Certified Fraud Examiner Practice

The intent behind 'property flopping' involves short selling a property with the purpose of deceiving financial institutions. In this fraudulent scheme, a property is purchased, typically at a significantly reduced price, and then the owner falsely claims it has a much higher market value or inflates its worth through deceitful appraisal methods. By doing this, the owner can create the illusion of a legitimate sale at a loss to the lender or bank, which may facilitate a short sale approval despite the true market conditions. This practice is unethical and illegal, as it misrepresents the property's value to take advantage of the financial system, thereby defrauding lenders and potentially harming the housing market.

The other options do not accurately capture the essence of property flopping. For instance, reselling properties at a loss does not align with the fraudulent intentions involved in property flopping; rather, it may simply indicate a bad investment. Renovating and profiting from resale is a legitimate practice that reflects good real estate strategy, while choosing properties based on historical value also does not pertain to the deceptive and manipulative tactics seen in property flopping.