In Business Since 2001 We accept Paypal
Home Article Directory
More from Bill Platt
"Bill Platt for Book Authors" Youtube Channel
Training for Book Authors
Other Resources for Book Authors & Publishers
FictionPlots.com (350+ Plots & counting)
Please Support Our Advertisers

 
D9 Hosting


Check The Appraisal Carefully To Avoid Being A Fraud Victim

Copyright (c) 2007-2023

There is a type of fraud in which an unsuspecting Real Estate investor believes he is buying a property worth a certain amount, when in reality the property is worth much less. This places the investor in a hopelessly upside down situation, owing more money than the property will ever be worth.

The primary way that this type of scheme is enabled is by the use of a "bogus" appraisal that over-inflates the value of the property. Once the investor has closed the deal, there is virtually nothing he or she can do to avoid the consequences of a 300% Loan To Value mortgage on an investment property.

This means that the investor will owe too much to be able to cash flow the property as a rental, and there's no possible way that he or she will ever sell the property for enough to cover the mortgage payoff. This essentially leaves one with a bankruptcy/foreclosure, "take-your-pick" financial situation.

Investors who realize they have bought a property that will never be worth what they owe on it, may continue to make payments for months or even years in order to preserve their excellent credit rating. However once the damage is done this is essentially throwing good money after bad.

Given that this is one of the worst scenarios an investor could ever experience, it behooves each one of us to take the necessary time to carefully examine the appraisal for the property that we are about to purchase, BEFORE we buy it.

Since this type of fraud is dependent upon an over-inflated appraised value, an appraisal with incorrect or deliberately misleading market information will be necessary to perpetrate this fraud.

Therefore if a prudent investor is careful to take the time to examine the appraisal prior to closing, or better yet, have their own appraiser do an independent appraisal, one could avoid this scenario completely.

In a nutshell, it is potential investing suicide to accept an appraisal at face value without verifying the information in that appraisal.

When you don't know the market well, it would be an excellent idea to simply pay the $250 or $300 necessary to have your own independent appraisal done.

You do not want to take anyone else's word for the appraised value of a property. YOU are going to guarantee the loan, so you are the one who must make sure you are not being misled into paying too much.

The vast majority of investor fraud and loan fraud would be avoided if someone took the time to verify the information in the appraisal.

The greater part of a typical appraisal will deal with what are called "comparable properties". These properties are supposed to be very similar in style, quality, and size, to the property which is the subject of the appraisal.

The concept of Comparable Market Analysis" or CMA, means simply that one property in a given neighborhood should be worth approximately the same amount as other similar properties in the same neighborhood.

A valid appraisal that is a reasonable and accurate estimation of market value would only use similar properties that are within a very small radius from the subject property being evaluated.

The official rule is within one mile of the subject property. But in Atlanta, one mile can be the difference between a $50,000 and $500,000 ARV. So, I prefer to see comparables that are located within the very same neighborhood. One mile can make a big difference.

The question is, "who is responsible for generating the appraisal being provided as an estimate of value?"

In a typical transaction between a home seller and a home buyer it is the buyers lender who orders the appraisal as part of the process of underwriting the loan.

But, in many investor transactions, the seller may provide an appraisal. When you are the buyer, you should always plan to verify any appraisal provided to you by the seller.

Many fraudulent schemes perpetrated against innocent real estate investors involve an appraisal that uses phony or manipulated "comparable" properties that make the subject property appear to be worth more than it is.

In extreme cases of well organized fraud, it is possible for the seller, the seller's agent, the closing attorney, the appraiser and even the lender to be involved in trying to lure a buyer into a bad deal.

Usually in this type scenario, the investor buyer is offered a "full-service" type arrangement, in which everything is taken care of for them. One should always be wary of any investment property deal in which "everything is taken care of for you", and insure that the appraisal is checked out carefully.

Many newbie investors get too emotional about finding a deal, and tend to accept information at face value. A number of my private clients, who have contacted me about getting out of a bad deal, admit that they "assumed" that the data provided to them was accurate, and did not question it. They were too afraid of "losing out on the deal of a lifetime". They let their emotions and assumptions guide them.

Real estate is a great way to build wealth – But, you do not want other people building their wealth at YOUR expense.

The single most important piece of due diligence on any property is to verify the real market value before you buy.


