How to Avoid Being Scammed by Real Estate and Short Sale Gurus
There has been a lot of talk on the Internet the past few days about so-called Short Sale Guru's and some of the scams they may or may not perpetuate. We have strong feelings about scammers at Short Sale Artisan, and that is: Steer Clear at All Costs!
Like any industry, there are always a few bad apples that can perpetuate the image that the entire industry is corrupt or full of selfish, greedy individuals looking to take advantage of other people.
Real estate in particular has always been a trap for that. It's hard to visit real estate sites anywhere on the Web without seeing promises of "Getting Rich in 30 Days" or "Make $10,000 In 5 Days without Having to Do Anything!". Let's be clear - there is a lot of money to be made in real estate, and real estate can be an incredibly lucrative industry. But don't think for a second that it's easy or painless. Being successful in real estate, like any other industry, requires work, perseverance, and constant self improvement. The old adage rings true: If it sounds too good to be true, it probably is.
Psychology behind being "suckered"
In a lot of ways, people get suckered for these get rich quick schemes the same way they do with diet pills. Many individuals, particularly those who are in a difficult position in life, will spend their last few dollars trying to buy some course or program that they think will just pile in money for them. It just doesn't work like that, just like a pill won't melt away the Bacon Double Cheeseburger you ate last night. Even MSN posted a great article on so-called real estate riches, doing some hefty analysis into the real estate investment psychology.
"It's the jackpot mentality," says psychologist Patricia Farrell, author of "How to Be Your Own Therapist."
Just like the schmoe who buys a winning lottery ticket -- every once in a while, someone, somewhere really does use these edgy real estate investment techniques to make millions. "It's not the principles that are flawed," says Bour. "It's the simplicity and ease that are overstated."
Most of the information that is taught by the so-called gurus is available free on Internet forums like Bigger Pockets or REI Club and can be gained for free, by talking with other investors in user forums who have or are in the process of actually doing the type of real estate investment you'd like to do (be it short sales, commercial properties, investment properties, rental houses, or fix & flip). It requires you to search out information and be proactive about it -but if you aren't willing to at least put in that level of effort, don't expect to gain anything more just because you shelled out $2500 on a spiffy real estate course.
Evaluating a real estate investment product
That's not to say all products are bad. You just need to be very careful with how you invest your money. Many courses are education, and education is invaluable. Next to a $100,000 college degree, a $2500 course can sure seem quite reasonable. But, like the college degree, its what you do with that information that determines if your up front investment was worth while.Research the company and the owners of the company
This is such an obvious step, but spend the time to research what you are investing into. Find out how long the company has been in business, and where they operate out of. Find out who the owners of the company are, and if they have true experience in the industry.
The great thing about the Internet nowadays is that it's quite easy to find out if people are scamming, because people are very quick to post about bad experiences they have, and it's hard to hide from bad press. There are also many websites dedicated to reviewing real estate guru's and their courses. They are worth checking out as well. Here are two to get you started:
Also, you should look also on Facebook and Twitter and see what people are talking about.Remember that these mediums are easily manipulated and affiliates and company shills can easily post "pretending" to be customers of the company. It happens all the time.
Make sure as well that the owners of the company / the Guru - has experience in what they are doing. They should be able to back this up with documentation and proof, and not self-created proof, like we have recently seen with this Karen Hanover scam that is percolating around the Internet. (Can you believe it? Some gurus will go so far as to self-invent designations for themselves that don't really exist!)
Talk to people who have been through the course
Under no circumstance should you ever sign up for a class or course without talking to someone who has already been through it. Learn from others. You can get a feel then also for the content of the class and the value it provided.Use common sense
Our rule of thumb: anyone who promises something crazy, is probably crazy. Also - don't be a marketing puppet. You know marketing when you see it. Don't fall for it! Use common sense, and look at the features of a package - not just the marketing hype. Over the past few months, we have found it amazing that some people can fall for such obvious marketing ploys. YouTube videos, extensive affiliate networks, and more; just go to reinforce the marketing perspective.
