Wednesday, March 4th, 2009 at 5:39 AM
Unethical Behavior
Rob Dawg said, “Jim, I know you are too ethical for this but I can imagine a desperate realitter™ posting the worst possible pics and a real low ball BPO and making a killing with a silent third party.”
How many shenanigans are going on out there?
How many listing agents are tilting the table? It doesn’t matter how you tilt it, if you give any agent or buyer a clean shot at buying a property to the detriment of others, you have breached your fiduciary duty to your seller.
It’s easy to find them too – they are happy to input the listings into the MLS!
A check of the listings that went pending in the three North County sections in February showed that 19 of 1,320 properties found a buyer the first day. A couple were re-lists, so they probably already had a buyer coming in, and two were short sales – the agent probably brought the buyer to the table.
The others?
Ten were bank-owned, and for those of you who have tried to buy a bank-owned property, you know how hard it is to get any answer from a bank, let alone in one day.
Sure, there has to be times when a bank will move quickly, but let’s face it, unethical things are happening out there. A check of the listings that sold the first day is the tip of the iceberg.
What can you do?
So you know, both Countrywide and Wells Fargo have the agents upload the data from the purchase offers onto their custom system. The manual labor is intensive, and if you have a hot listing with multiple offers, the mere inputting of offers can take a day or two.
Listing agents who have a winner in mind are tempted to shut down the process before it turns into a freak show – especially if they have their own buyer. They’ll mark the listing ‘pending’ to thwart more offers. It’s doubtful that the bank clerks are verifying whether the property is still active in the MLS, so it’s easy for the listing agents to get away with it.
If you really want the property, keep sending in your offers, but they’ll have to be good. A full-price or higher offer will probably guilt the agent into submitting it too, and you just might get lucky.
Another thing you can do is contact the broker/manager. He/she has the legal duty to adequately supervise their agents, and if you think shenanigans have blocked your shot at buying their listing, the broker will give you some attention.
Contact the bank directly? Fat chance that’ll work, but if you’re going to go, go all the way.
Contact the CEO or president but you’ll have to be be unrelenting. It’s working on an REO assigned to me; even though the former owners have moved out, they are still fighting. I received a call from the president’s office of Countrywide, telling me to expect that it’ll take a while for their fraud case to work its way through federal court (They are accusing C-wide of fraud, even though they have already vacated?). Not the same as getting your offer accepted, but an example of what happens when the president gets involved.
What about short sales?
There are no rules, no regulations, not even a set of suggestions when it comes to short sales. Think listing agents are manipulating the system? Bet on it.
But look at one of the main contributors – Sandicor. Last year the California Association of Realtors issued a mandate that all local associations mark their listings as ‘pending’ once a buyer is determined. Sandicor blew them off, and still to this day allows agents to leave their listings in the active bin, even though they have an acceptable offer or two.
It’s not in anyone’s interest to have hundreds of listings stay active when a buyer has already been determined.
Or have they been determined? That’s where the unethical behavior kicks in – if the listing agents can field offers for months, what’s stopping them from waiting until they find their own buyer, and plugging them in at the finish line?
The short sale environment is ripe for manipulation, sanctioned by Sandicor.
Though this is another look at the sausage-making, I’d rather get it on the table so folks know what they’re dealing with.
I urge listing agents to mark their short-sale listings as pending, which encourages the buyer to stick around and also give the marketplace a truer sense of reality. What if the buyer bails? Then marking the listing as a BOM renews the attention on it – if the listing was never marked ‘pending’ in the first place how will anyone know that the deal fell out?
Posted on Wednesday, March 4th, 2009 at 5:39 AM in Listing Agent Practices | 18 Comments » | 
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The easy solution to all of this is just to not buy. Buying is what feeds the monster.
Oh wait, it’s that what’s happening right now?
shadash | March 4th, 2009 at 6:24 amOn the short sales, doesn’t keeping the listing active after an offer is accepted at least let you make the case to the lender during the inevitable waiting period that the offer you have is the best that the bank is going to see? Once a listing goes pending on a short sale before the bank has approved it, I would think the bank would be more suspicious of collusion, especially if it is a fresh listing.
There are probably not that many buyers in this market that are willing to put up with short sales in the first place, and those that do probably understand that there is a possibility that they will get out bid after the seller accepts their offer. And as a buyer, once the seller accepts my offer pending the lender’s approval, is their really that much difference between marking it pending and requesting back up offers and putting in the comments section “Offer Accepted Pending Lender Approval of Short Sale” as required under current SANDICOR rules?
