Payment Of Inflated 'Doc Stamps' On Court-Ordered Central Florida Foreclosure Sales May Be Skewing Prices, Hiding Investor Profits

In Orlando, Florida, the Orlando Sentinel reports:

• Properties purchased through Orange County Clerk of Courts foreclosure sales at one price are appearing in the county Property Appraiser's Office records at a higher price, often tens of thousands of dollars more, according to an Orlando Sentinel review of 16 recent purchases.
• The discrepancy illustrates inherent flaws in a system that apparently allows investors buying up distressed properties to inflate the sale price of their real estate by paying a slightly higher state tax on the sale, commonly known as "documentary stamp tax." The disparity in prices has gone unnoticed by the three county government bodies with a role in the sale and recording process — until now.
• By having higher sale prices on record with the Orange County Property Appraiser's Office, investors looking to later unload the properties could mask their profits when they sell the real estate to new buyers.
• It's not clear how widespread the bogus sale prices are, but the implications are vast in a county that saw nearly 18,000 foreclosure cases last year alone. The phony sales prices could be skewing appraisals being done in those neighborhoods and influencing bank lending practices as well, said Orange County Property Appraiser Bill Donegan.

***

• The amount of that tax is supposed to reflect the sale price, but in the cases reviewed by the Sentinel, the payments exceeded what the buyers should have paid. [...] Investors spending a few hundred more on the doc stamps on the front end could artificially inflate the sales prices by tens of thousands of dollars — and they have.

For more, see Foreclosure auctions: Are bogus prices hiding profit?

For story update, see Foreclosure auctions: Bogus-price issue appears to be limited to sales in Orange.