Glenn Kelman of Redfin has been deceiving the public since the day they started the company, and he gets away with it because we don’t have a watchdog department or any enforcement of truth-in-advertising. We live in a society where anybody can say anything and never be accountable to the truth.
I’ve had enough, and I’m not going to take it any more.
Here are examples:
He says Redfin agents sell houses for $3,000 more than traditional agents. But you can only measure that if we sold the same house on the same day! He is using averages of different sets of homes, which is apples and oranges – yet it was one of their featured statements on their website for a long time.
He says that his sellers save $9,000 over traditional agents. You can say you charge a lower rate, but you can’t calculate the actual savings until you have the sales price. Agents don’t sell houses for the same price – houses sell for different prices depending on the agent’s method and expertise. If I sell the house for $10,000 more than you, then the sellers would MAKE an extra $1,000. It is deceitful for him to make such claims.
He says you will ‘close without a hitch’. A Redfin agent told me yesterday that 100% of his deals have a hitch.
He says they are full service. But then you send out the $50 girl with the least experience of anyone on your team to show buyers around? If you are ‘full service’, then you should have your BEST agents showing homes.
His home-flipping device, Redfin Now, is the biggest conflict-of-interest in the history of real estate. With Zillow’s Instant Offers, at least they send their staff people to give you a quote to purchase your home, and then direct an independent agent to give you a second quote. But Redfin offers the whole package together. But you can’t have it both ways – either you advertise that you are a full service realtor, and thus have a fiduciary duty to get the best deal possible for the seller, OR you are a cash buyer. But they run their flipping platform off their same website.
They know it’s a conflict too, and have a disclaimer at the bottom of the page:
Can you read print that small? Me neither, so I got out my magnifying glass.
This is what it says:
Redfin Now is a separate company owned by Redfin. Agents representing Redfin Now represent Redfin Now only and do not represent sellers in the sale of your home. If you decide to sell to Redfin Now, neither Redfin nor Redfin Now will represent your interests regarding the sale of your home. For this reason, it is recommended that you seek independent representation in the sale of your home. You may be able to sell your home on the open market for more money than Redfin Now’s offer price.
People who are drawn to a ‘full-service realtor’ website should get a fiduciary consultation only – that is what’s in their best interest. If you are running a separate company that buys homes, then it should be on a separate website.
The latest is Glenn saying that portals should include links that direct the consumer back to the listing agent. He says that it will encourage listing agents to stop ‘pocketing’ their listings, and sell them on the open market instead. But Redfin does the ‘Sold Before Processing’ to their sellers too, so you can’t help but think Glenn has an ulterior motive.
Here’s a good example of how sketchy the discounters are being with their advertising. It’s bad enough when they claim that they provide the same service as traditional agents, without providing any proof.
But this video – produced by Purplebricks themselves – gives you a great snapshot of their real integrity. When asked, “Don’t I have to pay with the possibility of my property not selling”, the expert says, “No…..not really.”
But the answer is yes – you have to pay $3,699 whether the home sells or not. It takes more prodding by the questioner to get her to deliver the right answer, but it’s still vague and evasive:
The local Purplebricks agent told us that the reason he went there was because he couldn’t hack it anymore as a regular realtor – he needed the salary to live.
If what you got for the money was transparent, the consumer would be better served. But instead, we get peppered with even more lies and deceit paid for by VC money in an attempt to win over the consumer before they figure it out.
The diverting of money being wired into escrow accounts to close real estate transactions is a real problem, but the authorities are on it – they have recovered $350 million! Unfortunately, they also mention here that $3.7 billion in losses have been reported:
Federal authorities announced today a significant coordinated effort to disrupt Business Email Compromise (BEC) schemes that are designed to intercept and hijack wire transfers from businesses and individuals, including many senior citizens. Operation Wire Wire, a coordinated law enforcement effort by the U.S. Department of Justice, U.S. Department of Homeland Security, U.S. Department of the Treasury and the U.S. Postal Inspection Service, was conducted over a six month period, culminating in over two weeks of intensified law enforcement activity resulting in 74 arrests in the United States and overseas, including 29 in Nigeria, and three in Canada, Mauritius and Poland. The operation also resulted in the seizure of nearly $2.4 million, and the disruption and recovery of approximately $14 million in fraudulent wire transfers.
BEC, also known as “cyber-enabled financial fraud,” is a sophisticated scam often targeting employees with access to company finances and businesses working with foreign suppliers and/or businesses that regularly perform wire transfer payments.
The same criminal organizations that perpetrate BEC also exploit individual victims, often real estate purchasers, the elderly, and others, by convincing them to make wire transfers to bank accounts controlled by the criminals.