Kingside | March 4th, 2009 at 6:47 amGet this… a friend is trying to buy a short sale, and the bank has already pre-approved it. Then it turns out the seller/owner has a nearly $100K side deal to sell the high-end appliances and furnishings like built-in TV and some furniture! (nothing is listed as excluded in the sales agreement).
My friend went in w/o an agent and hired a lawyer instead who quickly pointed out that this is fraud. I’m shocked that the selling agent, who set up the deal, doesn’t understand that it’s simply ripping the bank off.
Aztec | March 4th, 2009 at 8:04 amThanks Jim. Hopefully the Realtor repeater blogs will pick this up and give it wide exposure.
Rob Dawg | March 4th, 2009 at 8:28 amKingside,
Thanks for bringing up that specific thought.
I have two short-sale listings currently, and this is what I did. I let them stay active for two weeks, in order to show the lender that we gave it good exposure, and then marked ‘em pending.
One has one offer in, the other has three. I told all buyers where they are at, and treated them with respect, hoping they’d hang around long enough to get an answer.
I think buyers will wait around if they feel like they’re being treated fairly.
The difference in your scenario is that when an active listing is marked as having an accepted offer, those remarks are in the confidential section.
The general public doesn’t see them, leading to two problems:
1. Frustration on their part when they find out they can’t buy the house today, someone else is already in line and you’ll have to wait and see if they bail.
2. If the first buyer does bail, the temptation of the listing agent to call back the leads that came in over the last few months, rather than putting it back on the open market.
It’s a fine line, but if the first buyer bails and you don’t have a signed back-up offer, the property deserves to go back on the open market.
Remember the lady busting my chops a couple of weeks ago? She was wondering how come I put an REO listing back on the market when she had been one of the original eight offerees. I did both – I put it back on the open market AND called the other offerees, and three of them got back in the game. If you were the seller, wouldn’t you want that? I think so. But how many listing agents of short sales are going that route? Virtually none – once they get a bank approval they are going to see if the original buyer wants it, but if not they’ll be very tempted to call back their own leads only. Leaving the listing as active keeps the leads flowing in to the listing agents.
There is a company called short sale pros that is going around soliciting realtors offering SS support. But once you get into their pitch, you realize that the service is more than just support. They want to tie up the property with their buyer, and then push the short sale through to their benefit, then sell it to your retail buyer and they keep the difference.
Jim the Realtor | March 4th, 2009 at 8:42 amJim,
This is a good example of what is wrong with our country.
We don’t need a reboot. America 2.0. We need a complete makeover.
Very few of our institutions are working the way they should. Our leadership in every sector has just one thing on their minds-how can I make as much money as possible and screw everything and everyone else.
Sounds like a latin american style country to me. Third world? You bet.
In those countries, corruption reigns supreme. The good guys are outnumbered by the crooks, pimps and hustlers.
On this foundation we are somehow going to get ourselves out of this monumental fix? Using the same crooks who got us into this mess? Ain’t gonna happen!
America-Ponzi scheme R us.
Consultant | March 4th, 2009 at 8:51 amMore on Kingside’s point about active listings being marked ‘offer accepted subject to lender approval’.
There are 14,993 active listings today, and 1,902 of them, or 13%, are marked as having an accepted offer subject to lender approval.
There are also 6,051 pendings – if the short sales with accepted offers were in the pending bin, it would look like this:
Today’s MLS: 14,993/6,051 = 2.48
Reality: 13,091/7,953 = 1.65
The general public isn’t examining the market as closely as we are here, and the realtor community is barely aware of it, let alone publicizing it – they’re too busy supporting government intervention.
If both buyers and sellers saw that the market was this healthy (1.65 A/P ratio is healthy) they’d hopefully know that if a property wasn’t selling, it’s because there’s a big problem with the price.
The market is full of qualified buyers able to obtain realitively cheap money and buy houses from 20% to 50% off peak pricing. While many call them knife-catchers, they are forging ahead anyway. If the realtor community provided more support in terms of descibing the actual conditions, instead of the typical garbage from NAR on down, the market would be better served.
The worst of it for buyers is that some of the best-looking deals are the short sales that deserve to be in the pending bin. If all that was in the active file were the over-priced turkeys, it would put more pressure on sellers to get realistic, because it would be more obvious that they are crazy.
Jim the Realtor | March 4th, 2009 at 8:53 amContact the CEO or president but you’ll have to be be unrelenting. It’s working on an REO assigned to me; even though the former owners have moved out, they are still fighting. I received a call from the president’s office of Countrywide, telling me to expect that it’ll take a while for their fraud case to work its way through federal court (They are accusing C-wide of fraud, even though they have already vacated?).
