Why do banks think investors are scammers? Why? because of articles like this.

There has been alot of talk about arm's length transactions lately and the banks "new" addenda needed. There has also been talk of flippers, floppers, scammers, investors etc.

If we want to know why the banks think everyone is trying to scam them, read this article and the thousands of others like it.

Like it or not, this is what we have to deal with.

Scammers always seem to make a buck in tough times

Here are a few paragraphs.

'One of the more glaring results of the CoreLogic study was that short sales resold on the same day had an average of a 34 percent gain ($56,947) between the sale prices.'

According to the study, “suspicious” transactions are short sales that might have caused the lender to incur unnecessary losses. “Suspicious” short sales are defined as:

• a new transaction less than one month after the short sale where the new sale price is at least 10 percent higher than the short-sale price;

• a new transaction less than three months after the short-sale where the new sale price is at least 20 percent higher than the short-sale price; or

• a new transaction less than six months after the short sale where the new sale price is at least 40 percent higher than the short-sale price.

The study examined more than 450,000 single-family residence short-sale transactions in the past three years. It noted that some legitimate property rehabilitation and “flips” — where repairs and improvements were made — have occurred within the “suspicious” time frame.

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Permalink Reply by Smitty on August 4, 2011 at 3:07pm

Jeff, I'm sorry, but I just read what you wrote and can't find anywhere necessarily where we disagree. You basically said the same thing I did but in reverse. I would love a good debate but I can't debate what you wrote because it is the same thing.

So are you saying everything in your area sells for list price? ASSUMING list price is fair market value and a list price of $200,000 for a distressed property is on MLS, you're saying you don't ever see it sell for $180,000 or $170,000?

I 100% agree with you NO one is going to pay more for something they could get for less (although I have to eat crow on that too because I have a deal right now where a developer wants a property and is offering WAY more than list) so there are the urban legends. ( in reverse ) but, for the 99% of the other listings I see you're on the money, which is why to me, a house that is overpriced and sticks out like a sore thumb is USUALLY one in which the seller has all day long to sell it and doesn't care it's overpriced or whether it sells OR it's an agent who is trying to appease a not so smart homeowner who THINKS their house is worth WAY more than it is.

In the case of the REO bidding war, hey, Kudos for the bank. They were smart enough to UNDER price something and get multiple offers. Remember we had the conversation about if I can comp it, even though it's low, I'll list it there? Well, I've done that and guess what happened? yes, multiple offers. It's a different marketing strategy. It worked and sold and it was a short sale. I've also started in the middle of the pack and then done gradual decreases. Depending on the homeowners situation I take different marketing tactics. Either way the same property with the same beds, baths square footage and areas sold for LESS if it was a short sale or REO - normally.

I actually think we are saying the EXACT same thing. I have a very good friend who is an appraiser who has really enlightened me on why REO's and Short Sales, are liquidated values and not FMV. They will always sell for less than a property that is not distressed.