Hat tip to M.E. for sending this along:
Reno attorney and real estate investor William Thornton has filed a complaint with the Nevada Real Estate Division against local real estate figures Karen Greathouse and Nancy Fennell of Dickson Realty.
Thornton accused Greathouse of conducting a “pocket listing,” which he wrote means that “the agent fails to advertise the property in order to avoid sharing the commission with another agent (by representing both the buyer and seller) or only to share the commission with agents with whom they have a special relationship.” At issue is the sale in August of a home at 2550 Lakeridge Shores East in Reno, a lakefront property that had been foreclosed, acquired by Bank of America, and sold for less than the $807,500 BOA paid for it. It was assessed at $753,515.
The $371,000 listing on the house appeared just before the close of business on Aug. 16. Reno resident George Ritter offered that amount on Aug. 17, later increased to $455,000 before the house was sold. Thornton offered $400,000 on Aug. 18 and $500,000 on Aug. 20. In a sale that took many weeks to close, the property was sold for a reported $371,250 to a firm called 7 Figures LLC and was later put back on the market at $699,000 with Greathouse as agent.
In October, Greathouse responded to Thornton’s charges by saying that her selling to him “would have been bank fraud, as well, because … Mr. Thornton’s wife is a blood relative of John Cavanaugh.” In his complaint, Thornton argues that limitation applies only to short sales, which the Lakeridge home was not.
For the full details of the story, click here: http://www.newsreview.com/reno/content?oid=1305381
Jim, is there anything in your opinion buyers can do about this type of thing?
Essentially buyers are being cheated by insiders.
It is suspicious that the only people who made another offer were blood relatives of the the man who lost the house. If the price was really that low, at least in San Diego, there would have been multiple offers a day or two after hitting the market.
The best thing someone could do is an ocrenter-type blog that was totally anonymous, and call out these realtors.
It would be prudent for the board of realtors and Sandicor to lay down the law, and insist that all listings remain active for 2-4 days before being marked pending, instead of 2-4 minutes.
JordanT – that’s what happened in this story, the agent inputted the listing at close of business, trying to hide it. In San Diego the hotsheet re-freshes at midnight – you should see the activity in the 11-midnight period.
I agree there’s certainly fraud on the selling agent’s part but I also find it suspicious that the person bringing suit happens to be a blood-relative of the person who was foreclosed on.
It’s like a loan mod the hard way. Stop paying your mortgage and transfer those payments to a third party person, the relatives in this case. Wait for foreclosure and when the house hits the open market have that third party person buy it off the MLS. Since you’re saving so much anyways off the original loan amount, you wouldn’t mind paying 10% above market especially when combined with today’s interest rates.
What a shame. That isn’t helping the real estate profession.
As it stands, the system is broken because agents are incentivized incorrectly. A bid from a buyer without an agent will take precedent every time over a bid from a buyer with an agent. Then agents flat out lie to buyers and tell them “it won’t cost you anything to use a buyer’s agent.” No, it likely cost you the deal in a competitive situation.
This is absolutley disgusting and what a disgace to the profession and the NAR.
I’m sure the relatives are the only ones making offers because they’re the only ones that knew the house was even for sale.
I’d say “Realtor Ethics” is an oxymoron, and Jim’s one of the exceptions that proves the rule. Yeah… exceptional certainly describes him!
Thanks tj.
The reason I think we should be talking about unethics is to inform buyers, and have them navigate some very troubling waters with their eyes wide open – and/or get help!
This is the “why are the banks loaning to deadbeats?” question of four-five years ago revisited. Why are the banks acting stupid, AGAIN?? That’s the real question here. The fraudulent agents and the brother in law of the former owner are small potatoes. Bank of America is serious business. You want to fix these huge problems, work at the choke point for the transactions. Audit the crap out of wamu and boa and throw some asses in jail.
Too bad the feds who oversee these guys are understaffed with yahoos (intentionally, certainly don’t want them troublesomely regulating anything). Nothing is going to happen about this.
Why wouldn’t the Seller, in this case, BofA, want to take the realtor to task? Shouldn’t THEY bring up the issue of fraud to the authorities? Isn’t it in their best interest to get top doillar for their REO?
In theory, the “buyer’s agent” is actually an agent of the seller (or the seller’s agent) anyway since that’s the route the money takes.
“As it stands, the system is broken because agents are incentivized incorrectly. A bid from a buyer without an agent will take precedent every time over a bid from a buyer with an agent.”
Let’s face it, even more fundamentally, in the short term RE agents have every incentive to try to cause deals to happen, even if the deals aren’t good ones for their clients.
As long as people are hell-bent on buying and are content to enter into bidding wars, this will never end. Buyers are looking at the peak market (2007) values as a benchmark and think today’s prices are bargains. Wanna fix the market? Stop bidding the prices up. In fact, if buyers started bidding the prices lower, it might correct a slew of RE issues. Alas, obsession knows no such boundaries.
Kudos to Jim for taking an honorable position.