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Is it illegal for listing agent to hide good offers so friends can buy at LOWBALL price?

Should it be illegal for the listing agent practice of hiding all offers from the seller (including banks) at asking and above so their family, friends, or investors can get a lower than market price?  In California, approximately 30% of REO's are RESOLD within 48 hours of closing at a higher price.  This is called "flopping" similar to flipping, but the house is sold at below market price to buyers. So,metio,mes escrow will close both transactions at the same time to attempt to hide the quick flip.  The victims of these "flops" are usually banks or GSE's like FNMA OR GNMA.
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October 16 2011 - Pasadena
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Absolutely illegally...all offers should be presented to the sellers. I am a bit surprised that this is happening in California...in my experience, it takes me much longer than 30 days to get an answer from a bank and before they accept any offer, they have an appraisal completed and accept the offer that is within the appraisal range and has the least contingencies.

I did have that experience of selling a listing (many years ago and before we had acess to internet history of homes) and being contacted by an attorney a year later....the realtor had bought the home from the absent owners at below market value and relisted it for market value...the sellers became aware of my sale and sued the realtor for the difference of what he paid them for the home and what I sold it for and the realtor's license was ssuspended...unknown to me, he had only closed with the original sellers hours before he closed with my buyers.
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October 16 2011
Mr. Lie,

From your profile it is clear that you are a buyer of distressed properties. Consequently I trust you are all too familiar with the lowball offers these desperate sellers are given.

However, it sounds to me from your posts here and elsewhere that you resent missing out on some of those lowball opportunities that are available only to unscrupulous agents but not to  non-licensed investors.

If that is your concern my suggestion to you is this: get your license. That would level the playing field for you and then too can abuse the system. Be advised however that Realtors like myself (and that's the vast majority of us) would report you to the state Commission in a hearbeat. Not only would your license be revoked, but then there's the ensuing felony charges. 

Now, if I have misread your profile,

___________________________________________________________
"Cash buyer looking for correctly priced Single Family Residence. Focus is on SELLERS who have NO LIENS, No Seconds, NO HELOCS, and purchased before 1998. Also, the reason for selling SHOULD BE one of the following "NINE D's of Real Estate":

Death, Disease, Debt, Drugs, Divorce, Disaster, Disability, Discharged or Dismissed from your job?

If you are experiencing one or more of the above, You probably have equity, so why would you throw away a 6% commission to a sales agent when you can easily find a CASH buyer? Many sellers who meet the conditions listed above will have enough equity to make a profit! "

_________________________________________________

So if I have somehow misinterpreted your purpose for posting, and you are trying to protect sellers from those who would take unfair advantage of them, get in touch with your state Real Estate Commission. They typically have at least 1 board representative who is a lay person. Volunteer your time so that you can review the cases of those agents who do all those things that are ethically reprehensible.

Or, spend your time merely exposing those whom you know are acting fraudulently. That said, you need actual facts/data, names, places etc and not  "a friend of mine who" stories if you want credibility.

Might I also suggest you change your profile so that it avoids the appearance of looking like you are  just trying to drum up business for yourself from desperate sellers by demonizing agents. After all, there are unscrupulous people in all lines of work, including those that do not require a license. .

I doubt it would be good for business to appear to belong to that group.

just sayin'

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January 29 2012
Yes. It is illegal for listing agents to hide good offers so that friends can buy at a lowball price.

The buyer did not get the property that he/she was willing to pay more for, and the seller did not get the most money for the sale of his/her house.

The exceptions would be other terms of the sale such as cash VS. financing, an inspection clause, and time frame.
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January 23 2012

Why are you giving this man any of your valuable time?
He has been posting the same stuff since his first post on Zillow.
Obviously he thinks the Real Estate Industry is out to harm others.
Some of the post on this site absolutely defy logic.

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January 21 2012
Profile picture for Pasadenan
"Don't you and the client want to make highest and best??" -

No, no-one wants to make the "highest and best" offer; they want to make the lowest offer then can get away with, or walk away and find something else.

I think if people really want to learn negotiating skills, they need to go to Mexico and just observe buyers there for about 3 or 4 months.  There is very little negotiation on sales in the United States as we have been brainwashed into believing the listing price is the "actual" price.
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January 02 2012
Absolutely, because if for no other reason, it violates agency. You would not be doing your client justice. Besides, low ball price would mean lower commission?? Don't you and the client want to make highest and best?? 
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January 02 2012
Profile picture for Pasadenan
Of course it is not "new", and of course it will continue, and of course most of it will not be prosecuted.

If a free market economy, people are free to spend as little as they can get away with, and are free to mark things up on resell as much as they can get away with.

The public is not ready for communism, nor even socialism, even though most of the housing in the U.S. was already "socialized" by FDR starting in the 1940's.

No matter how much the district attorneys and FBI try to investigate and prosecute this, it will not change.  It is the way the system is set up.

