New "short sale" scam taking root?

Predators always seem to find fresh prey, even when game is otherwise thin on the ground. That thought arose as I got a tip about a new get-rich-quick scam involving short sales.

Short sales occur when lenders agree to let home owners sell their properties for less than the mortgage balance. While the process involves debt forgiveness, banks often prefer short sales to the messiness of foreclosures.

Here's what's been happening in some less-than-transparent cases in the Tampa Bay area: Let's say a Realtor agrees to market a house for $150,000. A third party short sale company in cahoots with the Realtor convinces the bank to accept that price.

The Realtor then negotiates a $175,000 deal with a buyer behind the bank's and home owner's back. With a bit of financing and paperwork sleight of hand, the bank is presented with a closed sale for $150,000.

The Realtor and his accomplices make off with the $25,000 difference, money that by all rights belongs to the bank.

Some might argue that this is a normal property "flip." I beg to differ. The outstanding mortage on such a house might be $230,000. It smacks of fraud not to pass the full sales amount to the lender.

Let's be clear here: Most short sale rescue companies and short sale Realtors seem to be legitimate. But it pays to sniff out the bad eggs.

Realtors make money on commissions. In the scenario above, a full 6 percent commission on the $150,000 house would amount to $9,000. Isn't that enough? Apparently not.

   

Comments

[Patty Neri]

If you want to go ahead and name names for corrupt Realtors that is fine by me but I think the little "lets be clear" part wss really not big enough in your statements. In every trade you have dishonest people but overall most of us are legitimate agents bound by a code of ethics that are working extremely diligently to help our clients get their homes sold before being foreclosed upon! And this saves those lenders a ton of money also. We are looking for the Win-Win in every situation and easily earn our compensation if not more so getting these deals through. To make blanket statements of corruption among a profession is absurd and degrading. Yes people should always use Realtors or any other professional they hire that come highly recommended from their peers, family etc. Know who you are dealing with of course. But when newpapers print articles that do not clearly represent a point we do not necessarily stop reading them do we?? And oh by the way, I am never too busy to handle any of your referrals.........if you want honesty and ethics that is!

[Steve]

I tend to agree with Patty - although I do credit James for being open to hearing both sides of the story (I wish more reporters would do this!).

If some "bad apple" realtors are in fact doing this, the local/state associations and fellow peers need to "out" these criminals and make examples out of them.

Those committing mortgage fraud need to be prosecuted and sent to prison (as well as pay back what they stole).

[Tara Jacobsen]

As a Realtor I have to agree with Patti. Short sales involve A LOT of time and energy to work since you have to gather all the information from the homeowners, do all the work of a "regular" listing and then slog through 2-3 months of negotiating with the bank, at which point they oftentimes just say NO and you work is all down the drain. I have had clients, upon hearing of this process, ask "why are you helping us then?". Realtors do this because it is a part of our job and the current reality of the real estate market - that's why! Also, while you are throwing big commission numbers around, most banks do not pay 6%, generally the realtors involved agree to split whatever commission is offered 50/50 and there is usually both a buyers and sellers agent so that is halved again. I know it is cool to bash realtors and the "BIG MONEY" they are making, so I shouldn't be surprised to hear it from the local estate "expert" and the St. Pete Times yet again.

[Ronnie]

James, if you have the names of these individuals you really should report them to law enforcement. This is fraud and all those involved should not only lose their license, but be prosecuted as well. I agree with the others here that there are bad apples in all professions. Lets weed them out.

[Fuzzy Bear]

Some might argue that this is a normal property "flip." I beg to differ. The outstanding mortage on such a house might be $230,000. It smacks of fraud not to pass the full sales amount to the lender.

I read the comments by the realtors who posted and I agree there are many good realtors. However, it seems like your industry is saturated with those bent on committing fraud.

Most in the industry know this is going on, but it seems to the public that nobody in the industry is taking action to weed out those who participate in this type of action.

Is it because those in the industry are afraid of being blackballed by the unethical who resort to intimidation tatics such as those used against the appraisers?

Perhaps it's time for the local and state realtor associations to step up to the plate and show the public they are serious about cleaning up the industry.

