Also see, Dominique Grubisa and DG Institute, Dominique Grubisa and DG Institute – Part 2, Dominique Grubisa, Master Wealth Control & Vestey Trust, https://thenaysayer.net/media-dominique-grubisa-dg-institute/
Dominique Grubisa claims that “there is a misconception that taking over distressed properties is preying on struggling families”, and she says that buying a property from a financially distressed owner doesn’t make you a “vulture”. See other posts about Dominique Grubisa / DG Institute.
This is not a legal question, but an issue of your ethics and values. I don’t think buying a house cheaply makes you a “vulture”, but my view is that taking advantage of an owner’s vulnerability, ignorance and/or trust is preying on them – and some of Grubisa’s teaching encourages that.
There are many others profiting from distressed home owners – not just Dominique Grubisa students. Once a bank issues repossession proceedings, the owners are contacted by numerous businesses (>10 letters is common) wanting to profit from their situation, including a number from Grubisa students competing for attention. Some of these businesses hope to find a cheap property, others want to offer various services (including debt negotiation), often taking a caveat over the property so they are paid when it is sold. Many of these are labelled “debt vultures” by consumer advocates.
So what, in my view, could make a ‘distressed property’ deal unethical?
Vulnerable owners – these owners are not just in financial stress, but they have not acted earlier to mitigate further loss and avoid bank repossession (as most owners would do). Community lawyers and financial counsellors, who often help people in these circumstances, say it is likely, in these cases, that owners have compounding problems including, family conflict, language difficulties, addiction issues or health problems (including mental health). These owners may be less able to protect their own interests.
Lack of knowledge – the owners are unlikely to have sought help from the bank, or an independent advisor and are unlikely to know what options they have, and to know the potential sale price of their house (even at this point in legal proceedings). According to one student, some owners (“a more elderly couple”) told her “we don’t expect to walk away with any equity from our house”.
Misleading information – whether the owners are misled by the Grubisa student or by information from other sources, they may accept the student’s ‘help’ based on misinformation. Grubisa often repeats the false message that when banks repossess a home they take all the equity and “don’t give change”, which could mislead an owner about their current situation.
Taking control of the property – Grubisa students are often not buying the property (despite what they might say in their letters to owners) but “control” the property by convincing the owner to grant a power of attorney to them, or possibly via a lease option contract. The agreement in Grubisa’s Toolkit allows the ‘intermediary’ to sell the property, with any surplus funds being the property of the ‘intermediary’ “and the seller cannot and will not make any claim against the intermediary for the payment of such money”. (It is an interesting use of the term ‘intermediary’ when someone is taking a power of attorney to control a property). Depending on the circumstances, the student may offer the owner money from the sale, but just the fact that an owner would sign such a document demonstrates their lack of understanding and lack of independent advice.
Lack of independent advice or representation – At minimum, an owner who is entering into a contract to give control of their property to another person, particularly where that owner is in vulnerable circumstances, should do so on the basis of independent legal advice.
The “more elderly couple” mentioned above “didn’t expect to walk away with any equity”. They accepted $270,000 in total for their house (incl payment of mortgage/debts of $210,000). After spending $30,000 on renovations, the student sold the house for $400,000.
The lowest sale price of a house in their suburb during the same 6 month period was $308,000, and the median price in that year was $419,000. It’s hard to know why the owners expected to get nothing from a sale – and that they would disclose that to someone who wants to profit from a sale. This should be a ‘red flag’ that you are dealing with vulnerable people – although perhaps that’s what the Real Estate Rescue course is about. Figures in this case are sourced from student discussing the deal with Grubisa online, Victorian Valuer General website and 103 sales within the same 6 months from realestate.com.
These are some questions that might help decide whether a potential property deal is ethical.
- Does the owner know the value of their property?
- Is the owner fully aware of the options they have?
- Is the owner under any misunderstanding about the outcome of other options (eg does the owner think that the bank will take all their equity?)
- Is the owner aware of the risks they face in giving someone else control of their property via a power of attorney (or other means such as a lease option)?
- Is it a fair ‘negotiation’ when the parties are unequal in knowledge and understanding?
- Has the owner had any independent advice and/or representation that could help place parties on a more equal footing?
- Is someone profiting by taking advantage of the owner’s personal, health, or financial circumstances?
- Is it ‘win-win’ if the owner receives what they believe is a fair price even if they could sell their home for more?
- Is it a ‘win-win’ if the owner trusts the ‘intermediary’ because the ‘intermediary’ is good at building rapport?