The previous video acknowledged a good realtor doing it the right way, but unfortunately there are still plenty of bad apples – and they are allowed to run loose. What could happen?
The Attorney General could get involved, and convict some of the offenders of defrauding the banks. If we had just a couple of perp walks, it would go a long way to solving the problem, because realtors don’t even realize that it’s wrong when they see so many others doing the same thing.
Or banks could pull the plug on short sales, but they would have to believe that foreclosing was the preferred option. Foreclosures sell for what the open market will bear, whether at a trustee sale or REO listing. Short sales rarely do, because there are so many conflicting forces at work – sellers enjoying the free rent, and agents drooling at the thought of hoarding commissions.
In a rising market, banks would be better off foreclosing and holding properties for months or years, rather than having guys like this rob them today:
Is there any documented method for reporting these things? Is there ever an official response when they do?
The association of realtors has no active enforcement of the rules. But if an agent complains and wants to collect all the evidence and then come into an ethics committee and prosecute the offender, then, if convicted, the offender’s hand will be slapped, and a strongly-worded letter put in their file. And allowed to continue to conduct business without penalty.
If you want to go after a license, then complain to the CA Department of Real Estate and in 12-18 months they will get around to reading your complaint.
Let’s do the math on 12 short sales where you deliberately kept the listings off the MLS until you found your own buyer.
The banks are paying 6% on short sales.
Average price $400,000 x 12 x 6% = $288,000.
Not bad for a month’s pay, and only risking a hand slap, or a bank turning down your deal because of the low price you are trying to sneak by them.
He won’t have any trouble finding his own buyers within a week to pay below-market pricing in this environment. There were 34 who jumped on the last one, but thankfully Sammy was on the up-and-up and handled it right.
All the evidence is right on the MLS too. There wouldn’t be any problem proving the fraud and deceit – it’s right out in the open.
It wasn’t clear in the video but “sold before processing” are the only remarks on listings like these, and usually no photos either.
It is realtor code for “hardy-har-har, I found my own buyer before I inputted this listing onto the MLS”.
Sellers are getting sick of it too btw
Real estate has always had a crooked fringe element.
jim,
Do you have a site that you could recommend that details how to properly handle a short sale? Are there any real guidelines? I think there is a lot a confusion as to how short sales are actually processed.
It seems that legit realtors will enter the listing into the mls when there is an intent to sell, regardless if the bank has given the ok or not. what you are basically saying is a lot of realtors find a person who wants to short sell then tries to find a buyer themselves before entering mls.Is their excuse that they are waiting on the bank to give the ok to the short sale before entering into mls?
It looks like your light on your dash indicates you have low air in one of your tires.
Is their excuse that they are waiting on the bank to give the ok to the short sale before entering into mls?
No – the banks want the listing agent to upload an accepted offer to begin the short-sale process. How the winning offer is selected is left up to the seller and listing agent.
Our local board of realtors gathered a volunteer committee of agents to author these “suggestions” on how to handle short sales:
http://www.nsdcar.com/announcements/shortsale_listing_agent_best_practices2.pdf
The buyer-agent version:
http://www.nsdcar.com/announcements/shortsale_buyers_agent_best_practices.pdf
Everyone in the business tip-toes around the fraud issues because they enjoy the benefits too much. This type of fraud is done by some of the best-known agents in the county, and as long as nothing is done to stop it, other agents figure it must be OK if the top realtors are doing it.
Couldn’t happen without “friendly” (corrupt) appraisals which have always been a staple of the industry, as have pocket listings, exclusives, title company / mortgage broker kick downs, etc.
Thx a million jim, awesome information.
This appears to be really taking a listing without exposing the property to the open market. the people who own the paper on these mortgages really lose out if the property is not exposed to the open market.The banks are often just a servicer aren’t they? Don’t these banks have a fiduciary obligation to the owner of the mortgage to get the most they can from the sale of the property?
If I was a beneficiary under a deed of trust and my trustee dropped the ball on me I would be p@ssed.
I guess some of these mortgages are owned by fannie and freddie. Are they the ones who are often abused the most? Seems like if a private entity owned the paper they would be on the ball to see that they are getting market prices for their properties.
Isn’t it shady business practices in a regular sale to not expose a property to the largest possible audience?
It seems like the people who own the paper on these homes are dropping the ball a little too.
I guarantee you if I owned the paper in one of these deals I would no what market value was. If the servicer had a shady realtor try and skim money off the sale I would be seeking legal advice.
It doesn’t matter who the bank or servicer is, because the deceit happens before they get involved.
It is hard for civilians to believe, but the banks and servicers still let the seller select the listing agent, and let them decide who the buyer will be.
Appraisals are done to ensure that the value is within an acceptable range, but the appraiser has to go through the listing agent for access – you can bet that there is plenty of nudge,nudge, wink,wink involved.
If there’s one thing we know for certain things will change. They always do.
Ignoring the argument that these types of deals are fraudulent, if market participants are finding their own buyers by the dozen off-MLS, that’s a trend worth paying attention to. What it says to me is that the MLS is dying. I’m not convinced that’s such a bad thing considering that we have multiple alternative platforms that are more efficient already in place.
thx jim, Getting a clearer picture of what is going on. You give people an inch of trust and they take you a mile it seems.
I think it happens alot. At least it seems like that to us buyers. You got the “listing rejects” that linger on and on, and on the MLS, or the backdoor deals made by some listing agents who already have buyer of their own ready to go when any decent home at a reasonable price comes onto the market.