Flipping houses, Flopping houses....

We've all heard of guys flipping a house. It makes sense, right?  You buy a home at a low price, fix it and sell it at a profit.   Well, when you flop a home, you're banking on the price going down.  This mostly occurs with short sales and in my opinion, are usually shady deals.   There are many ways to go about doing this.  One common way is when an investor persuades a bank to sell a home "short".  That is, selling the home for less than what is owed to the bank.  The investor has a seller already lined up to purchase the property at a higher price.  Now, is this illegal?  Maybe.  Unethical?  Very often the answer is yes.  Some of these guys who are doing this will actively seek out homeowners who are in trouble and give them a sales pitch on why a short sale is the only way to go.   I have personally dealt with some of these people.   These guys will argue that they are making a profit in a market where profits are hard to get.  Maybe so, but my objection is that the homeowner never gets the information that should be shared.   When I meet with a homeowner who is in financial difficulty, I refer him to a Tax Accountant or an Attorney for advice on short sales.  What do I know about the tax implications or legalities involved?  I'm a real estate agent..   The fact is, nobody knows how this is going to shake out.  When a homeowner short sales his or her property, they are entering uncharted waters.  They are not covered under AZ non-deficiency laws.  The courts have yet to weigh in on whether banks can come back and sue the homeowner for the amount they (the banks) have lost on a short sale.

Hey, I'm no advocate for banks.  I hate dealing with them, they frustrate the hell out of me.  Please don't take this blog to mean that I feel banks are getting an unfair deal here.

I'm just saying, if you get into trouble and are considering selling your house through the short sale process...educate yourself on all of the factors involved before proceeding.  And if you get an email or phone call from a guy named Lefty from Las Vegas who has a sure fire way to short sale your house quickly.....RUN!