[Joe]

Here is another short-sale fraud I've noticed: Realtors are listing properties for prices that banks won't necessarily agree to. So your asking price isn't really an asking price...ridiculous. The more nefarious version is the scammers listing online auction homes on the MLS at the current bid level. Not only is that price inaccurate, since you can't actually buy the house at that price (you have to bid higher), you're actually bidding on the opportunity to MAYBE have your bid accepted by a bank 2-3 months down the line. On top of that they pictures in listings are a few years old before renters and homeowners trashed the places.

[k]

You'll see questions like this on the exams. The old gag was something like:
"Customer A come into your brokerage looking for a particular property for X amount, but signs no agency agreement. Customer B comes into your brokerage with a listing offer for property fitting customer A's criteria and for an amount less than customer A's price. Before signing a listing agreement, you go ahead and buy customer B's property and sell it to customer A.
What laws have been broken?"

The difference on Thorner's scenario is the brokerage had an agreement (contract) with the bank, and, if they had a willing customer paying more, breached their fiduciary duty. Otherwise, you'll have to prove a collusion case with the shorting company - showing knowledge of the other customer willing to pay more.

Ultimately, the BROKER is liable in these circumstances, not just the sales associate. Also, the blanket use of "realtor" which, has additional ethics requirements to plain sales associates and brokers, seems hasty (to be light).

James, if you actually have names, proof of collusion and are doing the right thing to report this, I can't wait to read the real story.

[k]

Joe, the "price subject-to..." issue is a newer wrinkle. While the price is agreed to by the "owner", the bank has to agree as well. I don't like it either as it creates a perception of competition that doesn't really exist. All those folks doing their own research on Realtor.com and other sites are not getting the full story, in many cases, without the guidance of a Realtor. While those listing agents are supposed to be putting "Short Sale, subject to..." in the description, the general public may not know the full implications.
The bottom line is that I agree with you that if you can't actually sell the property (if the possibility exists of not selling), then that price should not be listed...period.

[James Thorner]

To people who have been critical that I revealed the scammers are "Realtors", I don't see how to avoid it. I could dance around the person's job title/certification, but whom does that serve? Take it for what it is. If people take the lazy fall back position of "they're all crooks in real estate", that says more about their personal prejudices than about the genuine qualities of Realtors. Should we ID corrupt New York Times reporter Jason Blair as "some guy who clicks on a keyboard in midtown Manhattan?" I think my posting suggested these people are "predators" without suggesting Realtors as a whole are predatory.

Well James, I tend to agree with you except for the fact that you only focus on specific stories or occurrences of fraud when they involve Realtors ...always followed by an apology that you're not labeling the industry. I can't think off the top of my head of any corruption story involving a non-Realtor that you've ever blogged about. Your language is often derogatory. I mean, why include "Isn't that enough? Apparently not."?

Your unsaid "said" implies that most real estate crooks are Realtors, but not all Realtors are crooks. So please, don't pee on our leg and tell us it's raining.

[Frances]

This seems to be a silly urban legend not well investigated. You completely ignore RESPA, the legally required closing HUD statement buyers & lenders use to ensure everything is kosher.

So in order for this to happen, a Buyer would have to sign off on a HUD for 150,000, then under the table willingly pull out his wallet and hand the Realtor 25,000 more? Or maybe he'd take out a secret loan for the difference?! Ha. That's a good one! (Even though it'll be obvious on the HUD that the lender, who owns title, is willing to part with the home for only 150K.) Not to mention, most Buyers don't like anything under the table as there's limited legal recourse in the event something goes wrong. Also, good luck finding a title company to insure and close this transaction. Not sure where these Realtors are finding Buyers & title agencies stupid and wealthy enough to do this...

But if you say it's happening, James, you must be right.

[James Thorner]

I'll try to document some cases as soon as possible. I left out some of the details. I was told the first leg of the transaction involves a private loan between the short sale rescue company and the Realtor. I'd rather unravel such a scam in its infancy than write about them in two years after the damage has been done.

[Frances]

"I'd rather unravel such a scam in its infancy than write about them in two years after the damage has been done."

Is that code for mediocre work done sloppily for quick sensationalism?

I wouldn't be busting your chops so much if you were an anonymous blogger, but when you're tied to a reputable newspaper, higher standards are expected and you should be honored, and not bothered, we readers expect it from you. You also just admitted that you haven't documented the cases that you've announced to the world. Guilty until proven innocent?

Guilty until proven innocent?

[Fuzzy Bear]

"I'd rather unravel such a scam in its infancy than write about them in two years after the damage has been done."

