Real Estate Valuation Fraud

Real Estate Valuation Fraud

Copyright: © 2015 |Pages: 14
DOI: 10.4018/978-1-4666-7254-3.ch023
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Valuation profession is a link between the borrower and the lender. Fraud is an intentional deliberate deception committed for illegitimate personal gain. There are several forms of real estate fraud, especially when the real estate market is facing a boom. The most widespread types of real estate fraud include the preparation of two sets of settlement statements, property flipping, and fraudulent qualifications. There are mainly three types of valuation to look out for. Valuation may be received from an unauthorized agency. Furthermore, a real valuation may be altered from the original to generate profit. Thirdly, intentional inflation of the value of a property will hide the real market value. It is usually difficult to spot real estate fraudulent activities, so deep investigations and professionalism is needed. This chapter explores real estate fraud.
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One of the most widespread types of real estate fraud is the preparation of two sets of settlement statements. In the first statement, which is provided to the seller, contains the accurate or real price of the selling property. It reflects the actual market price. The second statement, which is provided to the lender, reflects an embroidered property price. When the buyer gets the approval of the loan that is reasonably higher than it must be, the excess of money is distributed among the connivers. Another common real estate fraud type is property flipping. In this activity a buyer attempts to purchase a property at a low price, and resells it quickly at a much higher price. This might sound legal, unless when it entails false documents given by the buyer to the lender, it becomes fraud. Least but not last, fraudulent qualifications is also considered a type of real estate fraud. In this type of fraud, credit history and employment qualifications are fabricated by real estate agents in order to help buyers to become qualified buyer in the eye of the lender.

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