Fraudulent Proof of Funds

8 Replies

So I went into escrow acting as the broker on a commercial deal. I spoke with the broker numerous times and when I got his contract I see that it says the dreaded "and or assigns". I confront him about "wholesaling" this deal and he says "no no no they just don't know which company they are going to take the deal down in" ... which we all know is code for "of course we're wholesaling this ya idiot."

So against my better judgement I allow this. They send the proof of funds over with everything blacked out except the name I recognize as a prominent investor in Los Angeles, CA. So i tell them that I know that investor and I will check to see if his POF is accurate and that he is in fact a member or representative of the company on the contract.

I call over and sure enough he has no membership or ownership of the company on the contract and barely knows the deal. Just that the price is now inflated by $1.5M from all the "daisy chain" BS and wholesaling garbage going on. 

I undertand wholesaling and I get that there is a place for this in the industry, but do you not think this is absurd? $1.5M added on top? How dumb are these people?

So I sent a cancelation notice to them citing Fraud. Do you think this was an appropriate action?

Curious as to what people think about this garbage.

Hate to say this: typical fraudsters. I have been approached numerous times to provide POF. There is a lesson here on due diligence! Now you know to steer clear of these people in any future transactions.

@Steve S.   joker broker daisy chains... you have to wonder what all these folks do with their time.

As for proof of funds.. pretty simple on my end... credible lender you can talk to.. copy of bank account and the buyers personal banker that you can call and verify.

either that property was grossly underpriced or you have some pretty unintelligent folks thinking they can just run the dollars up.  Not sure its fraud but its stupidity at its finest

I have seen the price bumped up over 50% by wholesalers, even on land deals that were coming to me highly overpriced. Not too long ago, someone brought me an entitled land in Malibu that have been purchased last year by the current owners for $150k. The land was 4+ miles from the beach, up on the hills, on a semi-canyon location. The house next door, 2700 sqft built in the 90's had just sold for 1.2M - average sales price in the area. The approved plans were for a 3.900 sqft house. There were no comps for such footage within 2.5 miles. Larger newer houses only 1.5-2 miles from the beach with amazing unobstructed ocean views had recently sold under 3M. This wholesaler talked about "unique breathtaking ocean views", when in fact that entitled land had mostly hillside views and only a narrow 30-degree very abstracted ocean view far on the horizon. They wanted $960,000 for this land. By my calculations, by the time you were done with retaining walls and luxury details, you would likely not break even.

There are companies that only wholesale and do nothing but sitting around all day waiting for deals to come around from from their deal network and send maiers.

Many wholesalers have grown spoiled in the last few years having to do nothing else but spending 2.5 minutes a month on the computer sending 200-300 postcards and waiting for the phone to bring 10-20 deals. Now that mailers don't work so well, they just try to stiff the next guy they pass the deal on to. 

This is why the BRE is seriously looking into legislating wholesaling. I am not opposed to someone unlicensed making a living out of real estate, specially if they work hard at it, like everyone else. But the question here is, what is the limit between making a living and scamming?

I have seen the price bumped up over 50% by wholesalers, even on land deals that were coming to me highly overpriced. Not too long ago, someone brought me an entitled land in Malibu that have been purchased last year by the current owners for $150k. The land was 4+ miles from the beach, up on the hills, on a semi-canyon location. The house next door, 2700 sqft built in the 90's had just sold for 1.7M - average sales price in the area. The approved plans were for a 3.900 sqft house. There were no comps for such footage within 2.5 miles. Larger newer houses only 1.5-2 miles from the beach with amazing unobstructed ocean views had recently sold for just over $3M. This wholesaler talked about "unique breathtaking ocean views", when in fact that entitled land had mostly hillside views and only a narrow 30-degree very abstracted ocean view far on the horizon. They wanted $960,000 for this land. By my calculations, by the time you were done with retaining walls and luxury details, you would likely not break even.

There are companies that only wholesale and do nothing but sitting around all day waiting for deals to come around from from their deal network and send mailers.

Many wholesalers have grown spoiled in the last few years having to do nothing else but spending 2.5 minutes a month on the computer sending 200-300 postcards and waiting for the phone to bring 10-20 deals. Now that mailers don't work so well, they just try to stiff the next guy they pass the deal on to. 

This is why the BRE is seriously looking into legislating wholesaling. I am not opposed to someone unlicensed making a living out of real estate, specially if they work hard at it, like everyone else. But the question here is, what is the limit between making a living and scamming?