The main point of the article published in Realtor magazine was to spotlight how shady, fraudulent dealings by realtors are bad for the market. Specifically, I’m talking about when listing agents sell a new listing to their own buyer before inputting it onto the MLS.
Realtor fraud is bad for business, yet nobody talks about it. Shady shenanigans are allowed to exist, and in some circles they are encouraged, for one reason – to pad the wallets of agents. When you see some of the finest realtors in town doing it, you know you got a problem:
I usually don’t direct any blog material towards agents – can the regular bubbleinfo audience can be patient while I try to make a difference? Thanks.
A politician who went to prison 20 years ago in one of Arizona’s most notorious public-corruption cases has apparently been practicing real estate in San Diego County for almost 14 years, using his son’s clean record to get a license.
Donald James Kenney, 73, was a real estate broker at Coldwell Banker in Encinitas until last month, after The Watchdog inquired about his past.
The Department of Real Estate began an investigation after The Watchdog inquiry and ordered Kenney on Wednesday to stop practicing real estate. The state concluded that Kenney deceitfully used the identity of his son John Kenney, 44, to obtain a license.
The elder Kenney, who lives in Carlsbad, denies any wrongdoing and denies that he is the lawmaker convicted in Arizona. He declined to meet in person to go over documents gathered by The Watchdog showing he is the former politician.
The elder Kenney and the convicted legislator share the same date of birth and the same three colleges on their résumé. They look the same in photographs. And a letter sent to Kenney as part of his recent effort to restore civil rights lost after his conviction in Arizona was addressed to his Carlsbad home.
Kenney, when he was a legislator, took $55,000 in a gym bag from a Phoenix police operative in a sting operation in 1990 and was sentenced to five years in prison.
Last week we discussed a situation in Chula Vista where two short-sale frauds were potentially undermining the ability of others to sell for top dollar. Shady short-sales erode the faith and trust in the system – which could cause participants to make erroneous valuations, or cause them to sit this one out altogether.
Here are some tips you can use to determine if a sale could has been contrived.
You’ll usually find these when checking comparable sales. Here are the last four sales of the exact same floor plan in the same Rancho Carrillo tract:
$479,000 – April, 2011
$515,000 – May, 2011 $368,000 – December, 2011
$485,000 – January, 2012
The $368,000 is more than $100,000 lower than three sales of the same floor plan that all have similar locations? It sticks out like a sore thumb.
Let’s check the MLS listing history to see if there were any oddities:
1. The listing agent inputted the property onto the MLS on June 27th, priced on the range $499,000-$529,000.
2. Two months go by, and he wakes up on August 26th and ditches the crazy range-pricing idea, and changes the list price to a single number – $404,100. There is no logical or ethical reason to dump 24% on price in one day – you should move gradually until you start getting offers.
3. He takes a few days to secure the right buyer, and then finally marks it ‘contingent’ on 9/12/11.
4. For some unknown reason, on December 1st, he raised the price to $459,000, tacking on 14% on the same day he marked it pending.
5. He reports the closing at $368,000 on the 19th, and noted that he represented buyer and seller.
If you don’t have access to Sandicor, check the listing history at the bottom of Redfin: Link
I haven’t talked to this agent, so I don’t know if there is any rational explanation, but it would have to be a doozy – there are too many red flags, especially the ultra-low price in an otherwise healthy market.
The buyers can usually claim that they have done no wrong, they just told the agent the price that they were willing to pay. The agent can claim that he just did what the buyer requested, and the bank approved it. If the banks don’t crack down on these, agents will keep doing them, because there are no ethics or morals guiding the market – and nobody cares about the banks.
I see 1-3 of these happening every day around NSDCC, and never hear any listing agents objecting.
General red flags that may indicate something is fishy:
1. Weird or unusual price changes, especially after marked contingent or pending.
2. Extra-large gaps between list price and sales price – more than 10%-15%.
3. Listing agent represents both buyer and seller.
4. Days-on-market equals zero or negative number.
5. Property re-lists quickly with same agent at much higher price.
6. New-owner name is corporation or sounds like a flipper.
7. If you are tracking closely, you’ll see the listing agents making changes late at night. Sandicor resets the hotsheet to zero at midnight, so it’s easier to hide the evidence because most agents just work off the hotsheet’s daily changes.
