Bill’s Answer: The bait in many con game schemes is greed. Think Bernie Madoff. A promise of quick cash is made to the victim who is ultimately left empty handed. Real estate cons aren’t that common but they happen especially to vulnerable sellers.
Your story probably comes fro mthe “cash to buyer” type of transactionw where an overly anxious unsophisticated seller agrees to transfer his or her property along with cash to a buyer willing to offer an unrealistically high price for the house.
The scenario works like this. Let’s use Wellesley as an example.
A Wellesley house is worth $1 million and the seller has $400,000 in equity. The con man says, “Gee, this house is a steal at $1 million. I’d be willing to pay $1.1 million for it but I’m short of cash. Maybe, we can help each other out. I’ll arrange a first mortgage of $800,000 which will give you $400,000 in cash. We can split the cash and I’ll give you a second mortgage for $300,000 to cover the difference. We’ll both come out ahead.” Of course, the real spilt is made by the con man who takes off with the $200,000 without ever making a payment on the first or second mortgages. The seller has lost the house and the money and created a legal nightmare.
Could this happen? Not likely but possible … again, lots of very smart, sophisticated investors lost money to Madoff.