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Hot West Michigan real estate market increases fraud risk

On Behalf of | Jul 20, 2019 | Uncategorized |

Real estate professionals know that the only thing worse than a cold market where there aren’t many buyers is a hot market where there isn’t enough inventory for the people who want homes. West Michigan’s market is so hot that many people can’t buy, despite wanting to and qualifying for a mortgage.

West Michigan was hit incredibly hard by the 2008 mortgage collapse. For several years, properties values in Grand Rapids and its suburbs dipped substantially, with rundown rental properties selling for only a few thousand dollars occasionally. Those days are long gone.

Real estate values across West Michigan have increased precipitously, and there simply isn’t enough inventory on the market to satisfy all the people who want to own their own home. That means that representing both sellers and buyers has become incredibly competitive. Don’t endanger your career and freedom by making mistakes that could actually be fraud to score a listing or close a deal.

Sellers’ agents could make pricing promises they can’t keep

Trying to find a new listing as a seller’s agent is hard when there aren’t many properties going on the market. You rely almost entirely on advertising and recommendations, as most people will have multiple real estate professionals competing for their listing.

One way to secure a contract is usually to claim you can sell the home for more money than the other Realtors who want the listing. It is possible for some agents to legally and easily secure higher selling prices by properly staging the house or marketing it to specific buyers they know will aggressively bid on the property. However, there are also many opportunities to violate the law when trying to maximize the price of the property.

Failing to list a defect you know about as the agents or telling the sellers not to list defects in order to increase selling price is one example. Another could be intentionally working with a specific appraiser because you know they will return a higher value than others would.

In both of those situations, you can become vulnerable to accusations of fraud, particularly if the lender ends up foreclosing and determines the property is not worth the value financed or if the buyers discover the defect and can prove that you or the sellers knew about it.

Buyers’ agents can also make questionable decisions

Helping your buyers qualify for a mortgage or make a successful offer on a property is harder when there’s more competition for each home on the market. Some agents will recommend that their clients exaggerate their income or otherwise intentionally misrepresent themselves on loan application documents in order to secure a higher maximum mortgage amount and thus become more competitive on the market.

The tricks that you might use to remain competitive in a very difficult real estate market like the current greater Grand Rapids market could result in white-collar crime charges. If you have found yourself accused of real estate-related fraud, sitting down with an experienced white collar crime attorney can help you determine your best options for defense strategies.