8. The “five-second listing”, where a new listing gets inputted and then immediately goes contingent. Sandicor is complicit, because they don’t stop the days-on-market ticker for contingents, making these listings look like they have been “active” all along.
9. The “impossible-to-show” house, where not only is there no showing instructions, when you call the agent there is no response. How about the recent one on Three Canyons where the LA agent just let his voice mail fill up, so when you call you can’t even leave a message – voice mail is full. I have heard that one several times.
If you have 4-5 of these red flags on one deal, then you know what happened.
“What’s the big deal Jim?”
These lowball short-sales affect other individual sales, and thus, the market at-large.
I have a listing in escrow that was appraised this week, with a sales price of $300,000. There were two larger but identical comps – one sold for $329,000 a few months ago, and a short-sale closed for $270,000 last month. There was another sale at $368,500 in January of the next-bigger model.
We tracked down the buyer of the low-sale, and he says that he intends to put the property back on the market for $340,000 in three more weeks. But the appraiser ignores that evidence, throws out the $329,000 and $368,500 comps, and turns in his report at $270,000.
Because it was a VA appraisal, it goes on the record for six months for all future buyers to use. Now I get to ask the seller’s lender/investor to agree to the $270,000, or find a new, non-VA buyer.
Sent in by an anonymous flipper. Fifteen percent of this year’s NSDCC sales have been round-tripped:
We’ve purchased a couple at trustee sale recently where the “comps” are all short sales and REO’s.
Typically it’s never a problem getting 5 – 10% more than a distressed sale as most good appraisers understand the nature of the discounted distressed pricing.
Recently however we’ve been dinged on three sales because the appraisers didn’t give us consideration for the fact ours is an equity sale vs. the distressed sale comps. Prior to this we hadn’t been knocked down on price as a result of an appraisal for over a year. Either we’re in the midst of an unlucky streak with incompetent appraisers, or maybe there’s a shift taking place in the appraisal community. Too early to tell I suppose.
There was a nicely-upgraded, 3,576sf house in Chula Vista that we got outbid on today. The opening bid was $440,920.
There are only two recent closed “comps” in the whole neighborhood. The first closed for $510,000 on 1/26/12 as a short sale. The group that bought it is a competitor of ours and the listing agent who was also the selling agent in this transaction handles all of their listings. So he listed it low and pocketed the listing by not accepting other offers. He even stated in the confidential remarks “No showings at this time, an all cash offer has been presented to lienholders for consideration.” He double ended the deal and sold it to his buddies.
Three days after they closed escrow on this house for $510,000, they relisted it for $639,000!
They obviously couldn’t have done much in the way of improvements in 3 days, nor would they have needed to as it was the former model home. And I’m sure you can guess who got the new listing. The weird thing is they just withdrew it from the market today. Probably because at 27 days on market it’s getting a little stale so they’ll likely relist in the next couple of days.
The other “comp” is the same exact situation, but different agent. Put it in pending status immediately after inputting the listing so it shows 0 days on market. Don’t think this one’s a flip though….likely an end user. But once again the agent double ended the deal and sold it to someone they obviously know. The sale price on that one was $525,000.
The homes in this neighborhood are worth over $600k (highest sale on street was $1,425,000 in 2005).
The winning bid on this house today was $512,100. The guy who bought it is one of the old timers at the trustee sales…..he’s been doing it a long time. The true market value of this house is likely in the $600k – $625k range. He’ll have no problem finding buyers but will he get his appraisal based on the fraudulent comps? Obviously he doesn’t think it’ll be a problem.
In the meantime, this is just one more additional unknown we have to consider (among the many unknowns) that makes this business more and more of a gamble every day. If this is, in fact, the start of a new trend we’ll have to make the decision going forward whether we hold firm – or fold. If we don’t hold firm and accept distressed sale pricing as market value, then that will drag values down even further. The short sale agents will have to come in lower than our comp to tempt future buyers, and we in turn will be faced with lower distressed sales prices that could affect our appraisals. Could become a vicious never-ending cycle.
We saw earlier in the Realtor Ethics post that the NAR doesn’t like the re-inputting of stale listings to make them appear to be hot new buys.
