Attention For Sale By Owner - Alert on Possible Scam

Do you have your home up for sale by owner? If so, please read this through.

A seller that I have been talking with, who has since listed their home, was approached by a couple about the home, while still FSBO (For Sale By Owner) last week. The couple was very nice, expressed an interest in the home and eventually made a verbal offer. The sellers countered and they reached an agreement.

The couple then said that they would be using a VA loan and would get a VA appraisal and have a signed contract. Three days later the sellers and the couple talked on the phone. The husband of the couple informed the seller that the VA would only value that house at about $7000 less than the agreed upon figure, and, that they would require the sellers to pay $5500 in closing costs.

When asked how the VA appraised the home without a singed contract, the buyer replied that the VA checked out the value on tax records. The sellers, fortunately, walked away from the deal.

Now, where is the scam? The VA, nor any lender that I know of, in today's market, will do an appraisal without a contract. And, they will certainly not base that appraisal all on tax records. And, while VA will allow seller concessions, up to a maximum, they do not require them.

It is apparent that the "buyers" wanted to get a much lower than market value price for the home as well as having the seller pay most, or all, of their costs to close. To compound that matter, one of the "buyers" represent their self as a real estate agent. If that were true, this practice appears to be a gross violation of Georgia license law.

This is the first instance of this that I have heard of, but it is one too many. I recommended that the seller talked to the broker where the "buyer" indicated she was an agent. If anyone comes to your door proclaiming to be an agent, make sure that you get a card of theirs, and, if they try anything like this, report it to their broker. The "buyer" might not be an agent, or, might be new and not realize that they are breaking license law. They also might be unscrupulous and want to get a quality home for foreclosure prices. Either way, the broker is responsible for the actions of the agents at their firm and, believe me, will nip this in the bud.

So, protect yourself from predatory buyers. Read my blog, I try to be fair. And, to find out about my offer especially for FSBO's, give me a call at 706-207-5290 or click here to email me with your inquiries.

From the VA Home Loan Information Site, see particularly steps 2 & 3,

FIVE EASY STEPS TO A VA LOAN:

1. Apply for a Certificate of Eligibility (COE).
   
   A veteran can obtain a COE by completing VA Form 26-1880, Request for a Certificate of Eligibility, and mailing it, along with proof of military service, to the eligibility center (see office list at back of pamphlet). Also, veterans who have already begun the loan application process with a lender may request the lender obtain a COE through webLGY, which is accessed through the VA portal. More information about this online system can be found at our website which is: www.homeloans.va.gov.
   
2. Decide on a home to buy and sign a purchase agreement.
   
3. Order an appraisal from VA. (Usually this is done by the lender.)
   
   Ordering an appraisal can be done via the Internet using TAS (The Appraisal System). This is a centralized system that allows lenders easy and quick access to order an appraisal.
   
4. Apply to a mortgage lender for the loan.
   
   While the appraisal is being done, the lender can be gathering credit and income information. If the lender is authorized by VA to process loans on the automatic basis (and approx. 99 percent of all VA loans are processed this way), the loan can be approved and closed upon receipt of the appraised value determination without waiting for a VA review of the credit application. VA has also approved the use of several automated underwriting systems for lenders to use in connection with VA loans. The two main systems are Loan Prospector and Desktop Underwriter. For loans that must be approved by VA, lenders send the credit package to VA. VA staff will then review it and notify the lender of the decision.
   
5. Close the loan and move in.