Scammy Real Estate Ads Back in Force

Here’s yet another sign that we’re back in bubble territory, albeit a strictly anecdotal one.

During the last bubble it was nearly impossible to turn on the radio without hearing some form of scammy “riches in flipping” ad during the commercial break. I don’t listen to the radio that often, but in the rare instances that I do tune in recently I’ve been hearing a lot more of that same kind of garbage. For example, I’ve heard this one on KIRO more than a few times lately:

How would you like to make some serious cash flipping houses in your area?

Hi, I’m [censored], founder of the [censored] Real Estate Academy. Over the last few years my elite team of committed house flippers has been using my three step “Fortunes in Flipping” system to buy and sell properties for quick profits and long term financial gains.

Now it’s your turn to have the same investor success. For a limited time I will send anyone that calls a free copy of my “Fortunes in Flipping” kit that will show you how easy it is to get in, get out, and get paid! There’s no catch, I even pay the shipping cost.

In my free kit I eliminate all the guesswork and I break down the process for evaluating properties for a quick turn and instant profit and I show you how to access some very unique financing programs to finance your deals.

If you dig around online you’ll find that this particular scammer lures you in with the free seminar then tries to take you for a few thousand bucks for his three-day seminar. At the three-day seminar his slick salespeople will attempt to soak you for upwards of $30,000 to buy into his “system.” Oh, and the “very unique financing programs” apparently include financing real estate purchases on credit cards.

Yikes.


About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market.

25 comments:

  1. 1
    The Tim says:

    Not going to name the guy because I don’t want to give him any publicity. If you really want to know who he is you can Google a few of the key phrases in the ad. He’s easy enough to find.

  2. 2

    Also back are some of those scammy real estate brokerage ads, with guarantees about selling your house, etc. Not to mention “We Buy Ugly Houses.”

  3. 3
    Guest says:

    Tim, I don’t think you should give any more money to real estate companies like these. They will not deliver on their promises.

  4. 4
    jon says:

    I was looking at a discussion thread on Zillow last night and someone posted a warning about a specific named person running a scam where they wanted the earnest money wired back to them before there was enough time for the check to bounce. That comment was followed by dozens of other people who had been contacted by that same person using the same name and the same fake passport, etc.

  5. 5

    RE: jon @ 4 – That’s somewhat common, but it’s not just the check clearing that you need to wait for. That only makes sure it’s not a NSF situation. If the check was forged the person who owns the bank account has at least 30 days to figure out the fraud. You need to know who you are dealing with whenever you return money that was written on a check, because as a general rule whoever dealt directly with the forger loses.

    Attorneys have even fallen for that scam, where someone gives them a retainer amount and then the person asks for it back. The natural inclination of the attorney is to respond quickly to a request for refund of trust funds.

  6. 6
    Erik says:

    There is a lot of easy money to be made in real estate by reading this website, buying low, fixing up the property, and selling high. After reading your last post, I’m not so sure real estate will be strong til 2024.

    Also, I don’t see why seasonal pullback in prices matter per your last post. The best fit curve looks about the same as before.

  7. 7

    A Dad Told Me the Truth About His 31 YO Realtor Millenial

    He staged and put a $575K home on open house for a month…..no one showed up. No buyers qualified.

  8. 8

    I’ve also recently heard an ad on the radio promoting zero down loans, which is kind of funny, considering the increase in the number of buyers paying cash..

  9. 9

    By softwarengineer @ 7:

    A Dad Told Me the Truth About His 31 YO Realtor Millenial

    He staged and put a $575K home on open house for a month…..no one showed up. No buyers qualified.

    Yes, lack of qualified buyers. That was obviously the problem. /sarc

  10. 10

    By Ira Sacharoff @ 8:

    I’ve also recently heard an ad on the radio promoting zero down loans, which is kind of funny, considering the increase in the number of buyers paying cash..

    Well, people who make loans don’t make too much money off of cash buyers. ;-)

  11. 11

    There are some legit zero “downpayment” loan programs.
    The best example is the VA–Veteran’s Administration loan.
    Realize that any mortgage loan will have “costs” and those costs WILL be paid by the home buyer in one way or another.

    Speaking of deceptive advertising…..
    http://www.dfi.wa.gov/sites/default/files/consumer-services/enforcement-actions/C-14-1568-15-SC01.pdf

  12. 12
    Mike says:

    By softwarengineer @ 7:

    A Dad Told Me the Truth About His 31 YO Realtor Millenial

    He staged and put a $575K home on open house for a month…..no one showed up. No buyers qualified.

    Must be in a bad neighborhood. I’ve seen some tear downs sell for more than that this year. It’s pretty rare to see a house in that price range staged anymore, nobody buys a $575k house without a contractor lined up to fix it… But they do sell. Usually in a week or less.

  13. 13
    ray pepper says:

    this used to be called scammy…but nearing a decade old its still as true today at it was in 2006.

    http://www.500realty.net/movie.php

  14. 14
    ess says:

    I don’t mind “flippers”. Nothing wrong with a bit of capitalism, which has both risk and rewards. It is the essence of capitalism which rewards initiative with profit. Sometimes it works out, sometimes it doesn’t, that is the essence of capitalism. No one is twisting anyone’s arm in the entire process.

    Our neighbor died and his house needed some serious attention. That house was sold to professional flippers, and they did a beautiful job in almost redoing the house from top to bottom. I watched the transformation – it took a great deal of work and it was done at a professional level.

    The house was sold for a profit to happy new homeowners.

    Everyone won.

