Got scammed by a BP member, what should I do?

Got scammed by a BP member, what should I do?

Member since 2019 · 7 posts · 0 votes

Hi

I'm a new investor in NC area. I posted that I'm looking for RE in NC in BP forums. A few people contacted me and started sending me emails about new properties. I recently liked one of them, went to see it with that guy (turned out that guy was a seller's agent). I liked the property and made an offer. He did not agree to have a buyer's agent and said that I would have to pay him myself if I wanted my agent in. I agreed and made an offer through him (seller's agent). My offer got accepted. He rushed me to make the wire transfer of $5000 down payment on property and sign the contract. It was a weekday noon. I made the wire transfer to his company and told him that I'm in meetings until 4 pm and I will review the contract document afterwards, sign and send it back. When I started reading the document, I found multiple things that were not communicated with me before, so I told him to add the addendums for the things we agreed on. He refused to do so stating that it is the standard state document. I told him, I need to review the document with my attorney before signing because he is lying and the format he sent me is not a standard state document, rather it was written for his company. As a reply, he said, he will go with another buyer and not me. I said ok, and asked him to return my deposit. He said ok. Its been a week now and he's not responding to my calls and text messages. I have not received my money back. 

My question is, should I contact an RE attorney and take legal action? What should be the next steps on my end to get my money back. It looks like a scam to me. Any help is appreciated.

Thanks

SS

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Real Estate Broker · Charlotte, NC · Member since 2015 · 8 posts · 11 votes
6y

@Joe Splitrock @S Shah As the BIC and General Manager here at New Western Charlotte, I wanted to make myself present in this thread. Only one user in our system matches the last name of Shah, so using an assumption here, there is no record of any down payment or monies being sent our way from that investor. With that said, if you feel like I am missing something here, please reach out. If this is concerning another office in our network, I am happy to get you connected with someone that can help there.

Thanks,

Dylan

------ Irrelevant comment---- Addressed before I sent------

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  • Abel CurielBusiness Member
    Real Estate Agent · Queens, NY · Member since 2016 · 2k+ posts · 1k+ votes
    6y

    @S Shah, I would contact this person's broker immediately - ask for the broker owner. If they are not an actual broker or lied about being one, you should get your lawyer involved.

    I'd also reach out to BP... They may be able to help or at least warn other BP members.

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  • Mike CumbieBusiness Member
    REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
    6y

    I never recommend going to the sellers agent. It is brought up here often as the way to get things done. In reality you are going to the other side and asking them to write a contract for you. If you agreed to hire a buyers agent at your expense why are you two still talking?

    Without knowing the addendum you are speaking of its hard to say, how to react. Also in a hot market a better offer could have come in Before 4. So he could be legit or he could be way wrong. As far as EMD you should have it back in a reasonable time. Reasonable is usually like 2 weeks

  • Member since 2019 · 7 posts · 0 votes
    6y
    Originally posted by @Abel Curiel:

    @S Shah, I would contact this person's broker immediately - ask for the broker owner. If they are not an actual broker or lied about being one, you should get your lawyer involved.

    I'd also reach out to BP... They may be able to help or at least warn other BP members.

    Thanks Abel. I have been calling him but as soon as it rings it goes to his VM. It looks like he has blocked my number or something. He is a BP member. I see his profile. Should I just contact a lawyer and give him his details and he can handle the next steps for me? This is my first time encountering something like this, so I'm not sure how to proceed.

    Thanks for your help.

  • Member since 2019 · 7 posts · 0 votes
    6y
    Originally posted by @Mike Cumbie:

    I never recommend going to the sellers agent. It is brought up here often as the way to get things done. In reality you are going to the other side and asking them to write a contract for you. If you agreed to hire a buyers agent at your expense why are you two still talking?

    Without knowing the addendum you are speaking of its hard to say, how to react. Also in a hot market a better offer could have come in Before 4. So he could be legit or he could be way wrong. As far as EMD you should have it back in a reasonable time. Reasonable is usually like 2 weeks

     Thanks Mike. He said I will only talk to you and not your agent. Meanwhile all of this happened so my agent wasn't fully on boarded. I can wait for two weeks before moving forward. I just want some insights on what should be done.

