Is this super illegal?

Question

Hey there! So my brother and I have managed 3 flips for an investor and weve had one deal on our own, looking to do another!

A house hit the market this morning for 86k, our real estate agent thinks he’d be able to get it for 75k if we submit all cash offer. Was last sold in 2019 for 108k but ARV looks like it could be 130k. It’s a HUD home that’s listed as a single family but appears on record to be a duplex. 3100sqft 5bed/3 bath. We think rehab will cost us 15-17k. And we think we can rent each unit for $1000/mo plus’s utilities. Which means cash on cash return could be as much as 25%

We want to BRRRR it by using a family friend who’d like to help us by letting us use 75k but he can’t agree to buying the house till we can talk face to face on Tuesday. So my brother and I considered sending proof of funds to secure the deal in the meantime. However we only have 20k between us in a few different accounts.

So... is it super unethical or illegal to modify a bank statement to look like we have 80k in an account to secure a deal?

If the deal doesn’t work out we will just allow our agent/partner to buy the deal. Or we can use creative financing in a property that we have about 79k equity in to buy the deal.

Any advice on how to secure the deal another way or input on how to proceed.

Daniel Taylor · Answer

Yes it is unethical to misrepresent your finances. Drop the “super.” You already know the answer.

Greg H. · Answer

So as someone who has been buying HUD homes for 30 years, I have you some valuable information above

Again, hud does not care one but whether it is cash or financed. If your bid nets HUD $1 more and it is in their acceptable range, you win

Again, hud properties first are listed in an exclusive period which only allows owner occupants to bid. So if your numbers are accurate, there is very little chance an investor will be able to bid

This is all information that an agent experienced with hud should have already told you

Charlie MacPherson · Answer

@Devin Jewell I actually had this happen.  We represented a buyer interested in a $1.1M property.

Something seemed a little off, so I asked for proof of funds.  He sent me a screenshot of his online banking account.  We wrote an offer, which was accepted.

I did my due diligence and called the bank, but citing privacy concerns, they refused to answer any questions.  When his $5,000 EMD didn't show up, I called twice more.  Finally, the bank realized that privacy protections are only for customers - and this knucklehead wasn't a customer.  He forged the PoF.

My broker at the time was an attorney.  He said that this was both fraud and forgery - a felony.  I immediately contacted the listing agent and told her that we would cooperate fully if she wanted to pursue legal action.

That buyer was VERY lucky that the seller didn't sue him, but he was in a photo-finish with a criminal complaint.

I think the moral of the story is to be squeaky clean in everything you do.

Henry Lazerow · Answer

Illegal and definitely dont post online with your full name if plan to do that. Its fraud. I have caught someone trying to do that before we just blacklisted buyer.

Greg H. · Answer

Many things to address if it is a HUD home:

The property is first made available to owner occupants so if it is a deal, it will be snatched up

Zero chance a new hud listing at $86k will accept a $75k offer as hud could care less whether the offer is cash or not. The minimum acceptable offer is 88% net to HUD

Accepted HUD bids require proof of funds dated less than 30 days .

Eric James · Answer

LOL. You're joking, right?

Devin Jewell · Answer

@Eric James yes it’s joking, we have no intention of breaking the law. I do really hope there’s another option to secure a deal for someone who doesn’t have liquid capital to make an offer in all cash for a hud home though.

Curtis Mears · Answer

@Devin Jewell

Yes it is wrong, but is it super wrong? Yes. If you start down this path, eventually noone respects or believes you.

Shiloh Lundahl · Answer

We work with several hard money lenders who have lent to us on several properties. Because of the relationship with them, we have a proof of funds template from them where we just fill in the specific information for each property and we send it in with our offers when requested.

Chris T. · Answer

@Devin Jewell

'So, is it super unethical or illegal to modify a bank statement to look like we have 80k in an account to secure a deal?'

Ah.

I believe the term you're looking for here is 'fraud'.

Is this super illegal?

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