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In early 2006, the housing market in Southern California had started its downturn so I put a rental house up for sale. I wanted to list for $495K but my agent insisted I could get more. I think he was in denial about what was happening. We agreed to price the house at a range of $495K - $570K, a strategy many agents in this area were using at the time, mainly because they were unsure what to expect. The house took 3 months to sell and close escrow, and I received 6 offers in that time. 2 of the offers were for $495K with $ 0 - $5000 down and with large 2nd mortgages with variable rates. It seemed to me that the buyer would be putting themselves in harm's way with such a huge mortgage but the agent said it was common so I accepted one of the offers.
But here is the bizarre part. 4 of the offers were for 0 down with a purchase price of $570K.....but the buyer was to get back $70K at close of escrow - supposedly to do "improvements" such as adding spas and skylights and handicapped access etc to the house. Also, I was to pay all closing costs. My agent warned me these offers were fraudulent and to ignore them - which I did. It seems the buying agent was also the mortgage broker and her relative was the appraiser. All 4 offers came from the same office with different buyer's names. I realized that the practice of offering a house at a "price range" - sometimes with $50K - $100K or more difference between the lower and upper asking prices was just asking for a scheme like this and I'd noticed some houses were closing at seemingly very high sales prices - compared to recent sales in the area - I wonder now how many of these fraudulent sales were happening and in what areas of the country...
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