Sometimes the legal department works better. I was getting the run-around at TD Ameritrade until I contacted them.. action was very swift. When you contact legal, don’t ‘complain’.. lay out your case and what your evidence is as well as what you see the legal issues as. Keep is short and to the point.
ucodegen | March 4th, 2009 at 8:59 amGood point ucodegen!
Jim the Realtor | March 4th, 2009 at 9:01 amI know this couple who are getting married soon and wanted to go the short sale route – they already had a Realtor (sorry Jim), but I told them to not hold their breath. Well, it has been over two mos and the sale has not gone through. I told them to keep looking and keep their options open so they don’t fall in LOVE with the house and end up in a bidding war. Do you think SS, REO activity and sales will slow given the roll out of the new Home Affordable Modification Program Guidelines as of this morning. Even though they increased the qualification terms to $729,750 for 1 unit (and more for multiple units), I’m out of luck because I am not in Imminent Default – looks like I better call Chase to see what they consider Imminent Default.
3clicks from da Beach | March 4th, 2009 at 9:02 amI think REO activity will increase substantially, and short sales will dwindle.
Underwater borrowers are figuring it out that it’s better to work the government-assisted free rent program for a year or two, rather than short sell.
But realtors are big proponents of short sales because it gives agents a chance to earn a paycheck. I’d rather outlaw short sales, and force people to either make their payments as agreed or foreclose. If you short sell, it isn’t going to make that much difference on your credit report than a foreclosure, and if the banks/gov’t are sponsoring your free rent, heck save some money and get back on your feet.
(Am I pushing the morality thing again? Maybe, but that’s the way it looks from here)
Jim the Realtor | March 4th, 2009 at 9:08 am“I either want less corruption, or more chance to participate in it.” – Asleigh Brilliant
greenlander | March 4th, 2009 at 10:02 amJim,
Great topic and blogs. Thanks for all your informative blogs about real estate. I visit your site frequently and this topic touch based with me since I’m on the market in Corona area for almost a year now. I think that there’s a lots of that going on because my wife and I had put in at least 8 solid offers. All our offers were either at list price or 20-50K on top of the list price. Yet everytime we would be outbidded by 5-10k. We kept thinking there must be some inside that we just don’t know about. We also came across some agent who would not return calls to my agent, or the listing would be for 1 day, and we went to the home and there’s no key in the keysafe. Next thing, you know the status change to pending sale. Luckily for us, the market continues to decline, otherwise we would have really been knife-catchers.
I hate to think that there’s so many negativity in real estate market at a time when we are having an economy crisis. Wonder why these agents are risking their real estate license to pull these kinds of stunts. Maybe the law should change, to be more harsh aside from losing a realtor license and maybe some jail time.
Anyhow, its a good feeling to know that there are realtors, like yourself, to keep them in check somewhat. So “great job” for doing that.
Sean | March 4th, 2009 at 12:51 pm“Jim, I know you are too ethical for this but I can imagine a desperate realitter™ posting the worst possible pics and a real low ball BPO and making a killing with a silent third party”
The banks get multiple BPOs on a property as a check and balance on valuation. And those on contracted out to various mills, so the chance to snag a particular bpo on a particular property is remote. Now a listing BPO can be lowballed but the banks are going to look at the BPOs they got and the listing agents BPO and wonder the huge difference. I don’t see this as a huge problem.
® | March 4th, 2009 at 2:06 pmWhy don’t the lenders have an auction site where they are mandated to hold the property open for at least 30 days? After 30 days, the highest and best bidder wins the sale, and the transaction can be streamlined. Since the govt is now involved, the govt should run the site and everything should be fully transparent: previous sales history, loans, and liens against the property. All bids should be qualified (buyers go through a process to become qualified bidders, and their history can be tracked) and listed on the site. Full transparency and efficiency is what is needed here.
If the taxpayers are bailing out the system, there is no room for side bets and underhanded profits. The banks need to sell for the maximum price in order to save the taxpayers some money.
Can anyone explain why this isn’t being done?
CA renter | March 4th, 2009 at 2:53 pmJim,
Another great post!
Yes, this is going on and the banks are getting ripped off because the free market is not happening. I believe this happened on a REO that I was interested in – the listing went pending immediately and “no counter offers would be accepted because the offer was so strong”…..yeah right….
6434 Live Oaks
Carlsbad, CA 92009
MLS#080084024
-Big Fan of JTR
Big Fan of JTR | March 4th, 2009 at 11:30 pmMy brother in law was working w/ a buying agent but
John | March 5th, 2009 at 1:41 pmhappened to wander in to an open house without his agent. The listing agent offered him the house if he would not involve the buying agent. Straight out told him that if his buying agent was involved he wouldn’t get the house no matter what his offer was. Can I report that agent to any authorities?
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