Avoiding Equity Scams

Many news stories over the last couple of years have been dedicated to unscrupulous lending practices.  As a result, consumers are much more aware of the scams in the market and many of the unsavory characters have been weeded out of the industry.  However, there are still some “bad apples”.  Your Monclair NJ realtor can point you to some legitimate lenders, but responsibility for your safety lies with you.

Flipping

Outright scams are easier to spot.  The more subtle tricks of a dodgy lender are harder to see.  One such trick is called loan flipping.  It starts with a legitimate “cash-out” refinancing.  Many homeowners are using cash-out refi’s to make home improvements rather than selling their current home and buying another.  This is a great option for a lot of owners to access the equity they have already built in their homes and use it to build more.

The trick comes in after the refi is finished.  The lender contacts the homeowner after a few payments have been made and offers another refinancing to finance a dream vacation, a car or another luxury.  The offer of more cash is tempting but the lender tacks on high fees, often disguising them within the loan.  Ultimately, this can leave the homeowner with no equity and an even greater debt load.

Duck this practice by asking for a printed copy of all fees and costs.  Take the time to compare the lenders rates with other companies.  Don’t be taken in by offers that expire quickly.

Stripping

Equity stripping is another common ruse.  The lender encourages the borrower to be less than 100% truthful on their applications.  The lender makes it sound as if it’s OK to exaggerate or stretch the truth to qualify for a larger loan.  He may lead you to believe that you are entitled to better than what the banks will offer and a little of embellishment will get you what you deserve.

Any falsification of information on your loan application is loan fraud and illegal, no matter who encourages you to do it.  The point of this game is for the lender to con you into a mortgage you cannot afford.  When you fall behind on the payments he will be able to take your home, sell it and pocket the proceeds.

You can avoid this dangerous scam by being totally honest, even if it you qualify for less.  Know your budget and stick to it.  Don’t let house envy get you into trouble.

Talk to your Glen Ridge NJ realtor about scams and unprincipled practices.  She can help you wade through the lending process without getting trapped.  Ask her about the disclosure rules that went into effect last January to help make spotting these “bad apples” a little easier.

Open House Mistakes

If you’ve ever hosted an open house as a seller, you know it’s harder than it sounds.  It seems like it would be an easy job.  Just let people traipse through your home, see how great it is and wait for an offer.  Any Montclair NJ realtor knows there a lot more to it than that.

Great Expectations
An open house can be a great tool to generate leads and interest in your home.  It is not necessarily going to “sell” the house.  Some sellers do get lucky and find a buyer with an offer in hand at an open house, but more often than not it takes a bit more work afterwards.  An open house is a great way to attract buyers’ agents and build some good buzz for your property.  Keep your expectations reasonable.  Remember, this is just one tool of many in your realtor’s arsenal.

Not Ready for the Close Up
Do you think that the worst thing that can happen at an open house is for no one to show up?  It’s not.  The worst thing that can happen is that tons of people show up and house is a shambles.  This will wreck your home’s “reputation” among both agents and buyers.  Make sure your house is spotless from top to bottom, staged to perfection and ready to be scrutinized in every nook and cranny.  This means you have to pack up the clutter and about half the furniture, organize every item and scrub the entire house.  Don’t forget to remove medications and valuables, too.  Open houses sometimes attract more than just potential buyers so be careful with your possessions.

Attracting the Wrong Crowd
Sometimes sellers want to pull out all the stops to attract people to an open house.  They will hold raffles or give out door prizes, put flyers in every corner shop and coffee house and invite all the neighbors.  While a creative approach is great, this kind of marketing blitz may not be the best idea.  A raffle or door prize might get people in the door, but are they really potential buyers or just there for the freebies?  Think carefully about how many people you really want wandering about in your home.  Let your Glen Ridge NJ realtor advise you on how to best market to the right audience.

Insufficient Marketing
A mistake in the opposite direction would be not marketing enough.  If you just pop a sign in the dirt at the corner, you won’t generate interest past your nosy neighbors.  Work closely with your realtor to ensure that the right people are invited to your open house.

An open house can be a great way to market your property.  Ask your realtor if this approach is best for you.