When Good Intentions Meet Predatory Practices

– Marishka Pilch –

As real estate investors, we’ve all encountered situations where we genuinely want to help someone, but the numbers just don’t work. What breaks my heart is when these vulnerable homeowners fall prey to predatory operators who make promises they never intend to keep.

The Story

About two years ago, my business partner/husband Larry and I met a lovely elderly couple who responded to one of our marketing pieces. We met with them and we quickly learned their situation: they had purchased the home just a year earlier with a VA loan and had no equity. The reason they wanted to sell was heartbreaking – their daughter had stage 4 cancer, and they had moved in with her to help care for their grandchildren. 

During our initial meeting at their kitchen table, we discussed their options thoroughly. The husband mentioned they had a timeshare they’d been paying on but couldn’t use. Larry offered to review the paperwork, made a few calls, and discovered this particular timeshare was easy to exit – they just needed to pay $200 in back dues and call a specific number to cancel. We provided this information at no charge, simply wanting to help reduce their financial burden. 

Our Proposed Solution 

Given that they had no equity and their monthly mortgage, taxes, and insurance exceeded market rent, a traditional wrap loan wasn’t viable. They wanted to keep the deed in their name, especially with him remaining on the mortgage, which we respected. 

Our solution: a multi-year lease option that would give the market time to recover. We proposed starting with rent several hundred dollars below their monthly payment – they would subsidize the difference, but this was far better than their current situation of paying over $2,000 monthly out-of-pocket. We committed to increasing rent over time as market conditions allowed. 

Anyone who knows us understands we’re not high-pressure salespeople. Perhaps we should be – in this case, it might have served this couple better. 

The Predatory Alternative 

While they were reviewing our paperwork, a wholesaler approached them with promises we knew were impossible to fulfill. They offered to buy the property “subject to” (meaning the couple would deed over the property but remain on the mortgage), promising $30,000 upfront and no more payments. 

The husband contacted us about this offer. We sensed he was hoping we’d match it, but we couldn’t – while we try to help people, we don’t intentionally enter bad business deals, and there was no way this scenario would cash flow. I advised extreme caution, suggested they ask detailed questions, get attorney review, and explained why the offer seemed too good to be true. I don’t believe they followed this advice. 

The Devastating Outcome 

The wholesaler convinced them to sign. Over the following months, I watched local “agent-investors” I know promote this property at prices far above market value. Predictably, it didn’t sell. 

When I checked on the couple several months later, they revealed they’d never received a penny from the company and were still making mortgage payments on a house they didn’t occupy. Worse, they couldn’t sell or lease the property because the deed was no longer in their name. 

Yesterday, I received a heartbreaking call. The wife informed me that her husband had passed away last week. Despite everything that happened, she said they really liked us and trusted us, wanted me to know of his passing, and invited us to the service. My heart breaks for her and her family. 

The Bigger Picture 

Situations like this are exactly why distressed homeowner protection laws exist and why many states are cracking down on wholesalers and subject-to promoters. These strategies can be executed legally and ethically, but too many operators ignore both the law and basic ethics.

As legitimate real estate professionals, we have a responsibility to:

• Provide honest assessments, even when the numbers don’t work in our favor
• Educate homeowners about red flags in too-good-to-be-true offers
• Refer people to legal counsel when appropriate
• Maintain our integrity, even when it costs us deals 

Key Takeaways for Homeowners 

If you’re facing financial distress with your property:

• Be wary of any offer that seems too good to be true
• Always get a second opinion from a trusted advisor
• Have an attorney review any paperwork before signing away property rights
• Ask detailed questions about how promises will be fulfilled
• Verify the track record and credentials of anyone you’re considering working with 

This business can be heartbreaking, but it’s stories like this that remind us why ethical standards matter. We may not be able to help everyone, but we can ensure we never contribute to someone’s financial devastation. 

Beyond the business aspect, we genuinely care about the people we meet. That phone call yesterday was a powerful reminder that real estate isn’t just about properties – it’s about people and their lives. 

What red flags have you encountered in distressed property situations? How do you maintain ethical standards while staying competitive in this market?