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I’m wondering… Is this illegal or just a misleading tactic? Listing Price.

By REpro following x   2011 Aug 15, 12:26pm 10,714 views   43 comments   watch   nsfw   quote     share    


I deal with many RE brokers throughout the country. What I’ve experienced in the Bay Area has taken me by surprise.
In several attractively priced listings, I found the same story. Example: Listing price $399,000; however, an offer of $450,000 was rejected by seller (bank). In reality, seller is looking for offers over $500,000. The property is then relisted for the same $399,000 a few weeks later. Why have the seller and broker agreed to list the property for such a low price if seller has NO INTENTION to sell that low? This is not an auction (auctions require special licensing). The only explanation: to lure unsuspecting buyers into an overbidding war, setting a precedent for future prospective buyers (“If you don’t bid above the asking price, you will never get the property”). In the end, many people lose valuable time. Effectively in official RE statistics brokers proudly showing how many properties were sold above asking price.

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4   APOCALYPSEFUCKisShostikovitch   ignore (38)   2011 Aug 15, 2:18pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

This is why everyone hungers for a chance to rip out a RE agent's arm and beat him to death with the wet end. Every one of these instances should be reported to the local DA. When convicted, visit the scum-bag agents in jail, let them know you made the referral for the case and give them a copy of Brides magazine so they can pick something nice to look alluring for the neonazi serial killers who will make wives of them and shred their assholes into red, bloody pulped sores. If you are feeling generous, offer them a fatal dose of cyanide and remind them, 'it's never been a better time to die.'

5   kc6zlv   ignore (0)   2011 Aug 15, 2:56pm   ↑ like (0)   ↓ dislike (1)   quote   flag        

It isn't limited to the Bay Area. I just went through a similar situation with a short sale I made an offer on in the Sacramento area. In the end Bank of America insists the house is worth more than list price even though it needs a lot of work. In my case the listing agent appears to be a very level-headed guy. The buyers agent I was dealing with has been a waste of flesh from the start.

6   investor90   ignore (2)   2011 Aug 15, 3:10pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

To ApocalypseFuck- WHY DON'T YOU RUN FOR OFFICE? ANY OFFICE---with campaign promises like you make---you would EASILY win. I think I will put you in as a write in CANDIDATE? THE ONLY HONEST person running. But with a twist. I think you would hire some new government employees ...hundreds of them to WORK JUST LIKE THE ShowTime TV DEXTER character. DEATH TO ALL EVIL bastards...if that means REALTORS... So Be it. When did they think that being a Realtor WAS anything but NOT a legal excuse to maim and destroy people AND GET PAID FOR THE MISERY DEATH AND DESTRUCTION they cause?

VOTE FOR TONY MANERO for representative of anything. STOP THE REALTARD monsters!

7   taxee   ignore (1)   2011 Aug 15, 11:36pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

I really do believe they sell just enough REO so they can pretend to still be a business. The model seems to be: extend, pretend, collect that paycheck and bonus until they chain the doors.

8   Done!   ignore (5)   2011 Aug 16, 12:37am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Chin up, this isn't 2007, there aren't any bidding wars. The parties involved are dreaming. You'll eventually see that house go for less 300K.

South Florida is finally operating in a free market, well almost.
Straw investment firms are still getting the impossible 30K deals, that no body else living and breathing reality can't seem to obtain.
But the ridiculously overpriced listings are a thing of the past.
You still and always had, people that aren't really trying to sell their house, but list high just in case. But they are the exception and not the norm.

9   FortWayne   ignore (4)   2011 Aug 16, 12:51am   ↑ like (0)   ↓ dislike (0)   quote   flag        

bubblesitter says

Greed is the disease that does not go away,whether up or down market.

10   REpro   ignore (0)   2011 Aug 16, 1:15am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Tenouncetrout says

South Florida is finally operating in a free market, well almost.

Glad to hear this. Everything should be worth as much as someone is going to pay for. The only exception is monopoly, where prices can be dictated (e.g. DE BEERS in diamond market).
Is some areas we still have people who strongly believe that current downtrend is only temporary. In Bay Area there are also people who just have too much money.

11   PockyClipsNow   ignore (0)   2011 Aug 16, 2:31am   ↑ like (0)   ↓ dislike (0)   quote   flag        

If you call the bank about accepting a short sale they will say 'bring us an offer' then decide whether to take it. Its not that crooked. What else can they do?

