the rise in home prices in many U.S. markets.
One of the most prevalent scams is home appraisers over- inflating home values to secure larger loans. In one example relevant to the inheritor of a house in need of updating and repairs, the buyer uses a fake identity or another person’s name and credit history to obtain a fraudulent loan. This person commits identity theft and mortgage fraud to swindle the seller and lender. The “buyer” offers a much higher price than the home is worth, locks in a loan for the over-valued price, and then pockets the difference. In a worse situation, the swindler convinces the seller to finance some of the cost of the mortgage. The seller ends up handing cash to the “buyer,” who has no intention of purchasing their home. Real estate investors buy properties to make cash, and you should always keep that in mind when you are selling to an investor. Begin by researching who you do business with. When the right investor is hired, typically the investor or one of his agents will come and check out your house. They are going to ask you questions about the house and give a quick opinion of value, their opinion. Bare in mind that investors typically offer only 60-70% of the current value of the home, to cover their costs to hold, repair, and re-sell. They are focused on their "After Repair Value" number, which is the most they would be able to sell the property for after repairs and marketing time. If they are not paying cash and are obtaining a hard money loan, typically at a much higher interest rate, then the cost of the loan (plus interest) will factor in as well. They often buy houses that need to be sold as quickly as possible. The houses are then repaired, restored, and sold for far more money than they were bought for. That is why most investors try hard to get the lowest price possible when purchasing the house.
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