Frances:

Why don't you provide one of these cases so James can investigate it instead of expecting it from him?

Most journalists normally get their tips from the public. The same is true for the police.

These type of cases our out there, but it is to the public to produce the information to the media or the police so it can be investigated. However, once the police begin an investigation, the public will not hear about the details.

[k]

That's what you call a "scoop", fuzz. That's his JOB. Most reporters wait until they have verified and accurate information to avoid a libel suit. While, I think James' intentions were honorable, it just comes up looking limp without hard facts. Coming from a pro outfit like the Times, that would be expected (the facts, not the limp).
Now go clean your nose.

[James Thorner]

Your points are well taken. I was trying to give you guys a sneak preview of what's in the works journalistically. The blog format provides a bit more conversational flexibility than the print newspaper. But I see it's viewed as bad form. I'll be more circumspect in the future. We'll all have to wait for the full story!

[Fuzzy Bear]

Now go clean your nose.

There you go again showing the readers your lack of business ethics by attacking those with your unprofessional comments because they oppose your views.

You want to come across to the readers as a representative of the realtors, but you end up doing more damage to the image of the realtor by posting your personal attacks to try and intimidate the opposing party. You end up hurting the honest and ethical realtors in the business by your derogatory comments and your attempts to intimidate those who oppose you.

There is a simple rule in sales, never talk bad about your competitor or bad mouth prospective buyers or consumers. I am a prospective customer K, but only to those who display and deliver proper business ethics!

[A Smith]

Please confirm that the realtor is actually the listing agent for the bank. I agree that would be a big problem, but the transactions I am seeing involve parties that are ultimately matching new homeowners with banks that are or would be stuck with homes they cannot hold on their books as assets and are willing to take a big loss immediately to avoid the risks and costs of holding time, eviction, property maintenance, taxes, insurance, etc. The fact that there is a middle buyer does not diminish the obligation of the bank being short saled from making their own determination of price which sometimes includes hiring a listing agent who has legal and ethical obligations to their client.

There are major costs based upon the extra time to complete a short sale transaction and the high percentage of failed transactions that completely justify a "commission" (or whatever the fee is called) well in excess of 6%. Add the cost and risks of litigation caused in big part by the press, government agencies and courts, that have no understanding of the market, and 20% to 25% commission to the parties that get a foreclosed home into the hands of someone that wants the home seems like a competitive price to pay.

It seems to me that the real problem is when the ultimate buyer is in cahoots (whether as a willing accomplice or as a dupe) with the middleperson(s) and there is a fraudulent appraisal. The typical result is the middleperson(s) walking away with a substantial sum and the new lender being stuck with a borrower with no intention or the inability to pay along with inadequate security.

It seems to me that most of that problem could be cleared up if the ultimate lender chose the appraiser as is typically done in commercial transactions and the lenders improved their underwriting standards (which presently appears to have gone to the other extreme).

[Frances]

Well put A Smith.

It seems similar to what went on a few years ago when a fictitious buyer purchased a home, thus allowing the Seller to walk away with a bunch of money from a "would be" buyer...Who then disappeared and left the bank holding the bag.

[John Wayne]

I agree it is a shame that when somebody is willing to sell something and there is buyer for that item we should have a cap on what it can sell for, for example a $50,000 Benz should "only" sell for $1000 that would solve that situation but the last time I checked America was a country that allowed captialism.

[Sad but true]

Hate to say it but, what the writer claims is going on in this article is true. I would prefer he would have said Real Estate Agent as I hope most "Realtors" would turn their backs on such companies, as soon as they realize the truth.

Here is the long and short of how I have heard it works, I am sure I am missing the finer points, but you’ll get the drift. The Real estate agent gets a call Mr. Seller needs to sell his house or he may foreclose, or maybe just a short sale and Mr. Agent knows just the company to help Mr.Short Company. So Mr. Short sale starts the talks right away with the bank working on the short sale. The listing of course says something like List Price subject to Bank Approval and subject to trustee obtaining title, or something like seller will be 1234 Street Name Family Trust. Then when the purchase and sale comes in First Mr. Short sale buys the home from Mr. Bank for Price A and then Mr. Buyer buys the house From Mr. Short Sale For Price B. Back to back closings/or if need be in the case of Mr. Buyers FHA loan they have been know to hold for 90 days.
Seller may have to pay taxes on his loss, seller may have a defiant notice on the loss, not sure who is getting full disclosure some agents could just not know that this is wrong, Often the Sellers don’t even know it’s wrong either all they know at the time is they want out of a bad/shameful situation. Crazy part is Mr.Short charges a fee to negotiate the short sale!!

