So I was doing some research the other day on ways real estate investors find off-market deals. As you know, being able to find properties without competing with other buyers is super valuable. That’s when I stumbled upon this thing called the 72 sold lawsuit. Let me give you a quick overview before getting into the details.
What is the 72 sold lawsuit all about?
The 72 sold lawsuit refers to a class action lawsuit filed back in 2019 against a website called 72sold.com. 72sold marketed itself as a portal for real estate investors and agents to find hidden or off-market foreclosure and pre-foreclosure lists. Sounds pretty good right? The problem was, a lot of the properties they advertised as “coming due” or “pre-foreclosure” actually weren’t.
Turns out 72sold was scraping public records information but not validating whether the properties they listed were actually in default or foreclosure. A lot of the properties on their lists had already gone through the foreclosure process or the homeowner had become current on their loan again. This caused a lot of wasted time and effort for investors trying to contact homeowners of properties that weren’t really available.
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Details of the 72 sold lawsuit
The class action lawsuit was filed by three real estate investors who claimed they spent thousands of dollars on 72sold’s premium subscriptions and services over multiple years. They alleged 72sold knowingly or negligently published inaccurate and misleading information about the status of properties. As a result, the plaintiffs and other class members wasted significant time and money pursuing leads that turned out to be dead ends.
The lawsuit sought damages on the basis of breach of contract, unjust enrichment, negligent misrepresentation, and violations of California’s Unfair Competition Law. The key allegation was that 72sold failed to take reasonable steps to verify the accuracy of their pre-foreclosure lists before promoting them as viable investment opportunities to members.
Eventually, 72sold agreed to a $1.8 million settlement with the class action plaintiffs. As part of the settlement, 72sold also had to improve their validation processes going forward to minimize publishing incorrect property statuses. They were required to more carefully research each listing before labeling it as pre-foreclosure or REO.
How the lawsuit impacts real estate investors
For real estate investors, the key takeaway from the 72 sold lawsuit is a reminder to always independently verify any pre-foreclosure lead sources. Even reputable data providers can make mistakes. Don’t rely solely on what a website tells you – do your own diligence by contacting the homeowner directly, checking public records, or getting status updates from the servicing bank.
It’s so important not to waste time on properties that have already been foreclosed or are no longer actively in default. That’s why you want to cross-check multiple sources before reaching out. The settlement from this lawsuit reinforced the message that data providers should be held accountable for failing to validate critical information relied upon by their members and customers.
So how can you benefit from talking about the 72 sold situation?
Glad you asked man. Even though 72sold got sued a few years ago, their case is still relevant for savvy investors today. Here are a few ways the 72 sold lawsuit can help you:
Learn from their mistakes
By understanding what 72sold did wrong, you can avoid wasting money and effort on unverified pre-foreclosure leads yourself. Always double check property statuses rather than assuming what a site tells you is accurate. That little extra legwork could save you a lot of frustration down the road.
Know your rights as a consumer
The ruling in this case set an important precedent that data providers should take responsibility if they don’t validate the information they publish. It reminds consumers that we have protections against potentially misleading or incorrect information. So if you ever come across something suspicious, document it in case you need to take action later.
Screen lead sources more carefully
Be wary of any site that promises exclusive or hidden “pre-foreclosure” lists without clearly detailing how recent and reliable that data is. Do your research on the company – look for verifiable validation processes, transparency on data sources, and proof they monitor for accuracy. Aim to minimize risk by choosing providers with a strong track record.
Recognize opportunity when mistakes happen
Mistakes are inevitable, even for large companies. Where there’s an error, there’s potentially an opportunity. Keep an eye out for situations like 72sold – a big provider slip up could uncover off-market homes they missed validating. Just be sure to diligently vet any leads you find this way.
Some key lessons reiterated
To wrap up our discussion, here are a few of the most crucial lessons again from the 72 sold lawsuit:
Don’t rely solely on lead sources – verify independently
Only trust what you can confirm yourself through public records, direct contact, or other means. Cross-check multiple sources before acting on a lead.
Data providers aren’t perfect – mistakes can happen
No lead generator is foolproof. Have reasonable expectations and safeguards in place to minimize wasted effort from inevitable errors.
Carefully screen new lead providers
Do research into track record, data sources, validation processes before trusting a company with your time and money. Reputable brands that take accuracy seriously tend to provide better leads overall.
Stay informed on your rights as a consumer
Understand relevant laws protecting against misleading information. Document issues in case you ever need to take further action to recoup losses from bad data.
Opportunity exists even when mistakes are made
Keep an eye out for errors by large providers – some unverified homes may slip through cracks presenting off-market find potential if diligently vetted.
I hope sharing the story of the 72 sold lawsuit has been helpful to understand, my friend. The key lesson is always verify leads yourself rather than blindly trusting what any site tells you. Let me know if you have any other questions!
Conclusion
I hope sharing this story of the 72 sold lawsuit has been helpful, my friend! As real estate investors, it’s crucial we understand risks like relying too heavily on unverified third party lead sources. The key takeaway is to always do our own validation through direct contact and public records research.
Being aware of cases like this one allows us to safely take advantage of new opportunities while avoiding potential pitfalls or wasted effort down the road. Let me know if any other questions come up – I’d be happy to discuss further strategies for diligently screening off market deal flow. Happy investing!
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FAQs
Did 72sold go out of business after the lawsuit?
No, they’re actually still operating today under the same name. However, they did have to make process changes as part of the settlement terms.
How many class members were part of the lawsuit?
The class action covered all individuals who purchased 72sold’s premium membership services between January 1, 2013 to December 31, 2018. The total number approved was around 27,000 members.
How much did individual class members receive in the settlement?
Payments to individual members varied depending on how much each person spent on 72sold subscriptions over the covered years. On average, class members received a refund of around 15-20% of their total membership costs.
What type of flaws did investors experience with 72sold’s data?
Common issues included properties listed as pre-foreclosure that had already been foreclosed on long ago, reinstated loans shown as active defaults, and short sale properties incorrectly flagged as upcoming foreclosures. There was a lack of timely status updates.
How can the case impact other lead providers?
It puts all data companies on notice that they must carefully research listings before publishing potentially misleading statuses. Investors also now know to demand validation of pre-foreclosure sources rather than blindly trusting what’s advertised.