If "Jim the Realtor" was not just advertising himself for more business contacts, and really believed the propaganda he is promoting in the video... he would file official complaints with all the local boards and state licensing agencies and the district attorney and HUD and the FBI, and would spend 80 hours a week testifying against all the people he personally knows is committing fraud.  But he won't because he is part of the "corrupt system".

As Elizabeth pointed out in her post, even though she believes such activity is illegal, she was an "accessory" to such an action because she didn't do due diligence on the title research.


In other-words, who cares it if is illegal or not????  If you get scammed by a Flopper, the Government will not help you out at all!  It is your own responsibility to do the research, not some agent that is going to take up to 6% of your transaction money.
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December 31 2011
Profile picture for RealtorsDreamers
Check out what this 30 year Realtor says about SHORT SALE FRAUD by listing agents.  Its all too common..

PLEASE watch the complete video.  SHOCKING  EVIDENCE with MLS proof.  

SHORT SALE FRAUDS OF THE YEAR-2011 by "Jim The Realtor" of San Diego.  I dare you sales agents to watch...!

   http://www.youtube.com/watch?v=aLew-ikEv0k&list=UUr5LE6rAA-0M0vY9Y3XHe_w&index=5&feature=plcp

Now what can you say about rampant Real Estate Fraud....every day ...just open your eyes.  This process is killing buyers and banks to the advantage of listing agents and their "buddies" family members, and other associates in the listing office. 
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December 31 2011
Profile picture for RealtorsDreamers
Read this link from the most respected Realtor in San Diego about his post on YouTube about estate agent SHORT SALE FRAUDS, but for some reason they never get prosecuted.  

Discuss

http://www.youtube.com/watch?v=aLew-ikEv0k&list=UUr5LE6rAA-0M0vY9Y3XHe_w&index=5&feature=plcp 

This is the truth...!   QUOTE:  "...50% of all short sales are fraudulent....by the listing agent..."  Argue with him....! 
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December 31 2011
Profile picture for CrystalsSecondHome
I'm in the middle of purchasing a HUD foreclosure that lists the home at 50% less than the "listing agent" lists it for.  The "listing agent" is paid by our taxes and appears to be a flipper willing to "list" the property for HUD payments all the while searching for a sucker to pay twice as much.

Naturally, this "listing agent" con hasn't secured the property or performed other services HUD required to prevent devaluation of the property -- didn't remediate mold, didn't secure the property with locks, didn't remediate structural matters (or disclose) and didn't do anything but collect payment for not doing what the contract was for and fraudulently listing the property for double what HUD asked and made sure HUD presented a notice saying "the listing agent can pull the add to accept a previous offer" or some crap.

Yes, the contractors are holding out for suckers to overpay by twice as much as the homes are truly worth -OR- selling homes to friends and family at half the listing price.
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December 31 2011
Profile picture for Dunes ..
Worth a Read imo
FBI Fraud Report
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December 31 2011
Yes, it is illegal and unethical. The listing agent is required to present all offers in a timely manner and handle a multiple offer sale in a manner that is ethical, fair to all parties while maintaining the Seller's best interest. That being said, agents may have investors who are ready, willing and able to buy.  These investors have an advantage over owner occupied buyers in that they are using cash or other liquid forms of financing.
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December 31 2011
Profile picture for CrystalsSecondHome
This has disturbed me for some time now.  I see wrong listings in terms of actual number of b/r or s/f all the time.  The enormity of the problem makes me believe it is deliberate false info fed into the systems to make the properties more likely to meet some unethical re "professionals" family/friend purchaser's requirement than providing good public info for a legitimate sale,
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December 31 2011
True fraud no two ways about it.
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December 31 2011
Profile picture for Pasadenan
Zillow's white paper on Foreclosure sale values  indicates up to a difference of 30% for normal sale verses distressed sale for the equivalent housing in the equivalent area.

That means there will always be opportunities for Floppers as long as there are mortgage loans not being paid.

And really, the Floppers are not without risk; they are buying properties as is with substantial deficiencies that they will likely be responsible for on resale.  And each transaction is typically recorded at the county, so sites like this make it clear of past recent sales.

Often the eventual buyer "needs" a Flopper as many of the loans cannot fund with certain deficiencies in the housing, and they cannot be fixed when owned by another party that is not willing to do any work on the property.

But advertising a house for sale that one hasn't bought yet appears to me to be very problematic.  I'm not sure how the floppers are getting around that.
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December 21 2011
Just watched s CDPE training webinar the other day.... the FBI says last year mortgage fraud of this type cost banks over $300 million dollars. 
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December 20 2011
Flopping has long been part of foreclosure resales. It has always amazed me how many siblings of Attorneys are in the buy and flip foreclosures trade. An amazing amount of Banker's in-laws, and siblings, too. First time I've heard it called "flopping". I like the nickname for generic nepotistic real estate fraud.

