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Real Estate Saga

April 9th, 2010 at 12:28 am

Yes I changed my blog colors! The garish pink was getting to me. Made my eyes bleed late at night. This is a softer look...more SPRING!

Anyways....I might or might not (yes I do) know someone buying their first home. I am related to them. So I cannot give advice unless asked- and I know I will not be asked.

Here is the story...it blows my mind, and I could be wrong on the facts. This is all second hand info.

Lets name relative "Becca" (because I like that name). Becca cannot afford to live in her HCOL area and has decided to move to FL where real estate is tanking. Becca and her husband have a good income earning a combined about 80k a year...maybe more.

Becca saw a few houses and put in bids on a few foreclosures/short sales but was outbid. She really wants to take advantage of the $8k tax credit expiring at the end of this month, and interest rates as low as they are now. Because she was outbid on everything, Becca switched realtors.

She found someone who promised she can get a shortsale/foreclosure and close in time to get the credit. Realtor sent Becca online listings and Becca choose a house that she liked. Becca said she wanted to try and purchase it. Becca was told by the realtor that the house would ultimately sell for more than it is listed for- Becca needs to go get preapproved for $15k more if she wants to buy it. Becca goes to the bank to get approved for more.

Becca puts in an offer for $20k more than the list price and waits. and waits. The realtor tells Becca and her family confusing stories of an "Agent" who is in charge of the sale, there is no negotiating with the bank, but the agent..later they learn the agent is actually the realtors husband. The realtor spins it to sound like Becca is going to get a better deal and a faster close because the realtor has a "connection"..then finally Becca's offer is accepted.

A closing date is set, and an inspector must be found to look at the house. The realtor says "the homeowner is a contractor- he can probably inspect it for you. Call him." ...Wrong! Conflict of interest. Becca at least realized this and said- "no". That flew up a red flag for me...I was thinking- "WTH? What realtor would suggest that?"

But something still felt weird for Becca. No earnest money was given. A contract was signed..but something was off.

Finally the REAL story came out. The realtor's husband works at a bank. Before Becca put in her offer (while she was getting preapproved for more money)...the realtor's husband BOUGHT THE FORECLOSED HOUSE for cash. He is now selling the house to Becca for $20k more than he purchased it for! He has not even closed on it yet...he closes on the house the day before Becca closes on it.

And still somehow- Becca and her family are OK with this- they still think they are getting a good deal! They say its because the same house down the street is listed for sale for $20k higher than Becca is paying for her house! So they now know there is a middleman and that they are paying $20k more than he did..but since she can close and get the tax credit, and the house is still underpriced (in her head because of the house down the street listed for $20k higher)...she is going through with the deal!

I don't get it. On so many levels. Forget that most people would say "F it- I'm not paying someone $20k just because they owned a house for 1 day."...forgetting that, what about the ethics of this deal? A realtor took Becca's confidential information (how much money she had, what she could afford, what house she wanted to buy) and used it to her own advantage! She used Becca's trust against Becca! Isnt this fraud?! Isn't this enough to get the realtor fired if not arrested? I thought realtors were required to act on their clients behalf, to work in their clients best interest?! And why is Becca not backing out of the deal so quickly she leaves the realtor cold? Why is she still buying the house? I don't get it. The whole family just accepts it and tells themselves she is still getting a good deal.

If it was me- I would be so angry I would try to get the realtor disbarred from selling real estate. And I would realize that this ass man husband is stuck with a house he does not want in a declining market if I back out of the deal. I would go back and say "I will buy this house- but only for (what he paid for it...or less if I was feeling really angry).

Becca's just continuing with the sale. I am incredulous with her lack of personal judgment but actually don't think the deal will go through. I would think her mortgage company would see the title was held for 1 day before being resold and refuse to do business. Or that the house wont appraise. I hope the whole deal falls through. For Becca's sake.

Please- no one better post that this is common. It is so sleazy I want to throw up.

9 Responses to “Real Estate Saga”

  1. ceejay74 Says:

    Ugh. That made me feel sick to read, too. I hope Becca gets out of her state of denial in time to screw these people over BUT GOOD.

  2. ambitioussaver Says:

    I'd definitely report that realtor. If Becca hired the realtor, then she hired that agent to act as a fiduciary on her behalf. Part of an agent's fiduciary duty is to not have a conflict of interest and misuse confidential information to benefit themselves. I'm not an attorney but I'm almost 100% on this one with all the CPA exam stuff being crammed down my throat about an agent's fiduciary duty & ethics. Now, if this is the seller's agent - then that's another story.

  3. BlackDiamond Says:

    That is bad. I would not go through with the deal. No way. Becca needs to report the realtor.

  4. creditcardfree Says:

    I agree...completely unethical and grounds for loss of license.

  5. baselle Says:

    Awful, awful, awful. Handcuffs all around.

  6. whitestripe Says:

    that's terrible.
    the laws are totally different here, which would make it hard for someone to do that or atleast not be able to make much of a profit. not only would he have to pay stamp duty and council fees (a few thousand at least), but unless you live in a house for a year after you buy it, you must pay capital gains tax - probably wouldn't get much change out of that 20k here.

  7. whitestripe Says:

    btw, like the new colours!

  8. Broken Arrow Says:

    Huh, quite the interesting situation.... I'm not sure if the law was broken in any way, but I'd definitely be paranoid about the business deal. I doubt I'd go through with it unless the house was somehow a must-have.

    In any case, if they want it that badly maybe there isn't much you can do to talk them out of it.

    Anyways, I like the new colour scheme too. You could do something similar with pink if you decide to go back to it. But yeah, I didn't care for the last color scheme to be honest.

  9. monkeymama Says:

    Sounds familiar.

    There is a jinxed house in our neighborhood that has sold like 10 times in 10 years. It's WEIRD. The same model rarely comes up for sale otherwise.

    SO, at the beginning of the crash, we were house shopping. Our neighborhood was still holding pretty strong, but there were a lot of more desperate sellers. If we could sell our house we could put a nice/solid offer on a home with more land/space - without spending more. Basically, land prices depressed first, and we wanted to take advantage. We were on contract with a house and so listed our home. We were thinking $499k for a fast sale. It was a contingency purchase - time was of the essence. I think our realtor talked us into $525k. In the couple of weeks we listed, we had no interest but some random people asking if we would take $400k - thinking we could be desperate. Most of the time I have been an adult, real estate sells in 5 minutes.

    Our next door neighbor bought their home with a big name realtor in the area. Very flashy - we never liked the realtor. So neighbor asks us one day why we priced so low - that this realtor is PISSED at us - we are bringing down the neighborhood. It's like, HELLO. This is not low! They were trying to sell the same model (jinxed house) for $650k at the time - I swear to you. That was the peak price. We're like, okay but NOTHING is selling. At least things sell for $500k. It's not like we were skipping town with are riches either. We were looking to buy in a pricier area, actually. A lateral move. Price was FINE.

    SO, I swear to you, the realtor ended up buying their listed house for around $600k, and found some sucker to buy it for about as much. The whole thing was really shady. I think it was our realtor who pointed out all the weirdness that was going on with that house - something just wasn't right. Maybe he was able to see who bought it - I don't remember. He thought the reported price was inflated, too (when the realtor bought it. Like, they really didn't pay that much themselves). Within the year, one or 2 other homes sold for $600k+. It was insane. I don't know where they found these clueless buyers. they all foreclosed within a year or two - were the first to fall.

    Another neighbor, not soon after, needed to move for medical reasons. Sold in a hurry for $400k-ish. That was the going market rate at the time. But for a couple of random people who got suckered into paying another $100k-$200k. Boy, it happens.

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