Scam?
I recently met with a private lender who is offering me the opportunity to purchase foreclosed properties from them; all they are asking is a $5000 deposit on the potential foreclosed property to be used as part of the closing cost; Also offering 100% financing on the deal. The properties are in the process of being foreclosed on by the private lender themselves since they were the ones who did the financing for those properties. Supposedly all I have to do is give the deposit and wait until the foreclosure process is finished and then I will be able to close on the property. To me this sounds too easy but I am not too knowledgeable on the foreclosure process to know if this is a scam or if they are for real. Please help!
Too risky. What are you giving a deposit on? Lender does not own the property until foreclosed and they are given certificate of title, therefore there's nothing to make a deposit on. South Florida is the Land of Scams...watch out.
If you're going to pursue foreclosures, learn how the process works. Join DREIA and go to the meetings. There are experienced investors there (including attorneys) who you can talk with.
Just my .02
Your headline says it all. There might be something there, but my first question would be, "With all the RE investors in Miami, why would this banker ask me, a neophyte?" On surface, it sounds like they may be looking for an investor (perhaps you're not the only one getting the pitch? How many times will each parcel be 'sold?') onto whom to pass some of their legal costs of foreclosure.
Could be the properties they're offering you are their worst ones; hopelessly upside down and of no interest to others. At the very least, do some checking on the principal and his/her company and affiliations. Ask for references. Expect the brush off. If you get it, just smile and move on, wiser.
Thanks so much for the replies guys...as you suggested, I did attend DREI meeting yesterday and I must say I was very impressed and motivated. The amount of information and support available there is overwhelming.
I also did a little background check on the lender and he checked out ok....he recently closed on a deal with a close friend of mine and the company also checks out well.
The property also appears to have a large equity and seems worth the risk of the deposit.
thanks once again for your help guys!
When you get through your deal, please post the results here. The lender's arrangement is intriguing.
Steve
I sure will and thanks again for your information.
Good luck!
From what I can 'guess' the lender is using the deposit to fund the foreclosure process.
What price are you buying the property for? I would assume the lender wants something out of the deal. If not they should just foreclose and then list retail with a broker. If they are leaving money on the table for an investor like yourself they may be doing so for the speed but it does not really matter much. The slow bit is the foreclosure action. They can price it retail and then take off a bit (5%-10% for a fast sale).
If it seems to check out and you can afford to completely lose the 5K then consider going for it.
Most of the time you get a really good deal there is a reason. Find the reason.
John
Quote:
On 2004-05-20 06:25, shakyamunni24 wrote:
I also did a little background check on the lender and he checked out ok....he recently closed on a deal with a close friend of mine and the company also checks out well.
The property also appears to have a large equity and seems worth the risk of the deposit.
[addsig]
You are right about the deposit and yes, I went in knowing that I was willing to risk losing that money if things went wrong. I guess I'll just have to wait and see for now; the lender is suppose to be going to court this upcoming week to regain ownership of the property and from there, I was told we could begin doing the financing.