During the last foreclosure cycle – Starting in 2007, bank owned foreclosures were the typical sales type in real estate.
A majority of the housing was distressed in the following years up until 2012-2013, at least in the Santa Clarita Valley housing market.
It was around that time when an issue arose with the real estate agents who were representing the banks in the sale of their distressed “REO” inventory.
I know first hand because we had this insult happen to our real estate buyers from time to time. In addition, Citi Group, which was utilizing my team in the sale of their Real Estate Owned properties, advised me.
The reason these dishonest real estate agents were operating this way was that they wanted to capture the buyer so they could earn a double commission.
Other agents, with very qualified buyers, were writing offers that weren’t making it to the bank’s Asset Manager for review.
Asset Manager – the bank employee who was assigned to deal with the Real Estate Owned process and paperwork.
The Asset managers gave specific instructions to their REO agents, mandating that every single offer received was to be submitted to them. EVERY SINGLE OFFER. The punishment for not doing so, if found out, was termination of the agent’s REO Listing relationship.
The banks also started paying their REO agents no extra in the form of commission if they were also representing the REO buyer. Removing the incentive was brilliant and leveled the real estate playing field. (here is a thought, tell the agent you are hiring you won’t pay them any extra if they represent the buyer and see how fast they “don’t have a buyer for your home…”)
It did not take long until the foreclosure owners were double checking their agent’s honesty. Fake buyers, straw buyers, were hired and sent directly to the REO Realtor who was working for the big banks.
Low and behold, the banks discovered the agents they had hired, at least some, were palming the offers submitted by other real estate agents representing clients.
Those agents, who were discovered, were Terminated. News spread fast amongst the REO agents and those agents who were frothing at the bit to get a REO account to sell the bank owned properties.
Palming offers as a Listing Agent is not keeping you honest with your seller. They are required to know about all offers received.
It my understanding that 8 states make dual agency illegal in real estate. I also get why we have an entire page of Civil Code Sections talking about Dual Agency when we present a real estate contract.
Feb 24, 2012 – Of the eight states that ban dual agency outright, four allow designated agency (Alaska,Colorado, Maryland and Texas), three allow transaction brokerage (Florida, Kansas and Oklahoma), and three allow both (Alaska, Colorado and Texas). Subagency: The listing broker represents the seller in an agency relationship.
Civil Code Sections referenced, at least some are 2079.24 and on the Relationship Disclosure 2079.16 appears on the front.
Get your own realtor when approaching the purchase of real estate and rely on them to get your offer in front of the seller.
Sellers have a way of finding out when an offer was submitted and when it’s being palmed by their Realtor. When their agent gets found out, it gets ugly really fast.
Offers on real estate carry with them expiration times and dates. Sellers should be reviewing before the offer expires. Agents who are delaying the process in an attempt to bring their own buyer are failing to provide the best real estate representation to their sellers.
Today, this does not occur often, especially when I do my vehement writing about it constantly and present stories on our Housing Radio Show.
However, sometimes it does and it becomes apparent when offers are submitted but where the seller is waiting, “according to their agent”, more than two days to respond.
I have had my real estate buyers, by their own volition, go to the seller’s home and knock on the door. When they explain why they are there and that they submitted a full priced offer on the seller’s home, the seller’s are most times shocked. They did not receive the offer or get notification from their real estate agent. Watch that agent fall out of the real estate industry quickly!
Then my Social Media Accounts start blowing up and those bad real estate agents are called out!
It’s by Santa Clarita real estate blogs like SCV661.com where the public can discover when those in real estate are doing it wrong. I’m Connor T. MacIvor and I’m glad to be at your service.