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Buying a Home - The Phantom Offer
After a long and exhaustive search you have finally found the house for you so you instruct your real estate agent you put in a offer for you. You are told that there are no other offers on the property so you think your chances of getting it are pretty good. But when it comes time to present your offer your are told that there is another offer and it just happens to be “better” than yours. But is it real?
Are you familiar with the term phantom offer? By the time you finish reading this article on phantom buyers and sellers, you will know a few tips and tricks to protect yourself against this false offer.
A phantom offer is an offer that really does not exist. It exists only in the mind of the person making it. While phantom offers are not common practice, you will find it more prevalent in a hot real estate market where it is easier to fall susceptible to it.
Here is a scenario of a phantom offer created by the seller themselves. You come in and make an offer on a home, and suddenly there is another offer better than yours.
In this scenario, the seller will try and drive the value of the property up to get you to increase your offer. They may go so far as to actually create a phantom buyer.
With a phantom buyer the seller will actually create an imaginary person with good credit. They will create a fake contract that includes a higher price than what you have been offering. However since you are not allowed to actually see and read the competing offers you cannot really tell if the offer is legitimate.
If they have an accomplice it might include a mortgage broker used to create an identity and credit of a real person who was not able to close on the property. Ecuador">All of this is all designed to drive your bid price up.
Another problem a phantom offer can present to you is more than just money. You may have to go in and eliminate some of the conditions of the contract that you were hoping to get.
For example, you may not get the closing date that you wanted. You might not get the seller to making improvements prior to closing, or have a condition on a home inspection and so on.
The thing about phantom offers is they are illegal. They are used strictly to drive the price and conditions of your offer up.
There is another scenario that a phantom buyer could be created. In this scenario, a third party can create a phantom buyer.
The sole purpose of this is to defraud the lender themselves. What happens is the seller offers a property for sale and a buyer offers to pay more than the asking price.
The settlement includes payments for unperformed services for unrecorded mortgages. The buyer takes title in the name of an individual with good credit and the seller doesn't realize he's been involved in a scheme to defraud the lender.
Most phantom offers involve the seller and really are trying to take advantage of you when it comes to buying their home. Always get the opinion of your real estate professional as to what to do in these cases. Their expertise will help you to not fall victim to these types of scams.
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