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Utah Real Estate News Clips - Utah Real Estate
Division issues fraud alert
June 22, 2007
Warns brokers, agents to avoid 'investment' scams
The Utah Division of Real Estate recently issued a fraud alert warning Utah real estate agents and brokers to be on the lookout for real estate fraud. The alert explains there has been a dramatic increase in illegal property flipping throughout the state.
“The scam involves individuals posing as ‘real estate investors’ offering to purchase single-family homes at inflated prices, promising ‘guaranteed high rates of return,’ falsifying or obtaining fraudulent appraisals to substantiate the artificial values, and reselling or refinancing the homes several times for 150 to 200 percent of the actual value. The scam is most prevalent in areas of new construction and high-end homes, particularly Utah County (Provo/Alpine), Washington County (St. George) and Salt Lake County (Draper).”
In the alert, the Division also warns brokers and agents of the administrative, civil and criminal penalties for being involved in fraud, including fines, loss of professional license, liability to private parties, and up to 30 years in federal prison.
To help protect yourself, be on the watch for these fraud warning signs provided by the Division:
Properties reported as “sold” or offers to buy at values significantly higher than the asking price
Property sales history shows many sales with rapid and significant increases in value
Buyer purchasing multiple properties in a short period of time (often as owner occupied)
Appraisal is dated prior to the loan application
“Investor” using someone else’s identity and/or credit score to purchase a home
Buyers providing false information on employment, credit score, income or the occupancy of the home
REPC does not reflect the “true terms” of the agreement, such as undisclosed addendums
Unlicensed persons receiving “consulting fees” for helping “clients” purchase investment properties
Buyers and sellers conspiring to artificially inflate the property value and sharing the “profit”
Excessive payment to third parties such as unsubstantiated notices of interest or unrecorded second mortgages
Using HUD-1 statements as sales verification for appraisal “comparables”
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