BBB Issues Red Flags for Flipping Seminars

It's a "buyers beware" of a different sort. Recently some seminars have been getting the attention of the Better Business Bureau, and not in a good way. Seminars being held across the country showing the average consumer how to “flip” houses and build long-term wealth are getting red flagged by the BBB because of their exaggerated claims. One of these claims is stating that consumers can learn the process if they are “motivated” and spend just a little time learning from the seminar leaders.

While we have warned against get rich quick schemes in the past some people fall victim to their own wishful thinking. You can succeed in flipping houses and sometimes do it even using other people's money. What you can't do is expect to know everything after one seminar. That is always why we suggest working with systems and educating yourself in the industry first and foremost.

Here are the warning the BBB is putting out to all potential REIs:

You will not learn everything you need to know at the initial seminar. While that event may be free, it is probably a sales pitch for more extensive programs that can cost thousands of dollars.

Don’t fall victim to high-pressure sales tactics. Take the time to research the opportunity carefully and don’t sign a contract until you fully understand all of the terms.

Check out the refund policy and be sure to get all promises in writing.

Many fixer-upper or foreclosed homes on the market have been empty for long periods of time or may have been vandalized, which will make for costly repairs and will make the homes difficult to “flip” quickly. If you don’t have enough financial resources to hold onto the property for as long as it takes to sell it – this business is not for you.

If you purchase a home with violations, you could face fines or criminal penalties if you fail to fix them or cannot afford the needed repairs.

If you plan on financing the purchase of a house, be sure to budget for the appraisal, filing fees, insurance, taxes and maintenance of the house until it is sold.

Beware of becoming a “straw buyer,” a person who makes a purchase on behalf of another person. The real buyer promises to make all the payments and may compensate the straw buyer for the use of his or her credit. This activity is very risky for straw buyers, who may be held legally responsible for the debt they incurred on behalf of others; this can ruin a person’s credit and possibly even involve an unknowing straw buyer in a criminal scam.

Watch out for house flipping “rings” or “one-stop shops” of mortgage brokers, lenders, appraisers, home inspectors, closing agents, and attorneys. These groups try to convince home buyers that they can help with all the details of the home purchase, but because they are working together, there isn’t anybody protecting the home buyer’s interests. In particular, be wary of unscrupulous home appraisers who may fraudulent inflate the value of a property in an appraisal as part of a house flipping scam.

As always check out a company with the BBB before doing business. You can find great resources at www.bbb.org.

To learn more about Part-Time REI visit us at http://part-timerei.com/

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