Wednesday, December 19, 2007

Fake Home Sales - Don't look at what they say!

Buyers, sellers and other market participants typically monitor fluctuating home values through sale records that legally have to be listed with county clerks. But incentives offered to buyers -- ranging from free cars or furniture to cash rebates -- are making those prices less reliable as a sign of what buyers actually paid, netting out the giveaways. And that may be misleading lenders and people shopping for homes, some real-estate lawyers and appraisers warn."

Some examples where the incentive is not public:

• KB Home, Colorado: $196,000, according to deed.
Actual price = $168,400

Buyer disclosure form: KB paid $27,600 to 3rd firm, which made a cash payment to the buyer.

• Lennar, Florida: $479,000
Actual price = $450,000-459,000

Home buyers received Vouchers to purchase Mustangs, or a $20,000 Harley-Davidson.

• Bennett Homes, Maryland: $600,000
Actual price = $469,000

And of course - The Back Door - Screw the Buyer
Originally listed in February 2005 for $635,000; Wells Fargo held two mortgages: first for $479,800, second for up to $120,000. Buyer's agent said the transaction included a $120,000 "payment by the builder to an organization that collected fees for finding buyers."

- From Barry Rhitholtz - The Big Picture

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