Just a word that Not all short sale negotiation companies are bad, they are even allowed to charge you a fee (yes to be paid for their work) but it’s a sticky widget when they want to also help you by buying your home, but only for a second.

Me being a Realtor wouldn't touch that with a Ten foot pole! Unless my buyers wanted that house ( I have to do as my buyers want, and in that case I would bring in a Real Estate attorney!)

Be very careful, with listing your shortsales disclose everything keep good records and have your seller consult and attorney prior to closing!

[Nathan Jurewicz]

although there are some investors committing fraud in similar scenrios most investor that are flipping thes short sales send the bank a contract as part of there short sale package that have this exact language in their contract...
SELLER HERBY GRANTS THE BUYER AND/OR THEIR REPRESENTATIVES ALL OF THE NECESSARY RIGHTS TO LIST FOR SALE, MARKET, NEGOTIATE AND ENTER INTO A CONTRACT SELL 9OR LEASE) THE PROPERTO TO A THIRD PARTY. BUYER INTENDS TO RESELL THE PROPERTY FOR A PROFIT.

What fraud are you people taling about exactly?

[Key Largo]

Most Realtors don't have a clue how to do short sales and their listings languish for 6 to 12 months ending up at the forecosure sale. The bank takes the house back and subsequently has to dump the house that suffered a year of neglect, mold, etc. The banks ends up losing a year of lost payments, legal fees, taxes, insurance and maintenance. The bank's losses could easily total an additional $50,000 to $100,000 on top of what they would have lost anyway. The short sale expert may make $25,000 but they are really saving the bank $25,000 to $75,000 of additional losses. The short sale expert also gets the house sold fast and helps the bank get a toxic loan off their balance sheet a year earlier so the bank won't have to go to congress for bailout money. Negotiating a short sale is a labor intensive and time intensive project and short sale experts usually have a staff of 3 to 5 people, an office and other business and marketing expenses. What arrogance of a reporter to opine on how much someone should earn. Hey reporter: what's your salary? How many expenses do you have? You're a salaried shmoe with zero expenses, how dare you charge your newspaper the outrageous salary you get for writing superficial unsupported stories? How dare the newspaper charge $200.00 for a 5 line classified ad that costs the newspaper ten cents of paper and ink? Who appointed you to be the morality police when you understand zilch about the topic you are making believe you are investigating. Go back to investigating pooper scooping where you can't do much damage.

[Tino]

I just purchased a house that was a short sale and it required neither a lot of time nor expertise (it was the buyer's and seller's agents' first short sale). The time from initial offer to closing was 60 days. Bank approval and paperwork took about 35 days.

The differentiating factor in a short sale is not the sales agent, but the willingness and capability of the bank's staff to complete the paperwork and get rid of the property.

I know people that have been tied up in short sales for months and months because the bank will not respond.

[James Thorner]

To Key Largo: Make tubs of money. I don't care. Just be transparent. I know screwing the bank seems like fun, but we're learned what that practice has meant for the country. I have a "very close relative" - let's leave it at that - who works short sale deals. While these deals can stretch out for months, it's hard to say it's intensely hard work. It takes persistence, to be sure. In any case, duping a bank out of $25,000 is immoral, your false analogies notwithstanding.

[Tino]

Aren't the new housing laws passed in 2008 to blame? In the old (pre-2008) days, if you were the seller in a short sale, the amount forgiven by the bank (in this case, $230,000 - $150,000 = $80,000) becomes a 1099 taxable event to the seller, and they have to pay taxes on it. The seller then has a very strong desire to maximize the sales price and minimize the bank's writeoff.

With the new-socialist-government-will-forgive-all-personal-failings environment, this gain is no longer a taxable event to the seller. That is why this "scam" (as you refer to it as) is allowed to take place. It wouldn't happen if the seller was paying 30% of every dollar of that realtor's profit.

Congress (and a spineless President) get 100% of the blame for creating this loophole. If you create a loophole, people will jump through it.

[karen]

Can you answer Nathan's question?

[Buck Maxey]

Yes, I'd be curious to hear an answer to Nathans' comment.