    Thanks

    SS

  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    6y

    BP doesn't vouch for members or get in the middle of disputes. You should always do due diligence before doing business with anyone, regardless of where you meet them. I am sure you will going forward, so that is more a reminder for anyone reading this.

    You are implying it is a realtor, in which case they are licensed and there is a process for reporting them for ethical violations. You can also reach out to the broker owner as @Abel Curiel suggested. 

    If you suspect the person is not a licensed agent and plans to keep the money fraudulently, you can pursue legal and maybe even criminal action. Talk to your bank and they may be able to reverse the wire. Be sure to read your contract which states the process for handling deposits. You may need to file a dispute or follow some specific process to get it back.

    There are also various platforms on the internet to review businesses and realtors. You can provide reviews, which would be found by people doing due diligence in the future.

    Feel free to send me a PM with the users name. Just be aware, I can't take any action beyond checking their posts and making sure they are complying with the rules. 

  • Investor/Agent/Entrepreneur · Dallas, TX · Member since 2016 · 464 posts · 564 votes
    6y

    I definitely would be frustrated & would seek some action immediately, but I may not necessarily call it a scam (yet). The process in entirety seems normal, aside from the delayed release of your deposit. Every broker alters a PA to some degree for their firm. Seller/buyer disagreements on format, verbiage, terms, etc. on a PA will differ.

    Now the worrisome part is of course him not providing your ED back, and that too the timing. Check your local laws because some do require that a broker give it back within a certain timeframe. I would definitely contract the broker(s), the local real estate board, and get a RE attorney. If they are local, I'd go to that office in person as well. Regardless of what happened, there is absolutely no excuse for zero communication (especially after a week) and it needs to be escalated asap.

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    6y
    Originally posted by @Joe Splitrock:

    BP doesn't vouch for members or get in the middle of disputes. You should always do due diligence before doing business with anyone, regardless of where you meet them. I am sure you will going forward, so that is more a reminder for anyone reading this.

    You are implying it is a realtor, in which case they are licensed and there is a process for reporting them for ethical violations. You can also reach out to the broker owner as @Abel Curiel suggested. 

    If you suspect the person is not a licensed agent and plans to keep the money fraudulently, you can pursue legal and maybe even criminal action. Talk to your bank and they may be able to reverse the wire. Be sure to read your contract which states the process for handling deposits. You may need to file a dispute or follow some specific process to get it back.

    There are also various platforms on the internet to review businesses and realtors. You can provide reviews, which would be found by people doing due diligence in the future.

    Feel free to send me a PM with the users name. Just be aware, I can't take any action beyond checking their posts and making sure they are complying with the rules. 

    Either licensed or not  file a complaint with the state department of real estate.. if he or she is licensed they will be hot on it.. if they are not they may still do something.. I dont like EM wired to brokers trust accounts.. I pretty much insist it goes to escrow.. IE title and escrow company or closing attorney in attorney states.. Never the agent. or seller.

  • Clint ShelleyPro Member
    Surveyor · Dothan, AL · Member since 2014 · 425 posts · 391 votes
    6y

    Jay of course nailed it. Always use a third party escrow. My wife's broker has been waiting for return on EM from a deal for over 6 months from another licensed agent. It's a real CF and I don't know all of the details, but a 3rd party would have squared this away. Good luck on getting your money back.

    Clint

  • Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
    6y

    I feel for you, but Wholesalers - BWA-HA-HA!!!!

    Do NOT trust anyone that asks for your money before close if NOT with a 3rd party escrow is my biggest tip-off.

    Do not know the rules in NC, but you may want to call the REA on the off-chance he has a RE license.  One of the few things REA will nail people for is conversion of funds.

    If he's not licensed, then they may have some alternatives since he's selling real estate and expecting a fee.

  • Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    6y

    @S Shah I’m not sure what documents you signed but the purchase contract most certainly was the state contract, assuming he is a realtor. Email his Broker, stop calling the agent. A week is not a long time, if they deposited it. In FL, it is advantageous to place EM with the brokerage....if there is a dispute and you are in the right. 

