Fake Broker

Rakesh Purohit - Real Estate Mentor
              Real estate is full of surprises, especially when you have to judge people; judging people is a complicated business in these high value transactions. Last time we discussed about fake pricing which was quite easy to understand if you use your common sense, but finding out fake people is almost impossible in realty business; this may happened to you even if you are seasoned investor.

              In my professional career, I met hundred of such people. Interestingly I met 3 different people claiming as owner of same property which actually I bought from fourth person. My advice to every investor or home buyer; one must learn how to identify such people. This could be the best thing you can do in realty market to save your heard earned money from bogus people.

              Bogus people are everywhere; they come to you as buyer or seller and sometimes as middleman. Let's find out how to catch these smart traders with your sixth sense.

              Bogus Sellers: they are many in the market, most of the time brokers and their allies play this role. It happened mainly in resale properties in open market. Many buyers don't realize that they are buying property from a middleman and not from actual seller. Understand this with example:

              As a buyer whenever you go to the market you will find plenty of options, out of which you have to decide on the basis of budget and requirement; but many times you end up in a trap what you never understand even after the deal is fully materialized. Nexus of middleman and brokers work in a set pattern where most of the buyers never understand what is actually happening.

              Whenever you go to the market as a buyer you will be offered 2 typed of deals; one, directly from the seller and second is from financer. These financer are mostly the middleman those are ready to route any kind of deal through them.

              How it works: 'A' goes to market as a buyer and show interest in a particular property. Broker introduces 'B' as a seller and start negotiating the deal. If things move further and 'A' insist on seeing documents; in these cases broker and 'B' put a condition that before showing the photocopies of documents they will take some token money (this token money is quite different then the money buyer pays upfront). This is a refundable amount what 'B' and broker says that in case there is no fault in papers than the money will not be refunded otherwise if 'A' is not satisfied with the legality of documents than the full amount will be refunded).

              Most of the time the logic given in this kind of transaction is that 'B' wants to identify with seriousness of 'A' before handing over photocopies of property. Interestingly if 'A' agrees to pay this symbolic token amount (for example ` 10000/- for the property value approx 50 lacks) to 'B', in most cases 'B' do not provide the documents immediately, because 'B' in is actually a bogus seller; but surprisingly 'B' moves this deal and provide the documents within 2-3 days to 'A'.

              Now see what happen in these 2-3 days. After getting symbolic confirmation from the potential buyer ('A'), 'B' approach real owner of the property here we will call him 'C' and introduce himself as a buyer who is actually a financer and negotiate property with some margins whatever was quoted to 'A'.

              If things move further (mostly they do, because middleman are always aware of need and status of 'C' so they act within acceptable parameters for both parties). 'B' as a buyer gives a symbolic token amount to 'C' and sign agreement with him with the condition that at the time of transfer of the property 'C' will either transfer it to 'B' or to his nominee. 'B' takes photocopy of the agreement and other documents related to property and contact 'A'. It's easy for 'C' to understand that as a financer 'B' is not willing to hold the property himself and in-between before transfer of the property if 'B' gets a buyer, he will be selling it to that buyer before transferring the property, 'C' never understand that he was approached with a ready buyer in 'B' hand

              When 'A' see the documents and find discrepancy in title than 'B' introduce himself as a financer who is actually owner of the property and purchased it from 'C' but didn't transferred it to save stamp duty. He shows the documents related to the agreement between 'B' and 'C' which indicates that 'C' agree to sell and transfer this property either directly to 'B' or his nominee. Let me make it clear if 'A' tries to withdraw from the deal he lose his symbolic token as it was told to him in different language (what 'A' understand later stage) that if the documents are not genuine than only 'A' will be entitled for refund. If 'A' is alert and understand the trap he get out of the deal after loosing very little money but in some cases when 'A' decides to move on, than 'B' enters into 2 different agreement with 'A' as a Seller and with 'C' as a buyer. Money received by 'A' is given to 'C' after keeping the margin and 'C' transfer the property in the name of 'A' as pre agreed term.

              This entire process if done by smart middleman goes without notice and most of the time both 'A' and 'C' never understand that 'B' was not a financer but actually was a facilitator who acted as financer to both of them. There are many more bogus people those act in realty world; all you need is to find right broker, who can help you to search genuine buyer/seller. Don't forget Money Saved is Money Earned.