12   gregpfielding   ignore (1)   2011 Aug 16, 3:31am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Um.... yes. This is legal and not that uncommon. I can see why it's frustrating for buyers, but there is nothing illegal about it.

Realtors may deserve bashing for lots of reasons, but this isn't one of them.

Besides, the seller picks the price. Especially if the seller is a bank, the agent had almost nothing to do with it.

13   Katy Perry   ignore (2)   2011 Aug 16, 4:12am   ↑ like (0)   ↓ dislike (1)   quote   flag        

what else is "sold" this way in America? nothing IMO.

14   mdovell   ignore (2)   2011 Aug 16, 4:18am   ↑ like (0)   ↓ dislike (0)   quote   flag        

There's an odd brokerage firm in mass..

first they had commercials they'd sell your house in 60 days
Then they had them saying 90 days
Now they are advocating for short sales

15   pseudosea7   ignore (0)   2011 Aug 16, 5:00pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

Wouldn't it be nice if the buyer offers a much higher price, let's say $500,000 and later pull out of the offer? If the seller can do that why can't the buyer? Pretend to take the offer and sadly disappoint the other party and waste everybody's time.

16   wully   ignore (0)   2011 Aug 16, 5:24pm   ↑ like (0)   ↓ dislike (1)   quote   flag        

It should be illegal

If a car dealer in California tried that kind of scam he would be in jail before the sun went down.

17   wully   ignore (0)   2011 Aug 16, 5:30pm   ↑ like (1)   ↓ dislike (0)   quote   flag        

I think real estate agents love this short sale scam

All it is for them is a bait and switch form of advertising to pull in the suckers and get leads.

18   bighat   ignore (0)   2011 Aug 16, 9:48pm   ↑ like (1)   ↓ dislike (0)   quote   flag        

A listed offer should be just that. An offer to sell at that price. The first buyer who accepts the offer should have a contract to purchase the property.

19   commonsense   ignore (0)   2011 Aug 16, 9:58pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

wully says

It should be illegal
If a car dealer in California tried that kind of scam he would be in jail before the sun went down.

I feel the same way. This is why today more than ever I stay away from real estate. These actions are pathetic. There are too many questionable actions taking place. The great thing about these sites is that they stand as living proof that all people looking at or monitoring the markets are not stupid.

20   commonsense   ignore (0)   2011 Aug 16, 10:04pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

thomas.wong1986 says

So the seller is dreaming of the big payoff. Ha Ha Ha. let them keep dream!

LOL is that the truth! To me anyone who does such a thing as looking for overbidders today is a moron. I would love to look at a property with a certain listing price and have them expect a bid. I can clearly state I have never overbid on anything. My principle is an asking price already has a margin placed into it for underbidding. I always would shave off the top never go over a given price.

21   maire   ignore (0)   2011 Aug 16, 11:21pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

Bet the property goes to a group of "investors." The bank (banks) make more bucks in the long run selling bundles of property.

22   tomuo   ignore (0)   2011 Aug 17, 5:28am   ↑ like (1)   ↓ dislike (1)   quote   flag        

Katy Perry says

what else is "sold" this way in America?

On eBay, you'll see auctions with a low starting price, hidden reserve price, and a high "buy it now". This lets the seller wait for the one person willing to buy it at their wishing price, while still generating interest, and judging what people are willing to go up to, without having to sell at any price less than their wishing price.
As described here, it's hella annoying for a potential buyer, because the seller isn't ready to take the best price now, they just want to wait and see, while keeping their feet in the water.
A market is made by willing buyers and sellers, this would be an unwilling seller in my book.

23   Fiji   ignore (0)   2011 Aug 17, 5:31am   ↑ like (1)   ↓ dislike (1)   quote   flag        

I just dealt with a short sale that I had to pull out of. The bank wanted me to commit to a price for 90 days, yet they can still look for better prices. At the end of the 90 days, they can still ask for a higher price! They are crazy . . . . I don't mind them pulling these tactics, but not if we are bailing them out.

24   corntrollio   ignore (1)   2011 Aug 17, 5:52am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Fiji says

I just dealt with a short sale that I had to pull out of. The bank wanted me to commit to a price for 90 days, yet they can still look for better prices. At the end of the 90 days, they can still ask for a higher price!

Good for you. It's stupid for banks to take this line because there's always another short sale to move on to if one bank is a jerk about it. Buyers are so grateful to buy a "home" that they don't realize that they should be dictating the terms here.

