Eric at the North County Times was asking last week about the direction of pricing. I was the last to be interviewed that day, and it sounded like all the other realtors thought we’d see a slightly upward trend from now on.
He was taken aback when I disagreed, and went with the slightly downward trend. Why? Rampant realtor fraud and deceit will undermine any momentum.
Not saying anything is wrong here, I’m open to a logical explanation of how this video ended, after six sales from $950,000 to $1,200,000 between June and January – can you think of one?
Being someone who thinks prices are still out of whack like to look at it in reverse:
$775k is a real appropriate value for that house $200/sf or so considering the Black Mtn MR fees.
Its the other 6 homes where the government fraud of artificially low rates, etc have fraudently propped those prices up to re-bubble values.
However, reality is that collusion is obvious for the bank to let that one go below $900k.
I love your integrity, JtR! It’s probably just me but I was concerned for your safety when you said you were going up to that home and investigate. I breathed a sigh of relief that they didn’t answer the door!
And was that buzzing I heard from those electrical lines at the end of the video? You had me cracking up with your rendition of Kumbayah…
Way to call ’em out on this flimflam.
I’m not normally put off by powerlines, but the thought of spending 1M+ to live next to them? Not just part of these lines were in view, it was the whole hulking structure and it seemed in the backyard.
I don’t know…one day, that middle palm tree will grow so tall, that it will cover the entire power tower. Then RE prices will shoot up over there.
You should alarm the neighbors and the tax authorities. Because of this, at the very least, you’ll have this house paying substantially less property tax ($400 – $500 per month less) than all the other houses that sold recently… or probably that sold “ever” since it looks kind of new.
Here is a wild idea. The buyer knows somebody at the original loan bank, The buyer give the bank $400,000 cashier check. So the house will be recorded at a lower sales price to save $4,000 a year in property taxes. Its still fraud. I was one of the people in the 90’s involved in trying to widen the boardwalk, I had the list of all the property oceanfront owners. I notice at least 5 names of people who were taking the $7,000 home expemption who did not live in the ocenafront house. Fraud on both against the county.
Was it a short-sale to the original owner (or spouse, or???)?
BTW, lots of people don’t answer the door if they’re not expecting anyone (including us). 🙂
Yep. There must have been a $400K cash payment made under the table somewhere. There’s absolutely no way that house was sold at such a ridiculously low price especially at that prime location. The shadow payment would ensure the house was sold at fair(?) market value, but would be taxed at a much lower rate.
Do municipalities have software in their tax systems that can sniff out these discrepancies?
If the sellers has the equity, there could have been an under-the-table payment, but not if their loans exceeded the purchase price. The lender and title insurer would have wanted it to be part of the escrow.
Yes, they could have paid down the loan prior to closing.
But why would you willingly spend $400,000 and NOT put the home on the open market to see if you could minimize the impact?
The only possibility is that the sellers had bad credit, so they sold to their parents, who as part of the process to help out their kids also brought in enough cash to pay it down. The new loan amount is $400,000, a much more manageable payment than on the previous $1.15, and dropped their tax bill by $5,000 per year.
Or they did a short sale.
“Why? Rampant realtor fraud and deceit will undermine any momentum.”
JTR, I agree 100% and it is happening in my area as well. When a short sale closes that far below the comps and more particularly the asking prices the market goes into a stalemate and nobody wins except the buyer and agent that scammed the bank and the taxpayer. I think it is healthy for prices to be dropping but I think it would be better if they would be dropping more gradually with a heavier volume of sales so we can clear out some of the weak hands. These stalemates are just going to prolong the agony and yes I think fraud is the culprit here.
Nothing is fair today. Take 1819 PORTOFINO in 92054. The sign goes up and it takes a week before it enters the MLS. Guess what happens the very next day? PENDING.
Anneliese Graf held out on all of us agents to probably self sell this house. I wonder if the seller signed the clause to keep it out of the MLS?
Here is one–A small house in Escondido lists for $153,700 the agent informs me they have several offers, we want it-so we decide to go $175K out of the shoot (CASH, 15 day escrow) We get a call back a week later that they have accepted another offer–no counter for highest and best. Well, it ends up closing for $158K–it is now active again at $259K (fixed-up). http://www.sdlookup.com/MLS-100005801-840_Erica_St_Escondido_CA_92027
Hmmm… To me it sounds like foreclosures solve the problem. And what an elegant solution. There’s no haggling, taxpayers don’t lose $$$, and fraud like what was described is eliminated.
Only problem, banks lose $$$ and government won’t let a campaign contributors go down without a fight.
Up here in LA, there are rumors of under the table cash shenanigans to fraudulently lower the taxed value on higher end homes. As a potential buyer on the sidelines, this can only help me by lowering comps, but as an American and native Californian I don’t like the fact that it means we are quickly become like Mexico or Greece as a society, or that state licensed “professionals” are aiding and abetting tax fraud.