    The estate was able to sell the house without doing too much fix up the house.
    The flippers were able buy and sell the house for a profit.
    The buyers have a beautiful house that is new for almost all practical purposes
    A house could be resurrected and made useful once again rather than being torn down and new materials wasted in replacing one building for another. That should make all the global warming activists happy.
    The neighbors now have a beautiful house on the street – not an eye sore for them to view
    The taxing authorities now have a more valuable asset to tax.

  15. 15
    The Tim says:

    RE: ess @ 14 – I agree, flippers (that actually do a good job) bring value to the real estate market and help neighborhoods improve. However, this guy isn’t really a flipper. He’s a predator taking advantage of real estate hype to get people to spend $30,000 or more to get into his “system.”

    If his system really made it so “easy to get in, get out, and get paid” and make “instant profits” then why wouldn’t he be spending all his time and energy executing the system instead of soaking suckers for tens of thousands of dollars?

  16. 16
    sleepless says:

    the US home ownership is at 48 years low, the rents are at all time high http://www.census.gov/housing/hvs/files/qtr215/currenthvspress.pdf

  17. 17
    Blurtman says:

    RE: The Tim @ 15 – He is merely doing God’s work. I hope his academy was not eligible for student loans.

  18. 18

    RE: Mike @ 12
    Actually, Housing is on a Bad Foot This Month

    http://finance.yahoo.com/news/u-services-sector-growth-picks-134933933.html

    Stocks had a one day increase, an aberration or a yearly trend….Lord only Knows….

  19. 19
    ess says:

    By The Tim @ 15:

    RE: ess @ 14 – I agree, flippers (that actually do a good job) bring value to the real estate market and help neighborhoods improve. However, this guy isn’t really a flipper. He’s a predator taking advantage of real estate hype to get people to spend $30,000 or more to get into his “system.”

    If his system really made it so “easy to get in, get out, and get paid” and make “instant profits” then why wouldn’t he be spending all his time and energy executing the system instead of soaking suckers for tens of thousands of dollars?

    Which is the same reaction I have to those selling stock and other investment schemes. If the system works so great and is so fool proof, make a few billion dollars first so we mere mortals can be assured that the system is actually fool proof.

  20. 20
    Weasel says:

    By Jillayne Schlicke @ 11:

    There are some legit zero “downpayment” loan programs.
    The best example is the VA–Veteran’s Administration loan.
    Realize that any mortgage loan will have “costs” and those costs WILL be paid by the home buyer in one way or another.

    Speaking of deceptive advertising…..
    http://www.dfi.wa.gov/sites/default/files/consumer-services/enforcement-actions/C-14-1568-15-SC01.pdf

    There are also the WSHFC downpayment assistance programs. We used the Home Advantage DPA. Yes we do have to pay the downpayment back in the end, so its more like 0% interest “downpayment loan”. http://www.wshfc.org/buyers/downpayment.htm

  21. 21
    Mike says:

    By Weasel @ 20:

    There are also the WSHFC downpayment assistance programs. We used the Home Advantage DPA. Yes we do have to pay the downpayment back in the end, so its more like 0% interest “downpayment loan”. http://www.wshfc.org/buyers/downpayment.htm

    Do you have to pay it back if you default? That’s really the rub with a down payment – it’s only your money if you lose it in a default situation. Otherwise, it’s still 0-down, both in practice and performance.

    Honestly, I’m surprised they’re still offering down payment assistance. These were some of the worst performing loans outside of the private market subprime loans offered during the bubble. At least with the loan amount restrictions nobody can use them in my neighborhood. Those and FHA loans. Fortunately prices climbed to the point where only 3 homes sold in the last year were even eligible for FHA financing under current loan limits. Hopefully by the time limits are raised there won’t be any homes selling that low.

  22. 22
    PhilW says:

    You can probably find out more on the internet about flipping a house, than even a legit seminar could give you.

  23. 23
    Weasel says:

    By Mike @ 21:

    By Weasel @ 20:

    There are also the WSHFC downpayment assistance programs. We used the Home Advantage DPA. Yes we do have to pay the downpayment back in the end, so its more like 0% interest “downpayment loan”. http://www.wshfc.org/buyers/downpayment.htm

    Do you have to pay it back if you default? That’s really the rub with a down payment – it’s only your money if you lose it in a default situation. Otherwise, it’s still 0-down, both in practice and performance.

    Honestly, I’m surprised they’re still offering down payment assistance. These were some of the worst performing loans outside of the private market subprime loans offered during the bubble. At least with the loan amount restrictions nobody can use them in my neighborhood. Those and FHA loans. Fortunately prices climbed to the point where only 3 homes sold in the last year were even eligible for FHA financing under current loan limits. Hopefully by the time limits are raised there won’t be any homes selling that low.

    Good question, no idea what happens to that if we default. Potentially anyone can end up defaulting, so why exclude people who’ll also potentially not default? With out it we’d still be in the renting trap, what WSHFC offer is by far the best thing I’ve seen. Is the ever more unrealistic ability to save a downpayment and pay rent at the same time an accurate measure of how likely someone is to end up defaulting ?

    Our lender was very particular that our credit rating was good to excellent, never defaulted on anything in the past, written statements from previous landlords to say we never missed rent payments and had been good tenants, evidence of savings with things like 401k, daughters college fund etc, and some cash in the bank – so its not like they’re giving these “zero down” loans away to anyone =)

  24. 24
    John Wake says:

    I telltale sign of a scammer is they end up by saying, more or less politely, that you’re a loser if you don’t do this.

  25. 25
    Shoeguy says:

    Oh man! I was really looking forward to getting rich in Real Estate USING OTHER PEOPLE’S MONEY!!

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