How I got scammed on my first deal!

Question

After reading the recent post about a "scammer" I was convinced I should share my experience with the BP community. Perhaps to some it may look like I was foolish and I guess I was. I was embarrassed I had been duped,but it could of been far worse.

I know the odd one or two people may feel they want to post criticism over my actions and that's fine. I would sooner face criticism as a newbie who didn't know better than have this happen to others.

We learn from mistakes,we all know that but who says they have to be our own mistakes? As a collective community we need to share all experiences so we can all learn together. So here is my story.

In October 2013 I was finally ready to buy more first property in the States. I had been following the Detroit market and decided to commit.

I saw a property listed on Zillow and decided to contact the agent, who it turned out also owned the property. After much dialogue via e mail I saw she had another one for sale on her website and a price was agreed for them both.

I said I needed a contractor to take a look at the place. In my lengthly analysis paralysis stage ( before BP). I had been given the details of a contractor,somebody had successfully used. But when the realtor offered to contact her contractor, I agreed.

A list came back of the work that needed to be done etc. I then asked for my own contractor to visit which was agreed.

I was asked to sign documents and send earnest money.  I got this down to around $200. Over the weekend I was encouraged to send more money and I became suspicious.

When my contractor tried to contact them,they would not answer the phone. This happened several times.

When I began to look at things I could see this number and name used on many adds across the States.

I have posted a picture of one such add below. It seems they don't just limit themselves to real estate.

I learned a hell of a lot from this about how to verify people on the net. Reverse phone look ups, checking who owns the property. How to check if a realtor is licensed etc etc.  As a direct result of this I feel much more confident to check out credentials ask for references etc.

It would of been easy for me to say that's it and give up,my pursuit of investing in real estate.  But we all make mistakes and I do think it has helped me move forward. I realised I had a lot to learn and set about reading books, posts and pod casts. Most of these are free on the BP site.

I hope this helps people and look forward to your comments.

Below is the add I found on Zillow and below it an add with the same number and name I found yesterday.

Hattie Dizmond · Answer

@Nick Lee

Last summer I found an add for a property in an incredibly desirable area of North Dallas.  Now, I'm not a foreigner, so the to-good-to-be-true price immediately raised suspicions, but I contacted the seller anyway, while I continued to do a little research.  It turns out the property was indeed listed on the MLS, for approximately $700k, instead of the $250k the people said they were asking as a FSBO.

There was a long story about having just retired and going into the mission field, etc, etc.

Point being, you figured it out before you had sunk any real money into it, and the only thing you truly lost was time.

Every state has a board of realtors, and you can check on the current license status of anyone claiming to be a licensed realtor.  Being an off-shore investor, my advice is to find a realtor(s) in the market(s) you are interested in and build relationships with them.  Most realtors do have at least a trusted handyman, if not contractor, who they leverage to help with pre-sale fixes.  They are generally good and reasonably priced.  However, you should think twice about using those resources for major renovations.

Use the forums here on BP to ask for recommendations in the markets you're interested in, both realtors and contractors.  And, use the market based threads to make some connections with local investors in those areas.  They may be willing and able to give you a 2nd set of local eyes.

Thanks for sharing your experience.

Nick Lee · Answer

Thanks guys, you are correct. I think the lesson showed me I need to take a step back and think about things. As I look back on the article now I can see the red flags and so it's a lesson well learned.

What concerned me was the shear volume of adds I found on the net,with the same name and contact details.

Charles Worth · Answer

@Nick Lee

Not sure why anyone would make fun of you. Its a regrettable mistake and sucks as a first foray into RE investing. its the mistake of a new investor who maybe was just motivated enough to ignore the red flags. Motivation is a good thing but can also be the enemy of proper diligence not just in RE but in all forms of investing and/or business.  I doubt you would have ignored the red flags if you had numerous deals on your plate at the time to choose from. Key at least to me is to try and have stuff going so I don't even have to consider questionable stuff.

Assaf Furman · Answer

Thanks for sharing! You're right that it could have been worse but that's good you haven't given up. Persistence is key to success!