Can someone explain to me about mortgage fraud?
I recently found a REO property being offered for 99K. I did a property tax record search and found out this property sold for Oct. 2004 for 250K. I did some comp research and found several houses in the area sold for $240-250K. I thought this was a pretty good deal.
I talked to a seasoned investor and he found out the house sold 2 years ago for $135K. He also said recent sales in the area shows in the 200s and he suspected appraisal/bank fraud. He estimated (without seeing the property) the house after repairs is worth $150K
As a newbie, how I’m a bit confused about this. How do I determine if a deal is a good deal. I did my research, but apparently my deal wasn’t as good as I thought it was. How can I determine what the true value (ARV) is? I checked on the local county website the property tax info and it only shows the last sale date, but it does not show the history of sales thus I did not see the sale price of 2 years ago. Does anybody have some advice?
Let’s look at this another way.
I don’t know how you pulled comps or your experience with it, but let’s go with your figures. You said that you comped the property at a ARV of $245K or so. So that must mean that there are other properties in the area that are similiar to this one, and they actually sold for those amounts, correct?
Okay, so you think that you’ve got a good deal, but you run it by a “seasoned investor” to make sure. This investor tells you that the property sold 2 years ago for $135K. Know what this means to me, absolutely nothing. A price alone doesn’t tell you anything. It may have been a foreclosure sale 2 years ago as well. Besides, this “seasoned” investor has comfirmed that sales have been in the 200’s, I’m assuming close to your own comp range. Then he proceeds to tell you that it’s only worth about $150K after repairs. Did you ask him how and why he came to that figure?
From my point of view, it sounds as if your investor friend is not really looking after your best interests.
If you want to verify your comps, have an agent do a BPO for you. Heck, have two agents do one each. It may cost you $50-200 bucks, but if you’re in doubt, it’s money well spent to insure the deal is right.
Of course, I’m also assuming that you already have this deal under contract. If not, then this is probably going to be just a good lesson learned, because if the numbers that you presented is even close to accurate, it’s already gone.
You didn’t say what the repair costs were, but even taking his number of $150K it looks like a good deal, and that’s before negotiating down that $99K price.