But because the listing numbers are sequential, and start with the year inputted, realtors want their listings to be sporting a fresh new number, starting with a 12. I would guess that 1/4 to 1/2 of the new 2012 listings are repeats from last year.
At least this one has been aggressively lowering their price:
I recently completed 40 hours of continuing education to renew my broker’s license, and took these notes during the Ethics class on what I see most commonly abused:
Realtor ® Code Standard of Practice 1-3
A licensee is not permitted to knowingly make a false representation as to the value of a seller’s property in an attempt to secure a listing.
Unfortunately, many licensees frequently violate this ethical standard. Agents often face fierce competition to obtain listings. Consequently, many licensees will knowingly represent to a seller that the listing price of their property should be higher than reasonable facts can justify. This practice is often referred to as “buying the listing”.
The seller, not understanding that a willing buyer will have to pay the inflated listing price, is led to believe that the listing agent suggesting the highest price can actually “get me more for my property” than those agents who may have been fair and honest about the price of the property.
The licensee that listed the property at the inflated price knows that the property will not sell at that price. The licensee then will attempt to beat the seller down in price during the term of the listing in order to bring the price more in line with reality – the reality originally presented to the seller by competing listing agents.
This method of buying listings is to be regarded as a serious ethical violation and should not be practiced by any licensee.
Jim the Realtor is legit - I interviewed three brokers; he said list price should be $100,000 higher than the other two brokers; listed it with him and had all cash (no financing) offer in two days, five day contingency period, closing in two weeks - and it closed at his recommended list price. I could not recommend anyone more than I recommend Jim the Realtor.
When we moved to San Diego in 2005 we rented a big house on Mt. Soledad (La Jolla) with 180 degree ocean views for the same payment as a mortgage on a dump in Chula Vista. Clearly something was wrong. Yet, the media was full of the usual happy-talk nonsense, so I was glad to find Jim's blog. I've followed his honest assessments and data since.
We decided to sell and move to AZ at Thanksgiving. Dec. 1st we met with Jim to sell our home. We closed today (29 days later). Jim orchestrated a feeding frenzy -- we had 25 showings in 2-1/2 days, multiple offers, and sold for well over asking price. I'd say he earned his commission! We have owned and sold homes in 5 different States always using experienced, productive, full-time realtors. Jim outshines them all.
You don't decide to sell and close 29 days later over Christmas (with COVID lockdown) without some miracles. Donna was amazing at performing lots of those miracles and ensuring that everything was done right and on time. They are a terrific team with a very responsive and professional network.
Where do we begin..2020 has been a year for everyone. When COVID hit and shut down both my husband and my businesses, we were left with a mortgage and very little income coming in. We were stressed, scared and felt stuck. We made the hard decision to sell our home and move out of state. We contacted the Klinges' and spent a good hour going over what we hoped we could accomplish. Jim and Donna came over with comps in hand and suggestions on improvements to get our house ready for the market. It was overwhelming to think about, but Donna was there and one step ahead in every scenario. Basically we just approved what they suggested and Donna handled literally everything. We placed our house on the market and within the first day we had multiple offers well above asking price! We couldn't believe it. We were overjoyed! Jim countered the offers to weed through them, and everyone came back with way more. It was amazing, and we are ?? sure it was because of the staging and repairs the Klinges suggested we do.
Due to unforeseen dishonesty from the buyers lender, we hit a big hurdle when trying to close. We had already moved out of state and were shocked when three days before closing the lender dropped a bombshell on the buyers and us. However, Jim and Donna handled it like veterans, not afraid to play hard ball and represent their clients. After a few phone calls with us, and several between Donna and the lender, they had a plan B-Z to make sure we were taken care of. In the end we closed with even more money than we ever thought possible and with very little work from us. The Klinges handled this entire "2020" worthy event with the utmost professionalism and did everything in their power to not only make this as smooth as possible for us, but we also walked away with more money from the sale of the house than we ever hoped for. After working with Jim and Donna, you don't ever use anyone else. They are hands down the best team to represent you in any scenario.
Working with Klinge Realty Group was a great experience! They are very responsive, professional and knowledgable about the real estate market! I would definitely recommend Klinge Realty Group.
