By: Steven R. Buch
An unscrupulous agent will use all the ethical codes and the Realtors standards of practice to beat and cheat everyone. Here’s an amazingly devious means by which it can be done. Sellers, take heart and be on your guard. Read on further, to see how to protect yourself.
So, here’s the typical scenario: Shelley and Sheila, the “Sorry” Short Sellers are so thankful to the eager agent who will take their short sale listing and put up not one, but two brand new, shiny “for sale” signs. (Their house is a corner). The agent will post the listing on one or many multiple listing services and bring an offer, all seemingly in minutes. The sellers know that the amount of the offer is immaterial, since it all has to be sent to the bank and, at the end of the day, all they may be expecting is zero, nilch, nada. That is, the sellers hope to obtain forgiveness of debt. Here’s where it can get dark, delayed and downright dirty.
The seller has put all his trust and faith in the realtor’s quick efforts. But, it’s all a scam. The agent knows that the house is in good shape and worth far more than the offer. The agent uses many means to delay the short sale processing so that, ultimately, the home will go to sheriff’s auction. The agent has a crony ready to buy the property at a deep discount at the sheriff’s sale. One suspicious sale occurred after the listing agent mysteriously flew to Mexico to have an emergency surgery just before the public auction. By coincidence one of his friends bought the house! Hmm. The seller was hosed, house without the “u” in it!
This twist on the many ways to cheat a seller aims to delay and dazzle the seller into a false sense of security. The home is essentially maintained and “warehoused” by the seller and kept in good shape until it’s too late. The scam is virtually undetectable because it relies simply on a last minute failure, like “Houston, we have a problem.” It does not require collusion or bribery among the BPO specialists, appraisers, or a bank’s designated negotiator.
Why is the scam so tempting, so potentially successful? The rules governing realtors require that all offers go through the listing broker. Essentially, the “for sale” signs can act as a shield preventing good, true, market offers from making their way to the seller and bank. Also, the apparent last-minute failure of the transaction allows the agent’s crony the best opportunity at the public auction. This scam does not guarantee that the crony will be the highest bidder, but all other bidders will have been prevented from seeing the home during the entire duration of the listing! They must buy the proverbial “pig in a poke,” while our con artist has an upper hand.
How can sellers prevent this? There are several possible steps:
Before you even take the listing, talk to several agents about the “short sale” comparable value of your home. Make sure your listing is in line.
(Don’t bother with zillow or other automated valuations. You would not hire a robot to sell your house, so don’t expect true insight out of the ether!)
Publish a contact number in the MLS for showings, so that you will be reachable to some agents. Negotiations will still go through your agent, but this is a means to keep him or her honest.
Look at the listing in the mls, ensure the most flattering photographs.
Be sure that the offer of compensation is about half the total fee. This motivates other brokerage firms to bring their buyers to your listing.
Do not consent to disclosed dual agency. The buyer of your home need not be “represented” by your listing agency. Your home can sell by means of seller agency or transaction brokerage.
Stay informed. Insist on copies of correspondence, written updates.
Keep the home well groomed.
Hire your own attorney for the short sale. With so much riding on it, take the last mortgage payment you could have afforded and hire yourself a good lawyer, it will be the best money you ever spent. It will be mattress and money. You will sleep better and obtain the best outcome. I have consistently found the lawyers negotiate a better deal for the seller’s net benefit than any other party. Their interest is not tied to a commission and their fiduciary duty is only to you.
Steven Buch is the owner/operator of Stuyvesant Yale, LLC. He can be reached at (973) 985-7192 or via email firstname.lastname@example.org.