Here it comes, the tip of the iceberg . . .
From the Washington Post:
The FBI this month launched a mortgage fraud task force, gathering federal prosecutors and law enforcement officials from Prince William, Loudoun and Fairfax counties to map out a strategy to tackle the issue region-wide. One of the federal investigations is centered on Rippon Landing, according to Steve Durst, a U.S. Postal Inspection Service spokesman for the D.C. division, whose agency investigates mortgage fraud because it involves use of the mail. Durst declined to elaborate.When researching same-house sales, if I see an above-market price that followed a prior sale within months, I check the tax assessment for some extra help. I usually post the earlier sale which was more in line with comps.
. . .
According to land and real estate records, Zak Ahmadzada, a mortgage broker with American Affordable Homes in McLean, and Khalid Mirza, a real estate agent with Re/Max Champions in McLean, were involved in many of the transactions.
Land records show that Ahmadzada bought three townhouses in the Villages at Rippon Landing in 2006 and 2007 for prices ranging from $418,550 to $439,615. He sold two of them months later for $570,000 and a third for $585,000. Some investors said Ahmadzada arranged for buyers' loans for several townhouses at the higher prices, with no down payments and 100 percent financing.
. . .
Another investor, Wayne A. Lee, bought four townhouses in the subdivision in late 2006 for $570,000 and a fifth for $580,000. Two of those properties were purchased from Zak Ahmadzada, who paid $418,550 and $426,700 just months before, according to land records.
Today, three of Lee's homes are in foreclosure and listed for sale for less than $350,000. Lee declined comment Friday on the advice of his lawyer.
11 comments:
This is where the DR Horton community is right? I have looked their several times. Back in 06 and 07 that area got killed by investors! Half of the sold homes where back up for sale. Entire staff got fired at one point then the no flipper signs where popping up. Last time I went the no flipper sign was replaced with investors welcome, LOL.
Potomac Club did much better job of keeping investors out.
Its funny, now that the new home builders are hurting they are trying to welcome back flippers. I know of at least 2 new Falls Church communities, one by Winchester and the other Stanley Martin where they advertising "Great Investment Opportunity!" after previously halting sales to flippers.
Sorry builders, you contributed to the problem as well, selling to flippers and overbuilding. Now its time to feel the pain...
Doug said...
"Its funny, now that the new home builders are hurting they are trying to welcome back flippers."
Actually, it's perfectly rational. If you were a builder, wouldn't you be turning to any possible source for a buyer? I found it funny that they turned flippers away in the first place. You and I might like that, but what incentive does a builder have to turn anyone away who is ready, willing, and able to buy? If the lenders lent to people who really weren't "able" to buy that is one thing, but to say that developers should have discriminated against anyone who in a position to pay the price, that is lame. And to advocate that "the government" should do likewise is even lamer. Next year perhaps it'll be you someone chooses to discriminate against. After all, without new buyers ... or out of town buyers ... or whatever type of buyers except for the type of buyer I am ... I could buy want I want for less ... without much competition and without the pressures on prices that such competition brings.
"I found it funny that they turned flippers away in the first place. You and I might like that, but what incentive does a builder have to turn anyone away who is ready, willing, and able to buy?"
Even when the market was hot and flippers were successful it didn't do a builder much good to sell to them.
The minute they DO carry out their flip they become competition for the builder. A builder would find itself selling houses in a partially completely subdivision even while the flippers try to sell identical houses in the same neighborhood.
Think about it... you are in the business of selling houses... if you sell to a flipper, 6 months later when you have finished building the house they try to sell it. Who is likely to buy that house? The EXACT same person who would buy any of your other houses. You aren't really gaining sales by selling to flippers. You gain one sale when you sell to the flipper... and six months later you lose a sale when the flipper unloads it.
There isn't really much incentive to deal with them.
(Unless you can sell out an entire condo tower/subdivision pre-construction... in which case future competition isn't your problem.)
Plus...Flippers just aren't ideal customers. Many of them relied on shady financing, often falsly claiming that they intended to personally reside in the properties they bought.
Flippers are generally much more likely to try to back out of a deal if it stops looking good to them.