25   commonsense   ignore (0)   2011 Aug 17, 6:03am   ↑ like (1)   ↓ dislike (0)   quote   flag        

corntrollio says

Buyers are so grateful to buy a "home" that they don't realize that they should be dictating the terms here.

Precisely! The key factor the masses have yet to catch onto.

26   kronicade   ignore (0)   2011 Aug 17, 7:00am   ↑ like (0)   ↓ dislike (0)   quote   flag        

I think it's more complicated than everyone assumes. If this is a short sale (I'm assuming it is) there may be a second or third lien on the property.

Or (more likely) the owner is just trying to get an offer as quickly as possible to present to the bank.

If the resident lists a property and it is less than what is owed to the bank OF COURSE the bank is going to want more.

Look at it from the banks perspective. The bank could have NOTHING to do with the listing.

27   corntrollio   ignore (1)   2011 Aug 17, 7:21am   ↑ like (0)   ↓ dislike (0)   quote   flag        

kronicade says

Look at it from the banks perspective. The bank could have NOTHING to do with the listing.

I have -- what does this have to do with having offers open for 90 days? The bankster's interest is to get the most money. Isn't it better to be efficient about that so the price doesn't drop more while you're doing it?

The reality is that the banks have little interest selling things below par en masse. Everyone knows you have to get buyoff from 2nd and 3rd lien holders, but you can do that while your current mortgagor is defaulting.

28   kronicade   ignore (0)   2011 Aug 17, 7:50am   ↑ like (0)   ↓ dislike (1)   quote   flag        

You're correct. Unfortunately banks are not interested in "mitigating loss" only "maximizing return".

The banks may also have it worked out that on average they can get more money if they drag a process out.

For example, a borrower may be fed up with the delays and throw in a 20k promissory note or the buyer might want to just accept another 10k and be done with it.

I'm sure the banking the department responsible for the sale is commended when they squeeze another 30k out of the short seller and/or buyer.

There could also be some much larger forces at work wrapping their losses up with the holder of the note who might own a slice of a CDO that was sold a long time ago.

Who knows

29   kronicade   ignore (0)   2011 Aug 17, 7:53am   ↑ like (0)   ↓ dislike (1)   quote   flag        

So no, it not necessarily in their interest to be done with it.

The bank cannot trust that the first offer the seller has found is really at the correct market value. This is because the seller does not have an interest is the highest return, only to sell the property.

The seller does not care how much the bank gets and the bank may hold out if they think they're being short changed.

Take a home that is actually worth 500k. Why would the bank accept the first offer for 450k just to expedite their loss?

30   corntrollio   ignore (1)   2011 Aug 17, 7:54am   ↑ like (0)   ↓ dislike (1)   quote   flag        

kronicade says

For example, a borrower may be fed up with the delays and throw in a 20k promissory note or the buyer might want to just accept another 10k and be done with it.

More likely the borrower gives up because the bank is insane, and the bank goes back to them 6-9 months later and says, "we'll take your prior offer now." Actual story I've heard more than once.

Waiting forever to approve a sale while the market is dropping is usually misguided.

kronicade says

Take a home that is actually worth 500k. Why would the bank accept the first offer for 450k just to expedite their loss?

No one's asking them to take any offer. The question on the table is why it needs to be open for 90 days. If the bank thinks the offer is low, why not reject it quickly? If the idea was to get the highest offer, they could incentivize the realtor in a different way, e.g. change the fee structure so that the used house salesman gets substantially more the closer to the loan price the sale is. I'm not really sure what you're arguing any more.

31   kronicade   ignore (0)   2011 Aug 17, 8:04am   ↑ like (0)   ↓ dislike (0)   quote   flag        

I agree with you, just trying to rationalize the delay. I gues it is just insanity.

Maybe the big banks have lots of departments that don't communicate where all the work is done by a few under paid people and the management is completely incompetent.

Or, maybe a refusal letter is a waist of their time (no benefit to them) so they just leave it hanging.

32   sfvrealestate   ignore (0)   2011 Aug 17, 9:13am   ↑ like (0)   ↓ dislike (0)   quote   flag        

I'm a Realtor. This has been going on for years. We call it "price to entice." As far as I can see, the only parties that benefit are the Realtors as the house usually sells really fast and the agent can brag about multiple offers. But what's the true, long term benefit in getting buyers all excited about a house they ultimately can't afford to buy?

33   thomas.wong1986   ignore (3)   2011 Aug 17, 9:24am   ↑ like (1)   ↓ dislike (0)   quote   flag        

kronicade says

Take a home that is actually worth 500k. Why would the bank accept the first offer for 450k just to expedite their loss?