[Tino]

To answer Nathan's question, the buyer can do whatever he wants. However, he cannot have the participation of the seller's agent.

The realtor who is listing the house has a legally binding fiduciary duty to get the highest price for the seller (the bank).

By double-dealing, the realtor has violated both the realtor code of ethics (which is seen by its members as a joke, anyway) and Florida state law.

There is an extensive section in the Florida real estate sales associate course on just this topic. You can't play both sides of the fence if you are the agent listing the house -- you must notify the seller of EVERY offer on the property and your loyalty is to the seller before your own interests.

If the agent issued a single agent notice to the buyer [FL Statute 475.278(3)], then they are in deep, deep trouble. That's probably a loss of license, whatever profits they collected being disgorged to the seller, and fraud charges.

----- 475.278(3)(c)(1) ----

SINGLE AGENT NOTICE

FLORIDA LAW REQUIRES THAT REAL ESTATE LICENSEES OPERATING AS SINGLE AGENTS DISCLOSE TO BUYERS AND SELLERS THEIR DUTIES.

As a single agent, (insert name of Real Estate Entity and its Associates) owe to you the following duties:

1. Dealing honestly and fairly;

2. Loyalty;

3. Confidentiality;

4. Obedience;

5. Full disclosure;

6. Accounting for all funds;

7. Skill, care, and diligence in the transaction;

8. Presenting all offers and counteroffers in a timely manner, unless a party has previously directed the licensee otherwise in writing; and

9. Disclosing all known facts that materially affect the value of residential real property and are not readily observable.
__________
Date ______________________________
Signature

But then, most realtors are so desperate to avoid eating dog food that ethics take a back seat to being homeless and starving...

[Michael Slay]

If what was originally posted was true, whats the dif between that and a "net listing agreement" that has been approved by all agency's that says a seller can name his price and the Realtor can have everything he gets over that amount? I wont go into detail as its way too complicated but there is a LOT of work that is involved in a short sale. A bank will never agree to sell for a price that is not acceptable to them and a buyer will never agree to purchase for more than what that property is worth to them. In this economy we need the money to move in order for it to get better. If you limit an investors ability to invest you will choke our economy to death. Ultimatly the banks are able to do better buisness and the investor will pay taxes on their profit which will go to our govt. who has used a lot of that money already and gave it to the banks to help cover the loss, anymore of a loss will be claimed on banks taxes and carried over into the next year. Win-Win situations are important and although a short sale is not our first choice it is better than foreclosure.

[Jaime Tejera]

I just read the first guy's comments. And to put it bluntly he's an idiot. I am a short sale investor and both the banks and the homeowners know that I'm selling to a third party. So there you go, don't criticize us just because you don't know how to do it, or because a Short Sale investor didn't want to partner with you.

[Debbie Reynolds]

Well I know first hand that what James is talking about is happening in this country. I referred a client of mine to a Realtor in another state for her home that is in her and her sister's name and is being lived in by her father (he lost his job and can no longer keep up payments). I am willing to disclose the information on the people once my clients home closes and I know that the parties involved will not take any action that will cause the sale to fail. And we will expose the people as soon as practicably possible.

My client listed her house with the Realtor in the other state and had an offer in the mid $100's. The short sale negotiator that was referred to my client in the other state wanted her to sign a sales contract with his company for an "UNDISCLOSED PRICE" and they were intending to represent to the shorted bank a price in the low $100's. They told my client they were going to do a back to back closing and close with the bank for the lower offer and turn around the same day and close with the buyer with the higher price and pocket the difference.

My client was NOT comfortable with this and called me to intervene. I called the other Realtor and told them that my client was not comfortable signing such a document and wanted the offer that was procurred for the mid $100's to be negotiated with the bank. I work with a REPUTABLE short sale negotiator that was willing to take on the case even though this was in a state outside of my area of service. The short sale was successfully negotiated with the bank within 2 - 3 weeks and we will close in the beginnning of May.

Had my client not questioned the unscrupulous procedures of the original short sale negotiator, the bank would have been frauded and my client would be responsible to pay taxes on the difference since this home is not her primary residence. She is already going to have to pay taxes on the forgiven debt, but she would have had to pay more if the original negotiator had processed the case. She is so grateful for my intervention and as soon as her transaction closes we will be taking action.

