The C.A.R. published more information on pocket listings, summarized here:
http://www.mercurynews.com/saratoga/ci_23531360/realtors-share-info-off-mls-listings
The real problem isn’t getting addressed.
The “pocket” realtors usually don’t tell the sellers they are going to pocket the listing – and if the sellers aren’t paying attention, they will never know.
Seller will see the sign pop up in the front yard, and think that their agent is doing the job. Even if sellers verify that their home is listed in the MLS, they don’t know exactly what goes on behind the scenes unless they are really paying attention:
- The listing agent can input the listing, but then shut down the showings. Once they get an offer or two, some will start telling other agents that it’s too late, even though they haven’t accepted anything.
- Listing agents can also throw away offers. I submitted a cash offer that was $40,000 over the list price on an REO listing on the first day it hit the MLS. The listing agent said that the bank wasn’t taking any more offers, which I told him was hard to believe. Sure enough, 30 days later it closed for full price, and he represented the buyer too.
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Brokers and managers promote in-house sales, and some pay bonuses too. They have weekly office meetings where they discuss new listings to see if they can match sellers with buyers prior to MLS input.
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You would think that the primary motivation is for the listing agent to represent the buyer too and get both commissions. But you’ll see several of these completed where the buyer is represented by a different agent. Either the listing agent is going to extreme measures to hide the facts, or it was a pre-arranged deal.
Some of these sales close for what appears to be top dollar, but you will never know for sure unless the property is exposed to the open market.
There is no enforcement of any laws, rules, or ethics – realtors are expected to treat their own clients honestly. But you’d be surprised at how many of the highly successful and well-known realtors participate – and the president of the association of realtors confirmed it on our talk show.
It is old-school to look the other way, and by now it is deeply embedded throughout the industry as new agents see the old veterans rip off their own clients regularly in order to score a bigger payday.
I guess you have to put a little blame on the seller for not seeing what is going on.
Its like the wild west in real estate it seems.
Most don’t sell enough to be sophisticated about the scams being perpetrated, and trust their gut that the agent is honest. They just want a big check!
We need to self-police, or someone will do it for us someday.
I totally agree. The last thing you want is congress to pass some law “cleaning up the industry”, creating a body to regulate, and adding 10% cost overhead to all transactions.
I’m surprised this isn’t illegal under some form of contract law – it’s obviously fraud.
Jim,
This looks like a pocket listing to me. There is no reason for this property to be listed where it is at this time
http://www.redfin.com/CA/San-Diego/14756-Via-Mantova-92127/home/6542455
Isn’t their some oath that realors take like Doctors?
Our Code of Ethics defines our responsibilities:
http://www.realtor.org/mempolweb.nsf/pages/code
But it’s not like we sit around chanting these under the moonlight. I doubt any realtor has read the whole set.
We are required to take an ethics class every four years, so that is supposed to cover it.
Peter,
Thanks for the example – and probably the best way to disguise the fraud. The previous realtor inputted the listing last year, and instead of marking it as a closed escrow, he just let the listing expire so it doesn’t look like he was involved in selling it for $740,000.
Two weeks later it listed for $300,000 higher by a different agent.
Amazing! So what can be done here?
It seems to me like these guys are a little late to the party. You never know though all it takes is one sucker
I am a part timer in Orange County and the constant slime and unprofessionalism I run into all the time is why I could never see doing real estate full time. I have learned to “swim with the sharks” and close enough deal to keep myself plenty busy.
I feel the only solution is to create an offer submission system to make offers open and transparent. Fannie is on to the slime and now offers must be submitted to a central transparent system. http://www.homepath.com/realestate.html
CAR or NAR needs to step up and do something like this. It will go a long way to clean up the slime. Of course the very “professionals” that could do this will probably fight it.