  • Rental Property Investor · Northern, CA · Member since 2012 · 5k+ posts · 5k+ votes
    6y

    @S Shah Here's my guess on what happened here.  You weren't dealing with a Realtor.  You were dealing with a wholesaler.  You didn't pay an "earnest money deposit".  You paid a "non-refundable fee".  

    It's all just a guess at this point, since none of us have read your contract.  Doesn't even sound like you read it before you paid the money.  Don't do that again.  

    Ultimately, I hope this works out for you one way or another.

  • Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes
    6y

    Make a demand for your EMD in writing. If not returned in a reasonable time, drop a note to the State Attorney General's office as well as to the Real estate licensing people.

  • Rental Property Investor · Chapel Hill, NC · Member since 2019 · 120 posts · 119 votes
    6y

    @S Shah

    I agree with what some of the others have said. Are you sure this wasn't a non-refundable fee for his Wholesaling company? The tip off here seems to be that he started sending you emails with, presumably, off MLS listings. If he is a Real Estate Agent, call his Broker and explain the situation.

    The other thought I had was: in NC we have a due diligence fee. This is nonrefundable. That's not paid until after the contract is signed, though, so maybe that doesn't make sense in this case.

    If I was in your shoes, I would start with his Broker, especially if he is now ignoring or screening your calls. Then I'd go to an attorney. Good luck - I'm sorry you're going through this.

  • Member since 2019 · 7 posts · 0 votes
    6y

    First of all, I would really like to thank all of you. You guys are great. I really appreciate the help and suggestions you're putting forward. @Steven Griffith It was a non-refundable deposit, but I never signed any documents. Secondly, it looks like a wholeseller to me from what you'll are mentioning here. How do I know who his broker is? 

    I did stop the wire calling my bank the next day. I would know its status in the next couple of days. I still haven't heard back from the bank.

    I will keep you'll posted on how this progresses.

    Thanks once again for your valuable suggestions.

  • Pomona, NY · Member since 2016 · 375 posts · 217 votes
    6y

    @S Shah I'm curious, why did you wire him your emd, here in ny emd is held in escrow with sellers attorney. That was a huge mistake on your part, plus why didnt you have an attorney before hand, and why didnt they review it before u sent the emd, the deals I've done I've never sent emd until both parties agreed to contract terms and was fully executed by both parties. Huge mishap on your part. Best of luck

  • Rental Property Investor · Chapel Hill, NC · Member since 2019 · 120 posts · 119 votes
    6y

    @S Shah

    Google his name. Or, Google his name and 'real estate agent' to find which real estate company he is with (i.e keller williams, remax, joe's real estate company, etc). Then, call their main number and ask who the broker is and to speak with the broker. It's easier if the real estate firm is named after someone, as that person is usually the broker.

    Hopefully you stopped the Wire in time.

  • Rental Property Investor · Chapel Hill, NC · Member since 2019 · 120 posts · 119 votes
    6y

    @S Shah

    I missed the first part of your answer - but in re-reading it, I see that you mention it is a non-refundable deposit. That's going to make things a lot more difficult, without his cooperation, to get your money back. Maybe leave a msg first or email that you'll go to his Broker if he doesn't respond. I won't hammer home this point anymore than this, as others have already said this, but in working with Wholesalers in the future, I'd encourage you to read and sign everything first, then send the money. Safer that way. Good luck!.

  • Flipper/Rehabber · Albuquerque, NM · Member since 2019 · 61 posts · 64 votes
    6y

    S Shah, this one STINKS in many ways!  The best course of action for you is to contact the state Real Estate Commission.  Commissions are enacted to protect the public for bad apples.  They will get to the bottom of this ASAP once you explain your situation. 

    I am very sorry to hear about this and hope that justice will be done!  

  • Rental Property Investor · Los Angeles · Member since 2019 · 284 posts · 184 votes
    6y

    Ouch! Try cancelling the check... or call the bank let them know it was fraud.   Did you ever get his RE License#? Could be a wholesaler.   Believe it or not quite a few wholesalers are licensed realtors.   But if you are being blocked then definitely sounds like a scam that needs to be filed under the "lessons learned" folder.   I hope u find justice!   Please keep us posted.

