June 13, 2010
I don’t know anything about soccer. Heck, I don’t know anything about sports. So, I was surprised to find out that “flopping” is not only a real-estate term, but also soccer jargon and a general sports term (see here)!
Recently I came across an interesting article in Bloomberg, regarding real-estate “flopping,” and with my eyes always open to scams, I thought I would share some of it with you:
“A prevalent scam involves a practice called “flopping,” Barofsky said. In that scheme, investors or home buyers hire brokers to assess a home for less than its market value and convince banks to accept a sale at that level. The buyer conceals from the lender that he has lined up a higher offer and then quickly resells the property for a profit, as in the Connecticut case.
YIKES! According to CoreLogic Inc (real estate data and research company), this occurs in more than 1% of short sales, and may cost lenders as much as $50m this year!