Interesting CL post...thoughts?

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Submitted by minden on September 30, 2009 - 9:23am

Just saw this on CL. Is this sort of thing common? Or disaster?

MessageL:

I am in an intersting situation, and I am looking for a possible investor to assist, and make a quick return in the process.

I am looking to buy a home for my family. My income and credit is very good and fully verifiable. But because I do not have a huge cash down payment, I am approved for an FHA loan, rather than a traditional one.

This obviously puts me at a disatvantage when it comes to buying bank-owned homes with very specific criteria for purchase. Many/most will simply not accept FHA loans.

That said, I have found the perfect home for us- but it is bank owned, and they require a significant down in order to purchase. I am now interested in working out the following deal:

You purchase the home with your existing capital. You then sell it to me via traditional means at a premium that you and I will contractually agree to. You make a quick return on your otherwise idle cash, and my family gets our dream home!

Forgive me if this sounds overly optimistic...I am not a financial or RE professional, but I am savvy enough to not get involved with anything shady, so scammers need not apply.

Thanks in advance!

‹ How to find the sellers equity in the home Getting screwed by Bank of America ›
Might be innocent enough but
Submitted by Russell on September 30, 2009 - 9:49am.

Might be innocent enough but I don't think anyone would touch it. How is an investor goint to be sure that the person(with no down payment) comes back and buys the property with an FHA loan? Why is FHA going to appraise it for more than the investor pays? It is potentially very expensive if it doesn't work out and very likely not to.

Run! Head for the hills and
Submitted by creechrr on September 30, 2009 - 9:49am.

Run! Head for the hills and don't look back!

My interpretation:

"I don't have enough money to qualify to purchase my dream home. I'm looking for some sucker to risk his assets by purchasing this home. I will then magically have the finanical resources to make the purchase while bestowing a sizable profit to the kind hearted soul."

Come on, this has BS written all over it.

This is what hard money is
Submitted by sdrealtor on September 30, 2009 - 1:46pm.

This is what hard money is for.

Where does he live, Nigeria?
Submitted by Aecetia on September 30, 2009 - 2:08pm.

Where does he live, Nigeria?

if it's a flat out scam, how
Submitted by scaredycat on September 30, 2009 - 2:25pm.

if it's a flat out scam, how does the poster make money off it?

seems more like idle scheming thana scam. the premium would have to be pretty high to justify buying the house and hoping to flip it to the schemer.

A hard money lender wouldn't
Submitted by pabloesqobar on September 30, 2009 - 3:21pm.

A hard money lender wouldn't touch that kind of deal.

pay them 4 to 6 points
Submitted by sdrealtor on September 30, 2009 - 4:17pm.

pay them 4 to 6 points upfront and they will.

Sounds like he -owns- the
Submitted by Hobie on September 30, 2009 - 4:43pm.

Sounds like he -owns- the home he wants to buy!

Seems like there is a way to
Submitted by sdduuuude on September 30, 2009 - 7:30pm.

Seems like there is a way to do this to limit risk.

First, make sure he is pre-qualified with a lender of your choosing. Second, get all his cash as a non-refundable down-payment. Third, charge him a solid amount of money for the deal. Be prepared to flip it if he backs out.

Of course there is the issue
Submitted by urbanrealtor on September 30, 2009 - 8:09pm.

Of course there is the issue that FHA loans require that the seller have title for 90 days.

Sounds to me like he is
Submitted by threadkiller on September 30, 2009 - 9:03pm.

Sounds to me like he is trying to sell his sisters house for her. Makes absolutely no sense to me. Creative, but a scam non the less, possibly of Nigerian origin.

Guy sounds like a lot of
Submitted by oxfordrick on September 30, 2009 - 10:28pm.

Guy sounds like a lot of Piggs who feel shortchanged by a process that favors investors who can turn on a dime over would be homeowners who must attempt to jump through hoops.

So nothing wrong with an investor doing his DD, buying the home at appropriate price and lease/optioning to this guy until he can qualify for a loan.

This obviously puts me at a
Submitted by ucodegen on October 1, 2009 - 10:30am.

This obviously puts me at a disatvantage when it comes to buying bank-owned homes with very specific criteria for purchase. Many/most will simply not accept FHA loans.

This is a red flag. The banks don't care about the 'color' of the money on selling off the property. The part they do concern themselves with is: are the funds already available or approved, if not, how quickly can they be available or approved. What is the likelihood of the funds not being available or approved?

That said, I have found the perfect home for us- but it is bank owned, and they require a significant down in order to purchase.

Another red flag - FHA is allowing high LTVs, which means small down payments.

You purchase the home with your existing capital. You then sell it to me via traditional means at a premium that you and I will contractually agree to.

I suspect the 'traditional means' is owner(in this case you, the initial buyer) financed. Remember, this individual is stating 'significant down' required, which hints to me that their FICO is trash. It also raises the question, if they can't get the down payment to buy from the bank, how are they going to get the down payment to buy from you?

The other option is that this person is trying to do a short sale with an inflated price (not quite bank owned but will soon be). What guarantee is there, that they will then purchase from you? You might end up being stuck with the property.