My most memorable deal in 24 years resulted in me being asked by a prosecuting attorney for the State of Texas Dept of Insurance to be witness in Austin against 3 persons trying to commit fraud. The prospective buyer was part of the scam.
You can learn from this series of events which taught me what to watch for.
A seller hired me to sell his 24 townhouse style apt units
I represented the buyer and seller
Seller agreed to finance himself with 25% down
Had 3 offers
Asking Price went up each time a buyer made an offer
The seller had the George Kastanza approach to negotiating real estate. Every time he rejected an offer, he increased the price.
I met a prospective buyer that wanted a multifamily property and we toured the 24 units
He wanted to use a title company that He had used several times in the past in Tomball Texas near Houston.
The title company had several Houston locations
We asked for the insurance company to be a well known title insurance company
The seller accepted the offer and I scanned the executed contract and emailed it to the title company.
BY phone the title company closing agent acknowledged receipt and also sent receipt by email.
Title company acknowledged receipt of buyer earnest money.
Buyer decided that he would do the inspections himself because he had construction experience.
It was a brief inspection of a sample of the apt units.
We received a title insurance commitment from the title company with the name of the insurance company.
Several times I phone the title company and they did not answer the phone.
Hmmm
Frustrated …. I drove to their branch office location in Tomball.
No such address.
Upon further detailed inspection of the title commitment, I noticed the insurance company name was slightly different from the long actual company name. They inserted the word “National”.
I found the phone number of the main office of the named title company and the president said that they did not have an office in Tomball, Texas.
The seller and I agreed that we would not cooperate with any efforts from this buyer.
We smelled a rat.
Both the bogus title company and the buyer did not return my phone calls.
Seller reported the incident to the State of Texas Dept of Regulation.
Several months later I got a phone call from an attorney representing the State of Texas Dept of Insurance.
They were filing suit against 3 persons, two of whom were in Dallas.
They had attempted to represent themselves as a title insurance company.
I was asked for any evidence which I could contribute.
Willingly and Hopefully, I cooperated to help stop this and any future abuse.
This was a court proceeding to stop the defendants from representing themselves to be a title insurance company.
I had the option of driving to Austin, Or be interviewed as witness on the phone.
The 3 defendants did not show up and I did not have to testify.
Several months later the seller told me that his name had been forged and deed changed to another owner. Probably for the future purpose of getting a loan and keeping the money. This is probably why the buyer wanted a property whereby the seller had no debt and property had no recorded lien and seller could finance the purchase.
He hired an attorney to represent him in courtroom to get ownership title put back in his name.
I have discussed this experience with knowledgable title company execs and real estate agents, and they are amazed.
The experience did help me to know what issues can smell.
24 years of brokerage experience has help to know a large list of smells and how to avoid them.