If It's Too Good To Be True, It Just Might Be - March 21, 2010
Many homeowners in Fresno County just received a letter informing them of benefit entitlements on their home that looks like it’s from the government. Fortunately one of my clients gave this to me and said, “It seems too good to be true. Could you look this over and tell me if it is legitimate?” Although the letter was written very carefully not too state something inappropriate, it was very misleading. The letter said:
Although this letter does use enough of the words “can” and “may” to water down the message, it does mislead the reader into thinking they can borrow money against their home free from the responsibility to pay it back. Those statements are true in bits and pieces, depending on the type of mortgage that you obtain. However, that is not what is expressed. Since this does sound too good to be true, it is important that you seek the advice and counsel of someone trusted, such as your local Realtor®, before you take the risk of losing your home’s equity.
Another example of this practice also happened this week. Another local client was searching for a property online. They forwarded a posting that they had found saying that they could take over payments of $1595 per month. What made this ad seem misleading were the beautiful pictures of a 2,200 square foot home in a highly desired area that would obviously sell for upwards of $600,000. The pictures showed a home in pristine and glamorous condition with tons of amenities. So the question would be why would a seller sell such a nice property and get nothing out of it other than for someone to take over their already low payments? I put in several calls to try to find out the rest of the story, but never received a return phone call. This may be because I properly identified myself as a Real Estate broker.
The point of these stories is that our Real Estate industry is not completely free of misleading practices. One of the benefits of working with a real estate agent who is a member of the National Association of Realtors® is that they are required to adhere to a strict Code Of Ethics. In fact, Article 2 of the Association of Realtors® Code of Ethics states that, “A Realtor® shall avoid exaggeration, misrepresentation, or concealment of pertinent facts”. The above examples were full of exaggerations, misrepresentations, and concealments of pertinent facts. This is how many people lost their homes, by not fully understanding all of the pertinent facts involved in their real estate transaction.
The ultimate responsibility falls on each of us, as consumers, to make sure that we fully understand all aspects of the transactions that we are involved in. Our home is usually our most important investment that we will ever make so it is imperative that we have a trusted advisor to help us understand all the nuances that are involved. Feel empowered to ask questions and have any issues resolved before you sign on the dotted line.
To promote economic stimulus, the Federal Housing Authority can give you up to $625,000 for your home equity and you may never have to pay this money back and there are no out of pocket costs. Furthermore, there are no income requirements and no matter how much you borrow, you never have to pay back more than the value of your home. The Federal Housing Authority will make up any short fall.
Although this letter does use enough of the words “can” and “may” to water down the message, it does mislead the reader into thinking they can borrow money against their home free from the responsibility to pay it back. Those statements are true in bits and pieces, depending on the type of mortgage that you obtain. However, that is not what is expressed. Since this does sound too good to be true, it is important that you seek the advice and counsel of someone trusted, such as your local Realtor®, before you take the risk of losing your home’s equity.
Another example of this practice also happened this week. Another local client was searching for a property online. They forwarded a posting that they had found saying that they could take over payments of $1595 per month. What made this ad seem misleading were the beautiful pictures of a 2,200 square foot home in a highly desired area that would obviously sell for upwards of $600,000. The pictures showed a home in pristine and glamorous condition with tons of amenities. So the question would be why would a seller sell such a nice property and get nothing out of it other than for someone to take over their already low payments? I put in several calls to try to find out the rest of the story, but never received a return phone call. This may be because I properly identified myself as a Real Estate broker.
The point of these stories is that our Real Estate industry is not completely free of misleading practices. One of the benefits of working with a real estate agent who is a member of the National Association of Realtors® is that they are required to adhere to a strict Code Of Ethics. In fact, Article 2 of the Association of Realtors® Code of Ethics states that, “A Realtor® shall avoid exaggeration, misrepresentation, or concealment of pertinent facts”. The above examples were full of exaggerations, misrepresentations, and concealments of pertinent facts. This is how many people lost their homes, by not fully understanding all of the pertinent facts involved in their real estate transaction.
The ultimate responsibility falls on each of us, as consumers, to make sure that we fully understand all aspects of the transactions that we are involved in. Our home is usually our most important investment that we will ever make so it is imperative that we have a trusted advisor to help us understand all the nuances that are involved. Feel empowered to ask questions and have any issues resolved before you sign on the dotted line.