A homeowner told police his house was tented for termites, and part of the tenting process included placing cameras inside the house to detect an intruder.
The camera system later alerted the homeowner to the intruder’s presence, and within minutes the Carlsbad P.D. had this house surrounded, but apparently the culprit escaped – though he was caught a few hours later:
It happened to us – hackers got into somebody’s account.
They posed as the escrow officer and tried to divert my buyers’ down payment to the wrong bank account. Their timing was impeccable too.
Six days before closing, an email was sent to the buyers that looked like a normal email from the escrow officer:
Good morning (buyers’ names),
We are getting close to closing. It is important that we get the Cash to Close to avoid delays in closing.
Please tell me when you would wire the Cash to Close.
Regards, (escrow officer’s name)
The buyer asked for the amount and for wire instructions by email – and the hacker responded three times by email and even sounded like the escrow officer. This was the tip-off though:
Please find attached the wiring instructions. It is an account of one of our subsidiary company as our main account is currently undergoing compliance audit. As such, any funds entering the account would be held for review which would grossly affect the scheduled closing date. The total closing cost is X.
The hacker asked for an amount that was within $2,000 of being accurate, and if the buyers had been in a big hurry, they might have just sent it.
Thankfully, Mr. Buyer called the escrow officer direct to verify. The escrow officer was stunned – she hadn’t sent any emails to the buyers that day!
Because no crime was actually committed, the escrow, title, and mortgage companies just shrugged it off. We won’t ever know who the hackers were, or how they got in, but to call it unsettling is an under-statement.
From my buyer:
We felt very unnerved yet relieved. I couldn’t sleep that night, knowing how close we came to losing a substantial amount of money, by nearly anyone’s standards. I personally felt helpless, because I’m not sure what I could have done to recognize this fraud. We consider ourselves pretty plugged in and so we didn’t think twice about getting a wire request from escrow.
The bottom line is, escrow and bank request a lot of items and need responses ASAP so that escrow proceeds to a timely close. Therefore buyers are, in many cases, reading highly technical documents ‘on the fly’, often from smart phone screens. In my case, this meant that I was usually just skimming documents and electronically signing without really studying the material.
The escrow company did say in their instructions that buyers should call before wiring any funds. I didn’t notice this until after the attempted theft of our money. In the future, I would like to see escrow go back to speaking with buyers more often, instead of just emailing documents for signature. It sets a more personal tone and makes buyers more comfortable in picking up the phone to talk to the escrow agent with questions, rather than always relying on electronic communication.
Some escrow companies are now encrypting their wire instructions, but they are missing the point. The hackers are way ahead of us! All they need is a copy of the purchase contract (which agents, buyers, sellers, escrow and lenders email around unsecured), and the hackers can figure out the rest.
They just pose as the escrow officer a day early, and ask the buyers to wire the down payment and closing costs to them!
While we all are concerned about cybercrime and identity theft, it appears taking someone’s money the old-fashioned way has reappeared in a short sale scam in Southern California.
The alleged scam appears to follow the same basic format. A short sale agreement was entered into four to six months ago. The buyer made an initial deposit in the $5,000 to $15,000 range into the listing broker’s non-independent broker escrow. As with most short sales, the process takes several months and the selling agent is assured that the listing agent is working towards lender approval – it is just taking more time. Then the communication slows down, the selling agent begins to get concerned and calls the listing broker’s escrow. There is no answer, no return call, no other number to contact, and the earnest money deposit is gone.
We did open escrow before Thanksgiving on the sale of the two-bedroom home in Trilogy 2 in Carmel Valley.
The MLS entry had been on Friday morning, with open house scheduled for 12-3 on Saturday and Sunday. The weather was somewhat overcast, it is a gated community, and it was the week before Thanksgiving – how many would attend?
Being the least-expensive detached-home in the whole zip code probably drove the activity, and we had parades of people both days. By Tuesday, I had received seven written offers!
Here are my notes:
As what usually happens, the first person who came to Saturday’s open house was probably the most-motivated – and made a great offer, though not right away. I didn’t get any offers until Sunday, which made me think that buyers were either being very diligent about price, and/or strategic about delaying their offer, knowing that we were doing open house on Sunday (it is better to wait until after Sunday’s open house and get a feel for the action).
Not only were the offers rolling in slowly, but they were also very orderly about price – nobody was going much over list, so it was a real horse race. The comps were a problem, for a number of reasons; a) All three Trilogy neighborhoods use the same street name, Carmel Creek (making them all sound the same), b) some of the comps backed to busy streets, c) there is a 1,409sf, and a 1,410sf model, but they aren’t that similar. To help buyers sort it out, I produced a simple map:
If I had a chance to do it over, for easier reading I would group 1,3,7,8,10 as the more-valid comps, and those with street noise (2,4,5,6,9) as the inferior group.
