000.

I'm curious because from what I can see from the Orange County Property Appraiser's Office posting indicates that some local Countrywide approved appraiser had no problem with it, nor did Countrywide, based on their $275,000 mortgage. (See Attached)

http://mfr.mlxchange.com/Pub/EmailView.asp?r=1213726383&s=MFR&t=MFR
 

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Amy Perkins

Senior Member
Joined
Jul 20, 2003
Professional Status
Certified Residential Appraiser
State
Tennessee
That is pretty bad, I would be careful sending them a report, with this kind of fraud, they might try to cut and paste your appraisal too!
 

Brad Ellis

Senior Member
Joined
Feb 7, 2006
Professional Status
Certified Residential Appraiser
State
California
JConnor,

Atta boy!!!

This is so common that it is truly sad.

I have a list (non-publishable- sorry but the legal eagles are all over it) of probably 70-80 complexes, mostly in FL, where we see this and where we will not fund loans. I'll bet it nothing more than a drop in the bucket.

If you want to e-mail me privately the name of the complex/street address, I'll let you know if we have any loans in there.

In the meantime, you CAN demand copies of the HUD-1s on the comps from the developer. If they refuse, you have your proof. If you get them (and many of these guys are really dumb and WILL provide them) then you can see and track the payments to outside folks or "rebates" to the borrowers.

I'll give you one areas wheere we see this regularly- Brickell Bay in Miami (already publically identified).

So, let me know how I can help you and I'll do what I can. I'll be in today but then out a few days so apologies up front for any minor delay.

Brad
 
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