About The Author: Shop Amazon - Top Gift Ideas
Donna Robinson is a real estate agent, market analyst and the Training Director for The Real Estate Arena. This article is one example of the quality information you will receive when you join TREA. For more information go to http://www.therealestatearena.com/ad.aspx?i=rtcl

VOTE ON THIS ARTICLE
Needs Work >> 0 - 1 - 2 - 3 - 4 - 5 << Excellent Article

Tell our authors what you think about their article.



Top-Level Category: Finance Articles || Related Categories: Real Estate Articles

10 Most Recent Articles Written by Donna Robinson

How To Pick An Investing Strategy That Will Work
Written by: Donna Robinson | Distributed: 2007-03-21 | Word Count: 933 | Page Views: 3540 | Votes: 7 | Rating: 2.43
I often get email from investors asking me how they can tell which real estate investing strategy is ideal for their market. From the perspective of a new investor it can often be difficult to decide what particular strategy you should use in a given area.

Is There A Perfect Storm Brewing For Single Family?
Written by: Donna Robinson | Distributed: 2007-03-19 | Word Count: 921 | Page Views: 3928 | Votes: 14 | Rating: 2.07
A glut of new construction combined with higher than normal resale inventory, plus a sharp increase in foreclosures is leading to massive oversupplies of single family housing in most areas of the country.

Buying Your First Investment Property
Written by: Donna Robinson | Distributed: 2007-03-13 | Word Count: 812 | Page Views: 3649 | Votes: 12 | Rating: 1.92
Most new investors understand that real estate is an investment vehicle that makes sense. We all know that many fortunes have been built with real estate. But when you are first getting started, all the available information can be very confusing.

Are You Suffering From Anemic Profitosis?
Written by: Donna Robinson | Distributed: 2007-03-09 | Word Count: 794 | Page Views: 4179 | Votes: 8 | Rating: 2.38
Is your investment income looking a bit pale and fatigued? Do you become nauseated at the site of your profit and loss statement? Are you itching to sell properties that are losing money? Chances are you're suffering from a lingering case of anemic profitosis.

Back To The Future... Get Ready Now, Changes Are Coming
Written by: Donna Robinson | Distributed: 2007-03-08 | Word Count: 913 | Page Views: 3812 | Votes: 10 | Rating: 1.30
Being debt free, or having a very low debt to income ratio is the best way to protect yourself in an unpredictable and volatile world.

Flipping, Retailing, Leasing, Options, Short Sales? Confused By All The Strategies Out There? I Was Too!
Written by: Donna Robinson | Distributed: 2007-03-02 | Word Count: 1011 | Page Views: 4671 | Votes: 16 | Rating: 2.63
Many programs, seminars and boot camps on real estate teach a specific step-by-step strategy in an attempt to help newbie's learn how to become a real estate investor. I have taken such strategy based classes, and have taught them too.

3 Classic No Down Payment Strategies
Written by: Donna Robinson | Distributed: 2007-03-02 | Word Count: 1114 | Page Views: 4608 | Votes: 8 | Rating: 1.63
Everyone has heard a story or read about someone who bought a property without paying a single dime as a down payment. But how does this work? There are several * classic * methods commonly used to purchase real estate with no money down. There are an infinite variety of situations in a real estate transaction that could lead to a deal with no down payment. But for the sake of reality, I will focus on those that are most commonly seen in the current market.

All of Author's Articles on this site:

Most Recent "Finance" Articles

Credit Card Companies Reward Consumers Who Shop Around
Written by: Braxton Heitz | Distributed: 2012-11-20 | Word Count: 1159 | Page Views: 7345 | Votes: 15 | Rating: 1.80
With Ronald Reagan came mass deregulation in many industries. One of the industries that benefited from deregulation was the financial industry. As a result, hundreds of new financial companies were introduced to the American consumer during the 1980's. With the sudden explosion of new competitors in this industry, credit card companies began to struggle with how to retain existing customers and to recruit new customers.

What My Mother Taught Me About Credit Cards And Family Finances
Written by: Braxton Heitz | Distributed: 2012-11-12 | Word Count: 1285 | Page Views: 7306 | Votes: 31 | Rating: 2.39
My mother is an amazing woman. She made some of the hardest jobs imaginable look easy. No matter how hard her day was, she always had a smile and perfect hair.

