Because there is so much money and so many different professionals are involved in the real estate purchasing process, there is always room for professional incompetence or outright fraud. Here are some things to look out for in the team that assists you in your purchase.
Real Estate Agents: This is the key person on your team! Make sure he or she is competent! We cannot stress this point more! Do your homework. All real estate agents must be licensed by the California Department of Real Estate. Visit the Department’s web site (www.dre.ca.gov) to determine the license status of an agent.
Also, talk to others who have used the agent. This is the one person you really need to trust in this process.
There are some unscrupulous lenders out there who only want their commission or points from a loan and couldn’t care less if you are getting the best loan product. There are some lending tactics that are outright fraud.
Beware of the following illegal lending practices and predatory lending tactics:
Flipping the frequent making of new loans to refinance existing loans
Packing selling of additional products without the borrower’s informed consent
Charging of excessive fees
Bait and Switch offering of very attractive terms which are not available and then pressuring the borrower into more expensive terms and hidden fees
Door-to-Door High Pressure Sales typically trying to sell home improvement contracts funded by home equity loans usually with less than desirable terms
Trust Selling salespersons who try to gain your trust based on some common background and then sell you something that might not be in your best interest
No Job! No Problem! encouraging home equity loans to those with no job or bad credit with the knowledge that the borrower will probably lose their home because they can’t make the payments
Pressuring for Immediate Sale insisting that a loan contract be signed immediately before the good deal is gone.
Prior to using the services of a mortgage broker or lender, make sure they are properly licensed by checking the California Department of Corporations web site (www.corp.ca.gov) and/or the California Department of Real Estate’s web site (www.dre.ca.gov).
Home Inspectors: The competency of this person is key in making sure you’re purchasing a structurally sound, safe home. A home inspector who misses details can end up costing you tens of thousands of dollars in the long run. Or worse, missed details could cause you or a family member harm because of bad wiring, cracked glass and other hazards.
Escrow Officer: The escrow officer is the referee in the home buying game. Just as with your favorite sport, an incompetent or cheating referee is a huge headache. If bad calls are made on the part of the escrow officer, it can cost you large amounts of money or kill the whole deal.
Tax Advisor: A tax advisor can be a great asset to you financially. Finding out that certain expenses are not tax deductible after-the-fact can put you in a real bind with the IRS. Ask your real estate agent, family members, friends or others you trust if they can recommend the services of a reputable tax advisor in your area.