As far as the Realtor in the other state is concerned they claim that they don't know how the short sale negotiator conducts business, and only markets the home and the short sale negotiator handles that part. We will be filling her in on what we have learned and that they need to stop doing business with this negotiator.

Don't be fooled that there is not fraudulent things going on in this market - it is happening and we need to do what we can to protect our business and put a stop to this. Investigations are being done regarding suspected fraud and the powers that be are aware of it and are trying to stop it. It hurts us all!!! It hurts all Americans, when the banks are defrauded out of money they are due and that worsens the economic situation we are all facing.

Thanks James for bringing attention to this matter! There are unscrupulous people in all walks of life - we all need to participate to help educate people and help to protect them and all of us from these kinds of actions.

[Ray]

What do you really know about short sales buddy? Know all the facts before writing on the issue!

[Ben J]

What makes any of you think that the Realtor involved with the homeowner is actually representing the homeowner and not the investor?

[Tisha]

Just doing some personal research in regards to real-estate due to the economy. Found Nathan Jurewicz & Robert Kiyosaki listed in on the BBB site with different levels of B ratings. Interesting, must be doing something right.

[Alma]

One way to instantly spot potential "middle man" encumbered short sale listings is to look at the days on the market and see that the listing agent has never moved the property to "pending" sale. I've seen several short sale listings that have a 3rd party that has even taken ownership to control the property. Unsuspecting owners who sign over quit claims may end up getting not only a foreclosure on their record but also evicted from their home!

Unscrupulous Realtors are taking advantage of the short sale fraud opportunities. I've even seen a non-Realtor investor produce fraudulent overpriced repair estimates to purchase preforeclosure properties days before the foreclosure auction. All of this greed is driving prices lower. It's ethically wrong and my E&O insurer has recognized the potential liability and we are required to attend training if we list a short sale property. These fraudulent deals will surely be going away soon!

[Benjamin Johnson]

TO ALMA!!
The more short sales that take place the quicker we get out of the housing recession!! ENCOURAGE SHORT SALES, DON'T NIT PICK THE 1 OUT OF 100 THAT ARE "NOT UP TO YOUR STANDARDS!!!"

[Darwin Grey]

James,

When I searched a certain person's name, a person who does these kinds of transactions, your blog post came up. I have to correct you. It is not the Realtor who "in cahoots" with the short sale negotiating company convinces the bank to take that price. It is the buyer, in this case the person whose name I searched, who works with the short sale negotiating company to get the house at a discount which allows him to resell it for more. The Realtor has no collusion and there is no fraud, not even the "hint" of it as you suggest. These are properties which most realtors have no idea how to get sold, that would sit for months on the market, incurring holding costs for the lenders, were it not for the investor who comes in and helps the bank get these liabilities off their books. I am glad to see you are interested in seeing all sides of this issue, because it is not as black and white as you may think.

[Short Sale Specialist]

"Make tubs of money. I don't care. Just be transparent. I know screwing the bank seems like fun, but we're learned what that practice has meant for the country".

I coulndn't agree with that comment more when it comes to people like Key Largo! I'm the founder of the Short Sale Specialist Network, a nationwide network of honest and ethical Realtors who pledge NEVER to work with investors using the option contract or 3rd party mitigation companies.

I'm a strong believer that investors and agent like the ones mentioned in this article deserve to be in Guantanamo Bay (they don't deserve to be in our country!)

[Heather]

I am in complete agreement with Key Largo.
This practice is neither illegal or new! It is simply one of many real estate investing startegies. It is not duping the bank out of 25k, the bank agreed to sell the property to an investor for a certain dollar and then the short sale expert/investor can do what ever they want with the property! The bank got something rather than NOTHING, which is what they would get if the property went to foreclosure. The short sale practice gets the non-performing asset off the banks books, the homeowner got out of foreclosure, the investor/short sale expert made a profit and the end buyer bought a property at a good price. This is a win-win-win situation.

[Ben]

"I'm a strong believer that investors and agent like the ones mentioned in this article deserve to be in Guantanamo Bay (they don't deserve to be in our country!)"
HELLO THEY SHUT IT DOWN!! BTW, maybe you should pay attention to the real estate world a little too ... wait wait wait... why don't you start doing it the same way you have been ... wait wait wait .. look at the economy again.... hmmm yes please, keep doing it the same way, I love this nation giving up their homes!! YEA BABY!!