Understanding Your 401(k), IRA and Other Pre-Tax Investments
Written by: Irene A. Majchrzak | Distributed: 2010-08-03 | Word Count: 1005 | Page Views: 5101 | Votes: 3 | Rating: 2.00
What does all of the bad economic news mean to you, the average investor. Well, if you are still working and contributing to your pre-tax 401(k)'s, 403(b)'s, or IRA savings your strategies for salvaging your retirement will include reviewing all of the investment options found in your 401(k), etc.

Xerox Follow Apple on the Comeback Trail
Written by: Jennifer Robinson | Distributed: 2010-07-27 | Word Count: 1238 | Page Views: 5758 | Votes: 5 | Rating: 0.20
In many ways the companies share similar fortunes. Apple (founded by Steve Jobs, Stephen Wozniak, Ronald Wayne) produced the first successful personal computer with a graphical operating system. Xerox (founded by Chester Carlson, Joseph C Wilson) were the inventors of Xerography (later called the photocopier).

Payday Advance Loans Are Now Only One Toll Free Call Away
Written by: Tom Tierney | Distributed: 2010-07-27 | Word Count: 599 | Page Views: 4127 | Votes: 2 | Rating: 0.50
A friend of mine recently went through financial troubles and asked me, knowing that I'm a finance writer, if I could push him in the right direction for a short term loan to help out with his expenses. Here's his story:

Stock Market Falls Sharply
Written by: Irene A. Majchrzak | Distributed: 2010-07-27 | Word Count: 879 | Page Views: 4667 | Votes: 6 | Rating: 0.83
The stock market has been having a bad week. Wednesday the market ended the day down over 300 points. I heard reports that this was the result of investors taking their profits. Happens all the time. Then within a few days, the prices on many great stocks is so low that the investors are buying the stocks right back up.

Finding the Best Credit Card Applications
Written by: Jeffrey Weber | Distributed: 2010-07-27 | Word Count: 403 | Page Views: 3724 | Votes: 2 | Rating: 0.00
Online credit card applications can be confusing. That's the way the banks want them. This article will help eliminate some of the confusion.

Do You Know the Difference Between an Investment Advisor and a Broker?
Written by: Tome Tomaj | Distributed: 2010-03-11 | Word Count: 408 | Page Views: 4497 | Votes: 6 | Rating: 3.00
As an fee-only investment advisor I come across clients from all walks of life. Lately I have noticed something in common with many of these investors. Many do not know the difference between an investment advisor and a broker who manages and/or makes securities recommendations for their clients' investment portfolios. With the almost unprecedented volatility in the securities markets, you cannot afford to dig your head in the sand when it comes to whom is managing your assets.

Understanding Term Life Insurance and Getting Quotes
Written by: Brian Greenberg | Distributed: 2010-01-13 | Word Count: 520 | Page Views: 4459 | Votes: 3 | Rating: 1.00
Buying term life insurance can be a scary process but understanding the different types of life insurance can remove the fear. What you should know about term life and how requesting life insurance quotes online can be easy and very convenient.

The Decline in the Personal Savings Rate - What Happened to the Discipline?
Written by: Tome Tomaj | Distributed: 2009-12-15 | Word Count: 873 | Page Views: 5117 | Votes: 6 | Rating: 1.33
As more and more American baby boomers are nearing and entering their retirement years, many of them are concerned about whether their retirement savings will last them long enough to ensure their current quality of life, and rightly so.

Most Viewed "Finance" Articles

A Better Way To Sell A Structured Settlement - Via Auction
Written by: Clayton Frantz | Distributed: 2007-11-30 | Word Count: 1342 | Page Views: 11874 | Votes: 12 | Rating: 1.92
Structured settlements were introduced in Canada and the United States in the 1970's. They were introduced as an alternative to lump sum payments, common in insurance settlements and lottery winnings. In the decades since, they have also been accepted as legal financial instruments in England and Australia. In a nutshell, a structured settlement by legal definition is a statutory agreement to pay a specified sum of money over a period of time, on a payment system.

Using a 401K Loan to Stop Foreclosure
Written by: Daniel Lamaute | Distributed: 2008-02-11 | Word Count: 465 | Page Views: 10751 | Votes: 19 | Rating: 1.79
A bankruptcy or foreclosure can cripple one's ability to obtain decent credit for many years. In addition, some employers and landlords won't hire or rent to a candidate with terrible credit history. Thus, it is a good idea to discuss all options with a financial planner before ending in bankruptcy or foreclosure.

