How to Prevent Your Santa Cruz Real Estate from becoming a "Flop"

Posted by Lauren Spencer on Tuesday, May 17th, 2011 at 11:01pm.

Flopping is a short sale scam in which investors hire brokers to assess Santa Cruz real estate for less than its market value and convince lenders to sell the home for far less than market value.  Then, the investors quickly turn around and sell the property for a profit to a buyer they already have lined up.

This type of short sale "flopping" is on the rise, and it is costing lenders millions of dollars.  The greater the losses for lenders, the more difficult it becomes to make new mortgage loans available.

Here are the basics you need to know to prevent your Santa Cruz real estate from becoming a flop:
What makes flopping a scam?

The crime is in the fact that the lender was not made aware of the other, better offers.  Instead of the lender getting a higher price for the Santa Cruz real estate, the difference in the short sale price and the resale price is divided between those involved in the flop.

Can I get tied up in this flopping mess and not even know it?

In most cases, the homeowner has no idea that this illegal activity is going on.  However, in some cases, the homeowners themselves can be part of the short sale scam.  That is, the broker involved in the flop convinces the homeowner it is a faster way out of the present situation or that it is a way they can get a few thousand dollars to help with expenses.  Brokers involved in flopping scams are not going to tell the homeowner that it is illegal.
How can I protect myself from a short sale flopping scam?

The best way to protect yourself from this type of scam is by educating yourself.  Most importantly, make sure you are dealing with an honest real estate agent.  Interview agents before choosing one, get referrals and references and don't be afraid to ask questions.  Remember this is your financial obligation.

Need help selling your home?  Give me a call today at 831-662-6522 or email me at

For more information, please visit my website at


About Lauren Spencer

Award-Winning Santa Cruz REALTOR®

Lauren Spencer is your local real estate expert, specializing in Santa Cruz real estate and surrounding communities—this is where she lives, works, and plays too. Let her know your questions about the community and county and she'll be happy to fill you in on all you want to know! Lauren Spencer has consistently been voted best local REALTOR in Santa Cruz and is always happy to offer her advice and expertise. Call her at: 800.226.4717.

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