Jim and Donna Klinge made the sale of our condo extraordinarily easy. They know the market and gave us sound advice backed by details and very considerable experience, reflected both in the initial pricing and subsequent negotiations. They work together as a team and are always available to talk. We had a few challenges with our property and they were able to coordinate the resolution to everything, including items that I would not think would ordinarily be their responsibility to handle. They made the whole process effortless on our part. They are folks with high integrity and we cannot recommend them highly enough.
Review for Member: Donna Klinge
I cannot believe there are no reviews of Donna yet, ugh!! She is the secret sauce of the Jim Klinge/Donna Klinge combo! I will touch on Jim here, but Donna is why I'm so totally loyal to these two (no offense to Jim :)).
I consider myself a rather savvy buyer/seller. I've bought/sold 7 times in about 15 years. On the buy side, Jim is the PERFECT combo of: completely digitally savvy (he will pull data all day long until you feel comfortable with your chosen house, area, school district, anticipated appreciation rate...anything!), he's super well respected and known in the area by other agents, an amazingly cool but strategic negotiator, is totally devoid of desperation for a sale/commission, and more.
Then once you get into contract phase, Donna literally handles every last and final detail in a concierge-like manner -- totally shielding you from the daily back and forth, noodling and annoyances of the buyer's requests. She solves it ALL; it's miraculous what that woman accomplishes over and above what is even expected in a buy/sell transaction.
On the sell side, Jim and Donna do the same, but even moreso. Donna in particular truly takes everything off your plate: she'll manage getting the house painted, the carpets replaced, she'll go on site (as she Jim both did for me when selling our rental properties) to work with the renters and make sure the house is ready to show -- freeing me to have to take time off of work to do so. They work with A+ integrity, too, so you know you are serving all parties fairly and lawfully throughout.
A home purchase/sale is the most considered you'll ever make. HIRE A SAVVY AGENT, not a friend!, and get what you need out of the transaction. Jim and Donna are our agents for life.
Jim and Donna Klinge are by far the most professional, personable and responsive realtors I have ever worked with. They provide VIP concierge level service in every area of the process of selling your home. My home was marketed so successfully that we received an offer the day after our first and only open house. Thanks to Jim's pricing and negotiating, our house is now the highest sold in our community. Jim's vast experience means he has worked with several realtors and knows the market all over north county. Donna is AMAZING in processing everything in the transaction. She scheduled trades people to work on the house in preparation for the sale as well as the repairs needed before closing. She communicated clearly every step of the way about what would be happening. She took the weight off my shoulders for the whole process. I will always use Jim and Donna for my future real estate needs and I whole heartedly recommend them to anyone buying or selling a home.
Jim and the team at Klinge Reality are without a doubt the best in the business! Not only was Jim helpful and extremely knowledgeable, he was patient and determined to help me find my first home. Jim and his team have been in the business for many years, and it shows. Jim is a wealth of knowledge and was my biggest proponent despite the temperature of the competitive market. I ended up getting the perfect property in my dream neighborhood all thanks to Jim. From the day my offer was accepted, Donna was a real lifesaver. She was extremely helpful, responsive, and knowledgeable when it came to every minute detail, and held my hand through the process. As a first time home buyer I had no idea what the process would entail, but Donna curtailed every concern I came across and made the escrow process feel seamless. Jim and Donna provided me the best home buying experience, and I am very grateful for all they did for me. It was truly a pleasure to work with Jim and Donna and I am already looking forward to the next time we work together!
Review for Member: Richard Morgan
Richard is an amazing realtor! He has high integrity and genuinely cares about his clients and their needs. Richard paid close attention to what I was seeking in a home and was very patient in our search to find it. I would highly recommend Richard and will use him for future transactions. Truly a different kind of realtor experience!
Could not be happier with my experience with Jim and his team. He helped me sell a very unique and challenging property. Throughout the entire process he was always available, honest, transparent, trustworthy, and always put my interests as a seller first. A (rare) true professional! During close of escrow Jim went above and beyond to complete the deal. It would not have been possible without his experience, fantastic team, and pure dedication. Highly recommended!
Thanks Jim and Donna Klinge!