Shadash, the banks already got paid in advance for those losses. It was called TARP. So now we should make them take the losses. Foreclosure is the solution, not the problem.
JTR
Which vid cam do you use to record your vids?
Thank you! John.
I know how they got it done… Jedi Mind Trick
Real estate is the wild west.
I have only 2 words for what buyers are thinking:
COGNITIVE DISSONANCE
Or perhaps… just perhaps.. the idiotic lender, Wells Fargo, agreed to the 770K short sale. Perhaps somebody did one heck of a job negotiating?
After all… it WAS Wells Fargo that put the idiotic 1.15 million loan on the property in the first place!
So.. how is it fraud if the lender agrees? If there was money under the table, that is fraud. But it is all speculation.
Sure sure… it totally screws up the marketplace comps. Sorry, I have no sympathy for the banks.
Localboy, I have seen small discounts in market price, like your example, because the buyer didn’t have an agent. The seller’s agent gets to keep 6% of $158k, which is larger than 3% of $175k. Moral: If you are a buyer and need an agent, pay your agent a flat, pre-agreed upon price for doing legwork. You will get stepped on otherwise.
Fraud and conspiracy to commit fraud.
And where is law enforcement?
DonnieB,
I don’t think that’s very likely. Banks are disorganized, fraught with stupidity, and bizarre ritualistic forms and other cargo-cult like amorphisms.
However, I have never seen a short sale go through at a below market price that did not have some very funny business.
Most short sales require that the agent show proof that the property has been on the open market and that competitive bids have been submitted. The asset manager reviews all of the information, an outside BPO at least as well, and several other pieces of information. This is why SS listings can be so difficult.
No, this was clearly either fraud or something very much like fraud.
Chuck
I hate to say it…but I feel better knowing that its not just me! I’ve been looking to buy for a long time now and have lost in several shady situations.
Real estate is amateur hour right now. Banks are overwhelmed and will get outgunned by sharky dishonest agents. Honest to god get the FBI to start prosecuting some of these cases if you actually want something to change. Otherwise it is just talk
Can anybody tell how the banks distribute REO listing to agents? Isn’t it just another backscratch buddy system?
Anonymous,
The stuff happening in the Atlanta area is crazy criminal. The meltdown (which continues) wiped out a slew of so called realtors and mortgage companies in the metro area. That was a good thing. But many of the ones left are doing the same kind of hustle they did before the crash.
Let’s face it, at least here in metro Atlanta, the gangster banks are in cahoots with the gangster realtors. The whole thing is a coordinated scam.
There are honest, professional realtors in Atlanta, but they’re getting squeezed out.
Again, where’s law enforcement?
Meanwhile our Governor, who has said or done NOTHING about this real estate fiasco, now wants to sue the Federal govt. to stop health care reform. He says it’s unconstitutional.
Am I in a bad dream? If so, somebody wake me up. Please.
Chris G–In this case I was I was writing my own offer as a broker/buyer. However, in the past(unsuccessfully) I have offered to: 1) let the listing agent represent me as a buyer, 2)represent myself and let the listing agent keep the entire commission (both sides)neither worked.
here is one house that could explain it:
http://www.sdlookup.com/MLS-100009997-11475_Willapa_Cove_San_Diego_CA_92131
It is a short sale, but the buyer must agree to pay $20K for the 2nd lien (same service bank. loan was packaged and sold to investors) to close.
I am not sure if that $20K will show up in tax record, but from the offer document I got, I think it will not show up.
And, no, I didn’t win the bidding war.
They bid it up over $850K, adding $20K, it is at least $870K.
I thought it was common knowledge that controlling a short listing was the new lottery, with many different ways to cash in – some legal, some not, but none ethical.
With this particular property, don’t be surprised if the next chapter is a conventional active listing at market price.
Local Boy, I saw some of the same last year when I was looking. Right when it listed I made an offer of $280K for this one (10K over list) with great credit and financing. No response at all. A couple of months later, after I’ve moved on, it goes for $230K.
http://www.redfin.com/CA/Oceanside/2711-Mesa-Dr-92054/home/3198580
I can’t get over the fact that people are willing to spend over $1M and be 15 feet away from the neighbor… If those lots are 1/2 acre – they must be all backyard… there’s not a lot of side and front yard space.
If I was in the $1.2M price range – I’d be looking to do what Jeeman did – get a nice, solid house in a great school area with more land and fewer neighbors. (And HOA/MR’s within reason.)
I’m sure there’s fraud out there (#22, your statement “Real estate is amateur hour right now” has a superfluous “right now” – real estate is nearing 60 years of amateurishness), but I don’t see it here. The house is ugly and small compared to neighbors. No one is going to pay over a million for it. The owner wants out. The bank knows the 1.15 mortgage is no good. Someone who can pay the bills comes in a little bit cheap. Maybe if there weren’t idiots in this transaction and all the million+ valuations weren’t done by idiots this place would go for 800-900k – but to quote Larry Summers: “LOOK AROUND. THERE ARE IDIOTS”.