A recent ad on a local facebook site caught my attention. A woman was advertising a house for $1250. A big one, on the corner about 4 blocks from where I live. I was interested because there was no 'For Sale' sign in front of the house. She also was not listed as the owner of the house on the assessment site.
The ad went on to read that it was an excellent opportunity for someone to own an old house at a fraction of the price. It warned that a substantial downpayment would be required and that the purchaser would need to submit a list of the necessary repairs and a schedule of when they needed to be complete.
It didn't make sense for a number of reasons:
Number one: the house is a duplex. You weren't owning a house, you were owning part of a house.
Number two: if the house is selling for $1250, what is considered to be a substantial down payment on that?
Number three: If the house is being sold, then why does the seller need a timeline of repairs? It was not her business what happened after the sale of the property.
Now, I have a wide streak of curious, so I had to ask. I messaged the seller with my questions. All of them. She answered with: "Do you have enough money for the down payment?"
"Of course" I typed. "What is the down payment on a $1250 house though?"
She explained, "The house is $1250 a month." (The ad did not mention this, so my curious streak continued unabated.)
She said that it was seller financed, and that the monthly payment included taxes, insurance, interest, etc. The total price paid would be about 9 times the $1250 price she listed.
I said, "Well, that's very unusual. Every house I ever bought, the buyer arranged financing."
She was starting to get snippy. She told me that they had helped many people into home ownership in my area, and that she thought I was rude. I told her that as a potential buyer, I was entitled to ask questions, to do my due diligence. In my opinion, she was being pretty rude herself.
I said, "What agency do you represent?"
She refused to answer.
Facebook is a veritable font of information, so I did some checking on her facebook page. She had taken a class by FortuneBuilders. Basically, you can't find a lot of information on it on line, it is all very hush hush, but what I could glean from the BBB site was that it was a scam company. This woman wanted a large sum of money from the 'buyer'. She was charging an exorbitant monthly rent (note that our highest rent is $750 per month, but that is because the utilities are included in those two apartments.) The 'buyer' would be responsible for doing the repairs on the property, but if they fell behind in repairs, or the 'seller' was dissatisfied with the work, she could take the house back for a violation in the 'sales' agreement. It was referred to as a 'remote renovation business'.
I said, "We buy our houses in cash."
All conversation stopped there.
I went back to her ad and warned everyone. Basically, this woman had just bought 1/2 a duplex so recently that the deed had not been recorded. What she was doing was charging someone a huge sum of money to fix her house up for her. The buyer would never own the house.
How is this even legal?