  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    6y
    Originally posted by @S Shah:

    First of all, I would really like to thank all of you. You guys are great. I really appreciate the help and suggestions you're putting forward. @Steven Griffith It was a non-refundable deposit, but I never signed any documents. Secondly, it looks like a wholeseller to me from what you'll are mentioning here. How do I know who his broker is? 

    I did stop the wire calling my bank the next day. I would know its status in the next couple of days. I still haven't heard back from the bank.

    I will keep you'll posted on how this progresses.

    Thanks once again for your valuable suggestions.

     I did some searching (literally not even five minutes) on the person you sent me over IM. He claims to be a real estate agent, but he openly says other places "I am a wholesaler". I seriously doubt he is licensed. I am not sure if advertising you are real estate agent in North Carolina, when you are in fact a wholesaler, is legal. It looks like he works for New Western Acquisitions, which is a wholesaler. My recommendation is to call the state real estate board. File a lawsuit to recover your money. Report him and New Western Acquisitions to your states attorney office. They will likely investigate. In North Carolina, any fraud over $1000 is a class H felony. I would tell Mr. Wholesaler that and ask him to return your money ASAP before he attracts the wrong type of attention. 

    As far as this individual on BiggerPockets. His profile was opened in June 2020. I took less than five minutes to figure out he was a wholesaler. You need to be more careful. If you are not doing due diligence, you are better to put your money in index funds in the stock market. Stock market has oversight. Wholesalers do not...

  • Raleigh, NC · Member since 2017 · 38 posts · 24 votes
    6y

    Hi Mr. Shah, it was great speaking with you on the phone and I am glad it was just a miscommunication. What happened was the property was offered on a highest and best basis. Mr. Shah was the top offer and because of that was asked to wire his down payment and sign the contract. We learned after the fact that there were issues Mr. Shah had with some small terms within our contract. Since we could not come to terms the contract was not signed and the down payment is being wired back as we speak. 

    It was never anyone's intention to keep the down payment without an executed contract ever being signed. This is not how we operate and after speaking with Mr. Shah it looks like we will be able to do a deal in the near future.

  • Real Estate Broker · Charlotte, NC · Member since 2015 · 8 posts · 11 votes
    6y

    @Joe Splitrock @S Shah As the BIC and General Manager here at New Western Charlotte, I wanted to make myself present in this thread. Only one user in our system matches the last name of Shah, so using an assumption here, there is no record of any down payment or monies being sent our way from that investor. With that said, if you feel like I am missing something here, please reach out. If this is concerning another office in our network, I am happy to get you connected with someone that can help there.

    Thanks,

    Dylan

    ------ Irrelevant comment---- Addressed before I sent------

  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    6y

    @Ryan Groff and @Dylan Craig thank you for your fast action here to help. 

  • Rental Property Investor · Los Angeles · Member since 2019 · 284 posts · 184 votes
    6y
    Originally posted by @Joe Splitrock:
    Originally posted by @S Shah:

    First of all, I would really like to thank all of you. You guys are great. I really appreciate the help and suggestions you're putting forward. @Steven Griffith It was a non-refundable deposit, but I never signed any documents. Secondly, it looks like a wholeseller to me from what you'll are mentioning here. How do I know who his broker is? 

    I did stop the wire calling my bank the next day. I would know its status in the next couple of days. I still haven't heard back from the bank.

    I will keep you'll posted on how this progresses.

    Thanks once again for your valuable suggestions.

     I did some searching (literally not even five minutes) on the person you sent me over IM. He claims to be a real estate agent, but he openly says other places "I am a wholesaler". I seriously doubt he is licensed. I am not sure if advertising you are real estate agent in North Carolina, when you are in fact a wholesaler, is legal. It looks like he works for New Western Acquisitions, which is a wholesaler. My recommendation is to call the state real estate board. File a lawsuit to recover your money. Report him and New Western Acquisitions to your states attorney office. They will likely investigate. In North Carolina, any fraud over $1000 is a class H felony. I would tell Mr. Wholesaler that and ask him to return your money ASAP before he attracts the wrong type of attention. 

