Last week I wrote about the scam of collecting upfront fees and the scammer absconding with the money without performing any services for the homeowner.  As I mentioned, there are other scams that can occur at virtually any phase of the short sale process.  Because the decision to sell short is often full of emotion, and the process itself is long and confusing to home owners, the short sale transaction is highly vulnerable to scams. 

According to the California Association of Realtors, here are some red flags that may indicate fraudulent activity.  Be wary if someone does any of the following:
• Gives an unqualified promise, such as to obtain short sale approval, stop foreclosure, or other assurances;
• Is unconcerned about the sales price, possession of the property, and other significant terms of sale;
• Is unconcerned about the short sale seller’s financial situation;
• Is involved in a sales transaction where the seller is not the current owner of the property;
• Is involved in a sales transaction where the property owner has purportedly given someone an option to purchase;
• Represents that the buyer is an entity (such as a trust or LLC), rather than an individual person;
• Creates more than one sales contract for the same property;
• Asks for something to be done immediately without delay;
• Asks for a power of attorney;
• Asks for a transfer of title or an interest in the property outside of escrow;
• Asks for signatures on a grant deed or deed of trust;
• Asks for signatures without giving a lot of time to review the documents;
• Asks for signatures on a document that has lines left blank;
• Fails to provide copies of documents signed;
• Refuses or fails to provide written confirmation of an oral promise;
• Instructs the seller, listing agent, escrow officer, or someone else not to contact the short sale lender;
• Instructs a client not to discuss his or her situation with a housing counselor, banker, accountant, attorney, family, friends, or others;
• Has an answer for everything; and
• Engages in “shop talk” that sounds glib, but doesn’t in fact make sense.

If you have any questions or concerns about any part of the transaction, make sure you consult a professional before signing anything!

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