What Does Short, Long, Flat And Square Mean In Forex Trading?
Written by: Sam Beatson | Distributed: 2006-10-11 | Word Count: 525 | Page Views: 8598 | Votes: 22 | Rating: 2.68
Short, long, square and flat explained in terms of forex trading (Spot FX).

Why Over 3,000 US Companies Have Chosen the Frankfurt Stock Exchange to Go Public
Written by: Ron Crowe | Distributed: 2008-07-31 | Word Count: 786 | Page Views: 8526 | Votes: 18 | Rating: 1.83
The Frankfurt Stock Exchange, one of the world's largest trading centers for securities, has over 3,000 United States companies listed. North American and other foreign companies are choosing Europe, over the United States, to go public because of the punishing Sarbanes Oxley Act introduced in the United States in 2002.

Advantages and Disadvantages of Individual and Group Health Insurance
Written by: Kevin Kielty | Distributed: 2009-04-01 | Word Count: 639 | Page Views: 7646 | Votes: 14 | Rating: 2.00
The cost of individual and group health insurance coverage varies greatly as does the type of coverage they both offer. Making the switch can bring some surprises.

How to Hide Assets
Written by: Rocco Beatrice | Distributed: 2007-01-19 | Word Count: 507 | Page Views: 7492 | Votes: 12 | Rating: 1.08
How to hide your assets by repositioning your assets through an irrevocable trust with an independent trustee.

Credit Card Companies Reward Consumers Who Shop Around
Written by: Braxton Heitz | Distributed: 2012-11-20 | Word Count: 1159 | Page Views: 7345 | Votes: 15 | Rating: 1.80
With Ronald Reagan came mass deregulation in many industries. One of the industries that benefited from deregulation was the financial industry. As a result, hundreds of new financial companies were introduced to the American consumer during the 1980's. With the sudden explosion of new competitors in this industry, credit card companies began to struggle with how to retain existing customers and to recruit new customers.

What My Mother Taught Me About Credit Cards And Family Finances
Written by: Braxton Heitz | Distributed: 2012-11-12 | Word Count: 1285 | Page Views: 7306 | Votes: 31 | Rating: 2.39
My mother is an amazing woman. She made some of the hardest jobs imaginable look easy. No matter how hard her day was, she always had a smile and perfect hair.

The Effect of Inflation and Deflation on Retirees
Written by: Irene A. Majchrzak | Distributed: 2009-10-27 | Word Count: 1324 | Page Views: 6613 | Votes: 7 | Rating: 0.86
When we worry about how long our retirement income will last, we consider so many factors. The current economy is causing a drain on 401(k)'s and IRA's. So we have become much more cautious about withdrawing money to use it as part of our pensions.

How to Avoid Private Mortgage Insurance (PMI)
Written by: Jim Cramer | Distributed: 2008-02-20 | Word Count: 523 | Page Views: 6542 | Votes: 8 | Rating: 2.00
There is more than one way to get your desired home without having the 20 percent down payment and avoid PMI at the same time.

Highest Ranked "Finance" Articles

Identity Theft: The New Threat to Your Credit
Written by: Josh Pike | Distributed: 2006-08-24 | Word Count: 363 | Page Views: 4893 | Votes: 16 | Rating: 3.00
When we think of thieves, images of burglars creeping into homes and apartments come to mind. However, there are new thieves that can take much more than your money or possessions. If your personal information falls into the hands of an identity thief, your credit and finances can be ruined.

In Fear of Retirement
Written by: Daniel Lamaute | Distributed: 2008-05-08 | Word Count: 646 | Page Views: 4311 | Votes: 9 | Rating: 3.00
Many baby boomers are staring at retirement like a deer caught on oncoming headlights. They are not sure what to do or what else to do. They fear that whatever they have in savings just might not be enough. Less than 1 out of 5 workers felt very confident about having enough money for a comfortable retirement, according to the April 2008, EBRI Retirement Confidence Survey. And with good reasons, inflation is zooming at the same time that asset values are flagging.

Do You Know the Difference Between an Investment Advisor and a Broker?
Written by: Tome Tomaj | Distributed: 2010-03-11 | Word Count: 408 | Page Views: 4497 | Votes: 6 | Rating: 3.00
As an fee-only investment advisor I come across clients from all walks of life. Lately I have noticed something in common with many of these investors. Many do not know the difference between an investment advisor and a broker who manages and/or makes securities recommendations for their clients' investment portfolios. With the almost unprecedented volatility in the securities markets, you cannot afford to dig your head in the sand when it comes to whom is managing your assets.