They are also much more likely to fail to perform appropriate upkeep on a property during the period they own it. (mowing/watering the lawn, etc)
Your "real" customers also aren't going to be pleased to see large numbers of homes bought up by speculaters in their future neighborhood.
I agree with Leroy, its bad for the community and bad for the builder.
Its a very short sighted builder who makes his money selling to flippers.
Leroy said:
"Think about it... you are in the business of selling houses... if you sell to a flipper, 6 months later when you have finished building the house they try to sell it. Who is likely to buy that house? The EXACT same person who would buy any of your other houses. You aren't really gaining sales by selling to flippers. You gain one sale when you sell to the flipper... and six months later you lose a sale when the flipper unloads it. "
Sorry, I can't agree with you on this point ... Though your other (following) points make sense.
Businesses sell to "re-sellers" all the time. I remember my first job where I worked for a small telecom company reselling the services of a much larger telecom company. My first thought was "this is wrong ... does that larger company know?" Then I found out that that larger company not only knew but went out of its way to help the smaller re-seller AND gave it hefty discounts. Over the years I've observed that this is standard business practice and I've come to understand that because it's not a zero sum game out there there really is an advantage out there in using re-sellers. Your rationale that the reseller has "stolen" a future sales opportunity from the developer doesn't hold water. The developer got what they wanted for the property and, most importantly, they got it sooner and with more certainty. The future sale opportunity is just that ... a future sale opportunity separate and distinct from the last completed one.
Another way to look at it ... If in the month before the boom stopped the developer had chosen to NOT sell his last 100 properties to flippers so that he might instead "down the road" sell them to regular homebuyers ... Would he have been better off knowing what we know now? What's that old say ?... "A bird in the hand is worth 2 in the bush" ...
Lance, you are still looking at the problem in a short time period for a single builder.
If instead you looked at the problem for ALL builders, over a LARGE time period, say the last 5 years I think you would have a much different solution.
I could go into it in more detail, but Im being payed to analyze things outside of real estate right now, back to work!
Lance and Leroy are actually both right. Builders in larger developments will often put clauses into sale contracts to eliminate flipping. The up front sales volume generated by flippers is not worth the potential long term hassle of dealing with fluctuations in supply and demand (i.e., prices) that the flippers cause when they want to sell. Consider that the flippers' demand is speculative rather then intrinsic; they're not looking to live in the unit or rent it out as a long term landlord-investor.
But a smaller developer who simply wants to sell units to eliminate carrying costs? Selling to a flipper makes sense, and can reduce the developer's exposure.
Mike-
I looked at DR Horton too and felt that they, along with Pulte, Ryan, and M/I in Potomac Club, were jut too overpriced.
I realize Potomac Club is going to be a nice community, but 1 mile down Rt. 1 there's Port Potomac who's offering single family homes now in the upper 300's and 2 miles down there's Melody landing as well.
I actually purchased in Melody Landing, as I got an actual townhome for 265,00 instead of the 2 over 2 condos that were availabe in the potomac club for 320-350 (starting) depending on the builder. There's so many stairs in those damn things its ridiculous!
DR Horton over in "Freeport at Rippon" or whatever its called is a major rip off as well. The second and third bedrooms in those townhomes were so small, tand they aren't coming down in their asking price mutch either (starting around 310 with no upgrades I think).
The other problem with those communities is the giant power lines running right smack through the middle of them. I like Potomac Club, but the power lines combined with the massive amount of homes going in there was a turn off. That and the fact that the prices are just too damn high pushed me away from there and down to Melody Landing.
Also, Brookfield is building in Melody Landing as well, but they arent selling jack down there. (they have the 2 over 2 style condo as well). Does anyone see this building style as a fad that will lack resale value in the future even when the market comes back? I think it is, if for no other reason than its something folks arent used to and there tend to be an obscene amount of stairs for the upper units.
Lance,
Just because it's rational doesn't make it right. Now does it?
You seem to forget-Lance-that buying a home represents more than just a business transaction.
Are you a realtor? Tell the truth.
Lance, Lance,
Let it go. You make no sense. Listen to Leroy and some of the other posts here.
And Lance, you are a realtor. If you aren't, with your intelligence and ethics, they would welcome you with a big toothy grin and open arms.
Go for it.
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