    As far as this individual on BiggerPockets. His profile was opened in June 2020. I took less than five minutes to figure out he was a wholesaler. You need to be more careful. If you are not doing due diligence, you are better to put your money in index funds in the stock market. Stock market has oversight. Wholesalers do not...


    Yes... I figured that were the case.  No surprise it was New Western.   I've had dealings with  NWA in SoCal on my very first wholesale deal.   Even though I came out of it unscathed ...Never again!    Definitely crossed several lines of unethical practice on the last transaction I had.  They would do double escrows to hide their margins (and you end up paying for both closing costs)...  delayed ownership and limited access to properties that you had already owned.   They had a pressure cooker tactic to create a bidding war with other investors while maintaining that contact person.... your "buyer's agent"... is also in fact representing other buyers at the same time.   Not only that, but county records may not correctly show your purchase price (which is much higher than theirs).  Though you may end up paying less property tax, your capital gains tax basis will be compromised if you ever decide to flip or sell.  Very hard to catch this until its too late.   I can't even figure out how they were able to do that.  I had to go through the trouble to make the correction with the county records and assessors.  It's a total Mal Practice... and unethical at best.

    They should be banned from this forum in my opinion.   

  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    6y
    Originally posted by @Alvin Uy:
    Originally posted by @Joe Splitrock:
    Originally posted by @S Shah:

    First of all, I would really like to thank all of you. You guys are great. I really appreciate the help and suggestions you're putting forward. @Steven Griffith It was a non-refundable deposit, but I never signed any documents. Secondly, it looks like a wholeseller to me from what you'll are mentioning here. How do I know who his broker is? 

    I did stop the wire calling my bank the next day. I would know its status in the next couple of days. I still haven't heard back from the bank.

    I will keep you'll posted on how this progresses.

    Thanks once again for your valuable suggestions.

     I did some searching (literally not even five minutes) on the person you sent me over IM. He claims to be a real estate agent, but he openly says other places "I am a wholesaler". I seriously doubt he is licensed. I am not sure if advertising you are real estate agent in North Carolina, when you are in fact a wholesaler, is legal. It looks like he works for New Western Acquisitions, which is a wholesaler. My recommendation is to call the state real estate board. File a lawsuit to recover your money. Report him and New Western Acquisitions to your states attorney office. They will likely investigate. In North Carolina, any fraud over $1000 is a class H felony. I would tell Mr. Wholesaler that and ask him to return your money ASAP before he attracts the wrong type of attention. 

    As far as this individual on BiggerPockets. His profile was opened in June 2020. I took less than five minutes to figure out he was a wholesaler. You need to be more careful. If you are not doing due diligence, you are better to put your money in index funds in the stock market. Stock market has oversight. Wholesalers do not...


    Yes... I figured that were the case.  No surprise it was New Western.   I've had dealings with  NWA in SoCal on my very first wholesale deal.   Even though I came out of it unscathed ...Never again!    Definitely crossed several lines of unethical practice on the last transaction I had.  They would do double escrows to hide their margins (and you end up paying for both closing costs)...  delayed ownership and limited access to properties that you had already owned.   They had a pressure cooker tactic to create a bidding war with other investors while maintaining that contact person.... your "buyer's agent"... is also in fact representing other buyers at the same time.   Not only that, but county records may not correctly show your purchase price (which is much higher than theirs).  Though you may end up paying less property tax, your capital gains tax basis will be compromised if you ever decide to flip or sell.  Very hard to catch this until its too late.   I can't even figure out how they were able to do that.  I had to go through the trouble to make the correction with the county records and assessors.  It's a total Mal Practice... and unethical at best.

    They should be banned from this forum in my opinion.   

     Just in response to your comment about the sales price in country records. That seems like it would be based on how the title company reported the sale. Is it because the title company is looking at the purchase price paid to the seller and considering the markup an assignment fee? Wholesalers say all the time they are not selling the property, they are selling a contract. In other words, you are buying at their contracted price and paying the wholesaler an assignment fee. If that is the case, you could claim the assignment fee as an expense on your taxes. So, yes it would look like more gain later, but you have an offsetting expense that you got benefit from. It seems like it works out similar in the end. If it truly is a double closing, then the second closing purchase price should be the recorded price. Still, it seems the title company would be the one reporting it to the county.

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