Medicaid Asset Protection
Written by: Rocco Beatrice | Distributed: 2007-01-23 | Word Count: 646 | Page Views: 4660 | Votes: 9 | Rating: 2.78
Learn how to include senior Medicaid asset protection as part of your senior tax planning strategies. What are the tax implications of Medicaid and why it needs to be planned carefully? About seniors Medicaid asset protection as part of the senior tax planning strategies. Explains the new 5-year look back provisions for seniors to qualify for Medicare assistance into nursing home program.

How Do You Make Money In Currency Trading?
Written by: Tom Howze | Distributed: 2007-12-05 | Word Count: 727 | Page Views: 3793 | Votes: 9 | Rating: 2.78
The question, "How do you make money in currency trading?" is being asked by investors and potential investors worldwide as they witness the multi-year downturn trend of the US dollar and upswings in other currencies such as the Euro or Canadian Dollar.

Equipment Financing and The Five Cs of Credit Evaluation
Written by: Sean Marten | Distributed: 2007-10-17 | Word Count: 698 | Page Views: 4453 | Votes: 8 | Rating: 2.75
Equipment financing lenders, as well as banks, use the Five Cs to evaluate loan applications: Character, Credit, Cash Flow, Capacity and Collateral. However, while banks look at small-to-medium size companies from a Fortune 500 perspective, equipment financing companies see applicants from a small business perspective, which highlights a sixth C: Common Sense.

Reverse Mortgage Costs Are Not Too High
Written by: N. Sioris | Distributed: 2008-07-29 | Word Count: 1120 | Page Views: 4430 | Votes: 8 | Rating: 2.75
Reverse mortgage costs are repeatedly cited as one of the main reasons for seniors not to get a reverse mortgage loan. However, the same folks that harp on costs as being a reason not to use this financial resource rarely offer a less expensive option or an alternate proposal. Don't fall into the trap of listening to the negative hype without doing your own research. Find out what the true costs are and whether they are justified or not. Compare the cost of a reverse mortgage to the cost of selling your home, downsizing or moving into assisted living. Pull back the curtain and take a good look, then make your own determination. Don't base your decision on an uninformed friend, relative or media reporter.

A Recipe for Good Credit
Written by: Josh Pike | Distributed: 2006-08-17 | Word Count: 369 | Page Views: 3890 | Votes: 15 | Rating: 2.73
If your credit is not as good as you want it to be, take action now! It's easier than you think to improve your credit.

Why You Should Buy a Home Now
Written by: Clint Wooley | Distributed: 2007-01-09 | Word Count: 588 | Page Views: 3899 | Votes: 11 | Rating: 2.73
These days there is literally too much information for first time homebuyers to make a decision sometimes. Fear can prevent first time home buyers from ever acting on their dream of home ownership. When you look at facts, though, buying a home makes as much sense now as it ever has.

How to Find Financial Freedom
Written by: Kent Jacobson a.k.a. Mr. Success | Distributed: 2006-09-26 | Word Count: 457 | Page Views: 5033 | Votes: 14 | Rating: 2.71
Many people make finding financial freedom harder than what it actually is. In order to find financial freedom all you have to do is follow a few simple steps.











Download an eBook today
 
Directory Navigation
Locate By Category:

ALL Categories
Arts & Crafts
Arts & Entertainment
Automotive
Business - Offline
Business - Online
Career
Computers
Education
Family
Finance
Food & Drink
Health & Wellness
Home & Garden
Humor
Internet
Nature & Pets
Real Estate
Religion
Self Improvement
Shopping
Society
Sports & Recreation
Technology
Travel & Leisure
Uncategorized
World Events
Writing & Speaking

Change Number of Results:
50 - 100 - 200 - 500
Article Reprint Rights
Creative Commons License

This work is
licensed under a
Creative Commons
License


You are not required to show the creative commons license notice when you reprint this work.
Article Statistics
Word Count: 893

Total Views: 3604

Article Rating: 2.14 of 5
Votes Cast: 7

More Articles By Author:



Last Distribution Date:
2007-03-15 10:24:00

Internal ID: #4530





All Articles are Copyright © 2001-2023 of the Defined Authors.

All other material and images on this site are:
Copyright © 2001-2023, ThePhantomWriters.com