Wholesale Buyers and Lenders Beware!!

2 Replies

Attention all wholesale buyers and lenders across the country:

I want to share with you a recent incident I am aware of and the fact that this scam is becoming more and more common.

I recently was given a wholesale deal from an agent I have a relationship with, it happened to be just up the street from one of my development projects so it was very appetizing to me, especially the price point. I was offered a deal at a price of $730,000 for this home with pool that I could knock down and rebuild to new (a strategy I have been doing for several years now). I paid $850k for my property just a few doors down the street so this price was very, very good. After inquiring and saying I am in, the wholesaler supposedly informed the agent who then informed me that the deal was mine. Excited, I was all over him for the contract. I then started getting excuses as to why the paperwork had not come through. After several weeks of back and forth, it became clear to me that something was up so I took it upon myself to locate the homeowner and contact him directly. Upon speaking to him and asking about the sale of his home, the owner explained to me that he had no intention of selling and that the person claiming to have a contract with him was a fraud. Apparently, this wholesaler has been going around picking run down homes that would be excellent candidates for flips or re-developments and producing false purchase docs and assignment agreements. I was informed that one poor lender had wired into title $400k for a loan on a purchase that was not legit and is now out $400k.

I am working with this homeowner to locate and capture this individual or group of perpetrators and hopefully get them locked up where they belong!

If you are presented a wholesale deal from anyone, be sure to verify that the signed agreement is signed by the actual homeowner of the property, that the title and escrow company are legit, and that the wholesaler has a legit and fully executed agreement.

Unfortunately, our industry is no different than any other and unscrupulous characters exist who can't make it in the industry the legal way and choose to steal and defraud the innocent and unsuspecting. Be very careful before sending money to anyone, including escrow, title, attorney, etc and NEVER send money direct to the wholesaler or prior to close of escrow!

PLEASE PASS THE WORD ON AS THIS DANGEROUS FRAUD IS NOT EASY TO DETECT IF YOU ARE NOT EXPERIENCED.

@Will Barnard thank you for sharing this. We are having a big problem in our area with hackers hijacking wire transfers from escrow. They will hack the escrow agent or attorneys system and send an email changing wiring instructions. It look like it’s coming from the lender. 

Originally posted by @Greg Dickerson :

@Will Barnard thank you for sharing this. We are having a big problem in our area with hackers hijacking wire transfers from escrow. They will hack the escrow agent or attorneys system and send an email changing wiring instructions. It look like it’s coming from the lender. 

Yes, this too is an ongoing and old scam. Most title companies are hip to it so most will leave off the last 4 numbers from the wire instructions and ask that the sender call in for the final 4 numbers to prevent this scam.