At Short Sale Artisan, we take great care not to patronize our clients. We believe every client of ours is a self-driven individual who is looking for tools to make their lives easier. That's what we promise to deliver. We don't promise free money, or easy-street, or that you won't have to work again for the rest of your life in 84 minutes. Anything that promises to do the work for you and give you a 100% chance of success is a red flag, period.
Finally, don't fall for time-pressure tactics. You will always here that you need to sign up today. You don't. Your decision to take a course should be based on your desire to take one. Not a pitchperson planting that in your brain. A successful, well designed real estate course will be around tomorrow, next week, and next month. This is especially true on webinars where you will be pressured with "limited time bonuses" and other goodies.
What is the return and guarantee policy
You'd better be sure that if you aren't satisfied with the course, you have a way to get your money back! Make sure you research this ahead of time!Price to Benefit Ratio
It's easy for Gurus to convince you that their courses or software products are worth the steep up front fees, because they can make the easy claim that "All you need to complete is one deal and you will make back many times your investment". That's true, but if they are so confident in the ability to deliver that one deal - they should let you pay after you've made your first deal.
Our opinion: look at what you are getting. It makes no sense to pay $2500 for a "setup fee" for a piece of software, in our opinion. What software out there costs that much money, unless it is an enterprise level piece of software for a company with dozens or hundreds of employees? We feel that these exorbitant setup fees (charged by companies like Freedom$oft) is almost extortion. These companies aren't making their money by providing a good product at a fair price. They are making their money by suckering a few people into signing up for empty promises. In our opinion, this is not only scammy, it's also highly unethical. These types of deals lead people to feel like they have "sunk cost", that is; they have invested in the system and do not want to cancel, even though they get no benefit from it.
Industry damage
Another unfortunate byproducts of scammers is that they make the industry look bad and shady, when it truly is not. We've all read about the Freddie Mac report on investor fraud. These types of things are strongly perpetuated by the "bad apples" in the investment training and education categories. Overall, views of investors range from "meh" to "unethical", even though the majority of investors are stand-up people making a living with a true career path, like any other entrepreneur. That's why it is so important we self regulate and weed out these guru scams and investors who behave inappropriately.Some scams, exposed!
Just in the past two weeks, a big one has been the Karen Hanover commercial real estate investing. This one involved creating fake designations and placing falsehoods on an resume.The “associations” Karen Hanover touts as being a member of CCREA NAIA (and the self storage one SSEI?) are all her own creation. In February she had the balls to create a press release to tout how the CCREA had awarded her real estate course its #1 ranking! I love tenacity and perseverance, but fraud is disgusting and seeing how there are so many dubious characters in this business, it just bugs me. Anyway I sent an email to Sperry Van Ness’s Human Resources department and got back the enclosed email. According to SVN she has never worked there and their attorneys are looking into it. ))) I have not called Marcus & Millichap.This is pretty scary stuff. It's so easy on the Internet to look professional and real, and that is why so many people fall for scammers. It's not enough to be presented designations - you need to follow up with them! Now, that's not to say that Karen Hanover doesn't have valuable information to help you out in your real estate investing career - we are only suggesting that you need to tread lightly when contemplating courses such as hers. It certainly doesn't leave a great first impression when you hear about how things like her designations are fabricated.
So what should I do?
We are not against real estate courses or investments at all. We just think everyone needs to step back, take a breath, and not be blinded by the promises that are made by the marketing wizards that run these companies. Evaluate the course for what it really is. We personally feel that the best courses are ones that aren't "in your face" marketing, but are more subtle and have some more composure. These courses stand on their own, and don't need ridiculous promises to drive hype up to people who are vulnerable to the small glimmer of financial freedom with zero effort. You don't see real education institutions (like colleges) pulling these types of marketing tactics, so you should be turned off when you see high pressure sales tactics.
We'd love to hear your stories in the comments about companies that scammed you! Exposing them, as we mentioned above, is one of the most important things we can do to clean up the industry. There is a lot of real, legit money to be made investing in real estate, especially short sales with the market today. Remember, even a good course does you no good if you just attend and don't do anything afterwards. Action is necessary!
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