The real estate market offers many new opportunities to make profits and work your way into the industry. By doing a simple search on the Internet, you can often discover outlets of the real estate world that you never even knew existed. Many sites promise you minimal work and large returns, which may seem very enticing. It’s important to be very careful with this, however. Many of these “”get rich quick methods”" are risky ventures that should not be attempted by someone who is unfamiliar with the market or unaware of consequences that they may face. It is also vital for the consumer to be aware of unethical practices in real estate, as it’s often easy to fall for real estate scams.
Flipping homes is a practice in real estate investing that is receiving more attention from the media recently. The process itself consists of reselling a piece of property at a large profit very recently, sometimes even within hours, after the property was initially sold. Although this practice is technically not illegal and is not considered one of the most threatening real estate scams, it’s argued by many people that flipping homes is unethical, and should not be permitted. Flipping homes usually involves several parties who are compromising the ethics of their industry by providing false property value information to buyers and homeowners.
To state it more clearly, consider this: You purchase a run-down house that has been foreclosed in a nice neighborhood for a very low price. You then very quickly rehabilitate the house and place it back on the market at a much higher price than you paid for it. You have flipped this piece of property, and made a large profit off of it. You might be asking what is unethical about doing this, but this second example will clarify it more: You go to a realtor to sell your house, and he sells it to another party at a certain price saying he got you the best deal possible. You then find out later that within a matter of days, your old house was resold at nearly double what you received for it. It turns out the first person who bought the house from the realtor was working with the realtor to get the higher profit. In cases like these, the realtor will often tell the first seller that there are many reasons that the house can’t be sold above a certain rate, while knowing all along what the real value of the property is. When the first person buys the house, they make some very quick, simple improvements, and put the house back on the market as soon as possible. It may seem like a quick way to make some cash, but it leaves the original homeowner feeling robbed.
The government is trying to crack down on the practice of flipping homes, as it preys on people’s lack of knowledge of the real estate market, but since the laws are not clear-cut, the consumer also has to do their part to make sure they do not get victimized. How can you be sure that you get a fair deal when you sell your house? The simplest way is to make sure you know the correct value of your property, so you get the right price immediately. Have your house appraised by someone you know and trust, and use the same discretion when you’re selecting your realtor so as to avoid real estate scams such as these. Selling your house is a major transaction, and taking extra time and care will greatly benefit you in the long run.