3. We issued requests to every buyer for their highest-and-best offer, which helps to make it a fair race – the early offerors may not have known how competitive it is, and they deserve a chance to re-bid. Another benefit of requesting highest-and-best offers is that it buys time for other buyers to get in the game. In this case, the winner saw the house on Monday, and made offer right away.
4. I was working the phones all weekend, so once we opened escrow on Tuesday, I thought the action might die down. But I got another handful of calls from people who saw a rental ad in Craigslist – and it’s not the first time it’s has happened. Somebody took my pro photos and remarks off my listing and created a Craigslist rental ad for $1,975 per month, which is well under market. It is a scam that has been running for years – the guy on the phone tries to convince people that the rent is so attractive that you won’t mind sending the first and last month’s rent to a faraway address and wait by your mailbox for the keys. But they never come.
I notified Craigslist immediately, and they are quick to take these scam ads down, but you feel sorry for anyone who gets duped.
Every big-time banker saw Angelo Mozilo sell off stock and pocket $17 million per week during the final sunset of Countrywide, and then he walked with immunity. Who doesn’t want that package?
These people think they are above the law, and the way the feds ended this chapter will only make other bankers want to hatch their own scheme.
P.S. The long-time Wells Fargo employee who ran the scam was not prosecuted. On no, instead she walked with $125 million in stock options.
According to this Ripoff Report, it looks like they were promising to set up the victims with new corporations, and get them credit in the corporate name too, for just an extra $20,000 – $30,000:
Jacob Orona, Aide Orona, John Contreras, Prakashumar (“Kash”) Bhakta, Marcus Robinson, and David Boyd were indicted by a grand jury on 135 felony charges for operating a mortgage fraud scheme throughout Southern California and the Inland Empire, preying on homeowners facing foreclosure. Charges include conspiracy, grand theft, filing false or forged documents, and identity theft.
The scam artists promised homeowners who were underwater on their mortgages that they could provide legal remedies to avoid foreclosure, convincing homeowners to stop making mortgage payments and instead pay them $3,500 to start with an “administrative process,” plus $1,000 every month and separate amounts to allegedly file legal documents. The defendants filed bogus petitions and court pleadings and recorded false deeds in county recorders’ offices, causing over $4 million in loses while failing to halt any foreclosures. The fraud stretched through San Diego, Riverside, San Bernardino, and Los Angeles counties of California.
The indictment was delivered following a two-week special statewide grand jury convened in San Diego County. If convicted, Jacob and Aide Orona face over 90 years in prison; Contreras and Prakashkumar face over 70 years in prison; Robinson faces over 28 years in prison, and Boyd faces over 18 years in prison.
The indictment was announced by Attorney General Kamala D. Harris. The arrests and arraignments are the culmination of a joint investigation by the Federal Housing Finance Agency Office of the Inspector General (FHFAOIG), the Attorney General’s Financial Fraud and Special Prosecutions Section (FFSPS), the California Department of Justice Bureau of Investigation, and the Stanislaus County District Attorney’s Office, Real Estate Fraud Unit.
How they compare to Angelo Mozilo, who never spent a day in jail:
Mister Mozilo, a mortgage industry maverick who co-founded Countrywide in 1969, and nearly 30 years later co-founded the dramatically collapsed IndyMac Bank (now OneWest Bank), is widely regarded as one of the more Machiavellian sub-mortgage-men who helped march the U.S. (and global) economy straight off the cliff in the mid-Noughts. While Mister Mozilo and his mortgage-making army pushed and pedaled sub-prime home loans, he talked up the then-flourishing company’s stock price, earned hundreds of millions in compensation, and cashed out more than $400,000,000 worth of Countrywide stock, a large portion of it during the last couple of years of his tattered tenure as the king of Countrywide.
Alas, the sub-primed fueled real estate bubble burst sometime around 2007 and Mister Mozilo left Countrywide in 2008 after the crippled company was sold for $4.1 billion to Bank of America. In June 2009 the Securities and Exchange Commission (SEC) charged Mister Mozilo with insider trading and securities fraud and in September 2010 Mister Mozilo settled with the SEC and agreed to pay $67,500,000 in fines, $45,000,000 of which was paid by Bank of America. Despite the sizable payout, settlement terms allow Mister Mozilo to circumvent acknowledgement of any misconduct. We can’t vouch for or confirm it but online idle chatter says he has a net worth well in excess of half a billion dollars.