While there are bad RE agents and Investors out there trying to scam people, we cannot ignore the ones who are trying to help either. The true investors that don't screw over people need love, not Guantanamo Bay...

[Ben]

BTW, I love the option contract! Can you give me a SPECIFIC reason you do not like it Mr. self proclaimed short sale guru?

[Ben]

just kidding about Guan .. I love GTB!

[Tino]

"This practice is neither illegal or new! It is simply one of many real estate investing startegies."

You must be a realtor, since you are unaware of a single agent's fiduciary responsibilities.

[neressa]

Good day to you.
The name of the game is disclosure,disclosure,disclosure
from my understanding of the short sale kid program,it seems legit. I am a Broker associate in south florida, and I see where the parties to the transaction are notified of his intention, matter of fact he recommend
the seller speak to an attorney if they are not clear on his proposal.

Sometimes,as humans, we get jelous because someone else beats us to the goldmine.

[Kenny]

If you review the system at hand, you will see nothing is ILLEGAL. If the investor buying the property is buying from a bank using a REALTOR, then it is the REALTOR's job to get the best price for the buyer/investor. There is a BUYER's agreement signed. Is it right for the bank to charge high interest rates to some applicants? Is that illegal? NOPE!!!! It is ALL agreed upon in writing. It is not illegal to take a loss or buy wholesale. There is no fraud going on. I have reviewed the system and think it is a great way for investors and Realtors to make money. Everything just has to be in writing and worded correctly.
Is it illegal to break a contract??? NO!
However, there can be consequences in breaking a contract, but it is NOT illegal.

[Tino]

Sorry Kenny, a licensed real estate agent cannot "sign away" their fiduciary duty.

We know that Realtors are inherently hucksters and charlatans, but that still doesn't allow them to break Florida real estate law.

Please review my March 11 reply.

[Frank Lee]

This is not a gray area of representation...

Seller agents have fiduciary duty to the seller. Buyer agents have fiduciary duty to the buyer. Transaction Agents have no allegence - just Skill, Care and Diligence in the transaction.

If you are a seller, you must be careful when providing contractual permission granting transition to TA.

[Arnold]

SOLUTION - Banks should not allow short sales at all! When was the last time you bought a car then went to sell it and asked the bank to forgive the money you owe? Forget it!!! If banks would not allow short sales 40% of the inventory on the market would be gone over night. Guess what that does to supply and demand. Falling prices...no more! No the folks don't have a reason to short sale.

Oh and instead of the gov't giving money to the brain dead lenders at .25% they would be better off using FHA, Fannie and Freddie to lend to primary home borrowers that are Current on their mortgages at 3% regardless if they are upside down or not. Any new home buyer would get the same 3% so long as not mortgage lates in the last 6 months (need to qualify) and any investor that is current could refi or purchase at 5%. Use the current mortgage brokers and retail lenders, limit the compensation to 1%.

Real estate crisis....come on...SOLVED!

[Bob]

This Blog certainly illustrates two primary characteristics of off-the-cuff chatter: it's usually timely but only thinly based on fact with heavy overlay of opinion. The original author, Thorner, and most of the posts have little understanding of agency law especially as it relates to licensed real estate agents (including Realtors). Several posters have correctly identified that fiduciary responsibilities are the key element between the various parties, and that full disclosure is essential. Frank Lee stated it most clearly, that only by acting as a Transactional Agent with full disclosure can a Realator be in compliance. The so-called Short-Sale-Specialist (Mike Linkenauger) is totally off base and either ignorant of how agency law works, or is intentionally spreading false information. He is like realtors 30 years ago who refused to work with buyers' brokers on some kind of misguided belief that only they understood agency, dual agency, single agency, and disclosed dual agency. Thankfully we Realtors are well past those days of relying more on opinion than facts. I have no dog in this fight, have done no short sales (yet), and have nothing to peddle. the only problem with KeyLargo's post is in not clearly stating the critical importance of either separate seller and buyer (single) agents or that a Transactional Agency agreement be signed by all parties. Period. No scam, fraud, or problem with options, simultaneous closes, etc exists in his scenario so long as the provisions of agency law are adhered to for all parties to the transaction. Anyone arguing to the contrary needs to set aside their prejudices and learn the facts. That includes you, Mr Thorner. Describing a wholesaling activity as you have is inaccurate and unfair.