If you buy a house at a low cost, and turn around and sell it at a much higher price, is that considered a scam? I recently heard that it was called a 'house flipping scam' and is illegal. It just seems to me that you could sell it for whatever price you want as long as you own it and someone willingly gave a higher price.

Does all property have to be appraised, even if it's not done through a real estate?

hopefully someone can answer this better than me, but i dont see the problem with that.

if it is illegal, then i better never sell my house.
we got it for a really really low price for whatever reason, put a few days work into painting, leveling the floor, and other cosmetic stuff, and would be able to sell it now for over $20,000 more than what we paid.

plus, markets can change almost over night, and a house that was bought when no one was looking to buy could suddenly double in price if there is a boom in the town or area, and housing is scarce.

ok, it seems like the 'scam' involved is buying old falling apart buildings, painting them, and selling them as if there is nothing wrong with them.

im not sure about other areas, but here at least its hard to do.
when you sell a house, you are expected legally to inform the buyer of any faults with the house, and if you dont, and they find them, you have to pay for fixing them, and possibly face huge fines or jail time.

Honi, it's one thing to sell something you own at a higher price than what you paid for it. It's another to sell something with intent to fraud. In the typical "house flipping scam" buyers, lenders, and appraisers work together as a team. They buy an old rundown house and then spruce it up with solely cosmetic enhancements. Then they sell the house to some unsuspecting schmo who finds out after he has taken out a loan and bought the house, that his house is uninhabitable and requires major repairs. And usually this individual has had to finance his home through an FHA-insured loan because he didn't qualify for a conventional mortgage. So he ends up defaulting, the house goes back into foreclosure, and the cycle starts all over again.

This is a scheme that occurs more in the northern area than in the southern area. But I understand that there are proposed rules that the Senate is looking into to prevent this from happening.

Oh, and I'm not 100% certain but I do believe you have to get your property appraised before trying to sell it.

Appraisals are done to determine the current market value of your home. This appraisal would change based on other properties in your area that have sold and what similar properties are selling for.

It is not required that homes be appraised on a regular basis. One gets appraisals for various reasons...if you are buying a home - the bank will require that you have an appraisal done - they are looking to see that the house is worth what they are financing for you (or whatever percentage of that value is being financed) - they are protecting their interest.

You also get an appraisal done when you are looking to refinance to determine the amount of equity you may have in your current property.

The seller of a property is not required to get an appraisal for any reason. Oftentimes, a real-estate person will give you an "appraisal" of what they think your home is worth when they are going to sell it for you...this in not a true appraisal, but more the market value/estimate.

The scam you are referring to is as others explained - it's either a group of individuals (often including a "legit" appraiser) who makes the house appear to be something different than it is with the intent of covering things up...things that legally should be disclosed to a potential buyer. They will flat out lie on the sellers statement just to make the sale and make a buck.

A stipulation in any purchase & sales agreement must (for your own protection) include an independent appraisal (not one recommended by the seller) and an independent home inspection. ALWAYS make sure you have a back-out clause should things turn up from either source.

Thanks for that added info Lydia. I'll know who to come to when it's time for me to sell both my mother's and my aunt's condos.

Mother just got an appraisal when she finished paying off the mortgage this past month. Guess that was just a courtesy thrown in by the bank.

Thanks for the info everyone. Now I see how some cases could actually be scams.