If you think the last ten years of RE scam creativity were ugly, just wait.
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October 25 2011
Profile picture for Pasadenan
Clearly any selling agent that closed a property 1 day after another agent bought it also knew if there was a 30 day escrow, a title search, and title insurance.  That makes the selling agent an accessory.

And it is not just mortgage fraud, it is also mortgage insurance fraud.  And if the bank let it go just to collect the insurance... the bank will be prosecuted for mortgage insurance fraud also.

They all seemed to have learned it from Enron; but no-one seemed to learn the lessons from Enron regarding consequences.

Not surprising since NAR lobbied the government for the bad housing policies in the first place, and doing anything about it would make it clear that all the politicians and the whole real estate industry intentionally ripped off the public to put money in the pockets of agents and lending institutions.
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October 25 2011
Profile picture for Trump Junior
Not only should be but is freaking illegal.  A number of big-wigs in my neighborhood in Queens have been arrested for this.  They give you enough rope to hang yourself.  The evidence is all there in the sales records.

I don't want to say who it is because I met him and he is a nice chap.  Arrested on 50 million bank fraud by the FBI.  He says he will be exonerated.
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October 25 2011
I think the majority of people in real estate attempt to play by the rules but when you have a product (homes) that can earn people a lot of money, and sometimes very fast, the scammers, those looking for a quick investment will always be one step ahead of the majority, who simply purchase a property 2-3 times in their life, while the 'professionals' can't be bothered worrying about it.

I filed an ethics complaint with the local realty board a few weeks back. It was loosely related to this question. Broker had foreclosure listed as active, claimed there were no offers, and the minute they received our offer claimed the bank had accepted one a week ago. The broker never updated the MLS until they were threatened with a fine. The realtor association, the people that are suppose to protect the industry and regulate it tried talking me out of filing an ethics complaint despite the standard practice of foreclosure brokerages playing around with offers and fixing the game with the banks.

I filed the complaint anyway, and within days I was told it was rejected.

This is only one of several stories that other agents can share that involve shady practices in the foreclosure world.

But in the end, if the bank sold it, most people can't be bothered as they assume were one less foreclosure from the Bottom. Right...
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October 25 2011
Profile picture for RealtorsDreamers
"...Short-sale fraud and other servicing-related fraud is definitely the fraud du jour and our greatest area of focus at the moment,". In 2011, more than 50% of Freddie Mac's investigations were related to short sales.
According to a recent study by CoreLogic, short sales that were resold the same day averaged a 34% gain (or $54,947) between sale prices. One in every 6 short-sale transactions in the first half of last year appeared to be one of these "suspicious" resales, CoreLogic said. This year, it expects lenders, servicers and investors to incur more than $875 million in unnecessary losses from these shady deals, as the number of short sales surges an additional 45%.

Who are the perpetrators?

For the most part, these deals involve insiders, from the underwater borrowers themselves to investors, listing agents, brokers providing valuations and so-called "facilitators," or middlemen negotiating with the banks and buyers trying to flip the properties.

  Are any Realtors involved?

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October 16 2011
Profile picture for sunnyview
I think the scam is the great equalizer. Anyone can do it, nobody will step up and report agents that participate. The banks clearly need more regulation.

Maybe if they get ripped off by floppers like they have ripped off the public, the regulators and banking industry will finally wake up and do the right thing by writing solid rules.
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October 16 2011
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October 16 2011
Profile picture for sunnyview
Not illegal unless they are caught. Flipping/flopping have been going on for a long time and the industry makes money on those deals so they are clearly not interested in addressing it.

Anyone who doesn't like it should step up and call their congressman to make it so that the house cannot be resold in less than 180 days if it has a government backed loan. That would end it, but expect pushback from those currently on the money train.
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October 16 2011
Profile picture for RealtorsDreamers
Comment from another  ripped off buyer...

"...I just met a guy last week that was doing this exact thing in Southern Califonia. He said he recently got his real estate license solely to do this - rack up offers on an REO, hit the bank with his offer, buy the house, then sell it to the high bidder. He said he was successful on his first try - using the "bank delays" as a way to keep the original offer interested.

It sounds illegal, but is it?

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October 16 2011
Profile picture for RealtorsDreamers
http://www.bloomberg.com/ ... read.html


It's just robbery," she says. "And I don't know how to stop the robbery."Wright says she is still not sure if the servicer or owner of the property ever saw her clients' much higher offer. All she knows is that two agents picked up a luxury property for $80,000 less than market value, the banks took a big loss and the listing agent got both sides of the commission, representing his colleagues.

When she asked the listing agent why, she was told to "leave it alone."

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October 16 2011
Profile picture for SteadyState
First - is there a credible source for the 30% number and is this practice in fact illegal?
If the above two claims are true, then what is the NAR or other REAs doing anything about this - do they have  whistle blowers in the brokerages? Or is this another example of look the other way when a fellow broker or REA performs illegal actions that the very consumers that the agents and the NAR purport to serve?
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October 16 2011
 
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