Land Flip

What is ‘Earth bar

A land flip is a fraudulent practice in the field of real estate, which comes a group of colluding buyers together to sell a piece of undeveloped land between them to inflate the price of property in excess of the market value.

Penetration of Land flip’

After manipulating the price of the real estate market, land flip guilty to sell it to an unsuspecting buyer outside at a very inflated price. When the buyer tries to resell the land, its value is returned to a normal market level, because it either has no real value, or is hidden legal problems such as air pollution, toxic, lien or easement problems. The net result is a large, irreparable damage to the buyer.

For example, land flip, a group of five can buy a piece of land for $10,000. Each group member sells the land to another for a slightly higher price. When the fifth and final member acquired the property from others, its price has risen to $14,000. Currently, the group sells land to an independent buyer for $15,000 producing a fraudulent profit of $5,000.

Financial institutions face the risk of land flip when making loans for the purchase of the unfinished building. Largely, this is because the value and demand for, an undeveloped piece of land difficult to identify. The creditor may return the undeveloped land in the event that the buyer defaults on the loan. However, it can be difficult to sell the property, even if the break-even price. Many lenders require 50% down payment for undeveloped land to protect against the risk of default.

An example of a land flip

Companies that make the earth flip could approach potential investors by phone, through ads in local media and with attractive direct mail campaigns. These actions promise huge profits and include gifts to lure the obligations of the investor.

In 2006, the newspaper “Washington post” and other news agencies reported considerable scandal land flip involving common property management. In this case, pieces of vacant land along the coast of North Carolina selling for as much as 400 000 $suddenly dropped to $20 000 in value. In some cases, properties were sold back and forth between the staff in General property management. For example, TRM bought the property for $180,000 and sold it to a worker on the same day for 250 000$. The employee sold the property back in TPM, who then sold it to another colluder for $310,000. Ultimately, he sold an unsuspecting couple for $354,000.

The message about the scandal involved at least 1,500 investors lost hundreds of thousands of dollars each. In addition, the foreclosure banks have lost tens of millions.

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