It stops being worth 500K when the other home across the street is sold for $450K or less. And that has been happening over the past few years.

34   corntrollio   ignore (1)   2011 Aug 17, 9:57am   ↑ like (0)   ↓ dislike (0)   quote   flag        

thomas.wong1986 says

kronicade says

Take a home that is actually worth 500k. Why would the bank accept the first offer for 450k just to expedite their loss?

It stops being worth 500K when the other home across the street is sold for $450K or less. And that has been happening over the past few years.

Also, kronicade has failed to show how this is different from ANY homeowner selling his/her house. Everyone plays this game -- should I wait and hopefully get a better offer?

Are you saying banks are worse at valuing properties than individual owners? You'd think banks would be better because they have more people to do analyses, have more resources at their fingertips, and have more houses they already own (haha) against which they can compare.

35   REpro   ignore (0)   2011 Aug 17, 10:53am   ↑ like (0)   ↓ dislike (0)   quote   flag        

Banks analyze only numbers. Rarely short or foreclosure house is in mint condition. Information about house condition banks can only receive from the listing broker. If property received multiple offer (that was a fact) and the highest and best offer was $450K, why they just can’t admit it, but still hope for $500 plus and relist again for the same low asking price.

36   SNL19067   ignore (0)   2011 Aug 18, 10:51pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

My wife and I had a similar situation.
We were looking to buy a house for cash as our primary residence and a local property (REO) came onto the MLS with a note that "...the best offer over $200,000 in our office by 5 PM tonight gets the house." I called my wife who left work immediately, we looked at the house and went to our realtor's office to make the offer. We offered $201,000 and got it in by 4. We were told by the seller's realtor that ours was the only offer. We were very happy that our search was over. For the record, the house at the peak of the market would have gone for around $280,000.
We got a reply from the bank after a week or so that they now wanted $225,000! Not liking the game but still wanting the house, we countered at $208,000. They then countered at $230,000. Game over and a huge waste of our time and resources.
I went to the Sheriff's Sale for the property the following week and spoke with the bank's lawyer about this property and showed him the MLS listing to which he replied "They would never have sold the property at that price". I guess the banks can do whatever they want. I further guess that having the full faith and financial backing of the federal government behind you makes this easy for them.

37   corntrollio   ignore (1)   2011 Aug 19, 3:59am   ↑ like (0)   ↓ dislike (0)   quote   flag        

SNL19067 says

I went to the Sheriff's Sale for the property the following week

What did the property sell at in the end?

38   SNL19067   ignore (0)   2011 Aug 19, 6:36am   ↑ like (0)   ↓ dislike (0)   quote   flag        

As far as I know, the bank maintained possession at the Sheriff Sale and the property still has not been sold. They would have been wise to take our offer. This happened almost a year ago.

39   zzyzzx   ignore (1)   2011 Aug 22, 4:45am   ↑ like (0)   ↓ dislike (0)   quote   flag        

A bidding war to get a $400,000 house to $500,000 in CA in this economy??? That's laughable.

40   kronicade   ignore (0)   2011 Aug 22, 6:37am   ↑ like (0)   ↓ dislike (0)   quote   flag        

corntrollio says

thomas.wong1986 says

kronicade says

Take a home that is actually worth 500k. Why would the bank accept the first offer for 450k just to expedite their loss?

It stops being worth 500K when the other home across the street is sold for $450K or less. And that has been happening over the past few years.

Also, kronicade has failed to show how this is different from ANY homeowner selling his/her house. Everyone plays this game -- should I wait and hopefully get a better offer?

Are you saying banks are worse at valuing properties than individual owners? You'd think banks would be better because they have more people to do analyses, have more resources at their fingertips, and have more houses they already own (haha) against which they can compare.

Yes, I'm saying banks are NOT as good at determining fair market value as homeowners and local buyers. This is especially true when a bank has tens of thousands of properties.

41   kronicade   ignore (0)   2011 Aug 22, 6:54am   ↑ like (0)   ↓ dislike (0)   quote   flag        

I'll just reiterate what I've already said:

A homeowner selling their property as a short sale will almost always start by listing their home LOWER than the home could actually sell for. This is so the homeowner can quickly present an offer to the bank.

And yes, homes are decreasing and the market sucks but it will still take awhile to cover a 10% gap if the bank accepts the first offer when they can get more.

I see the problem as twofold: One, the bank is a bureaucratic, manipulative nightmare with unrealistic comps (pointed out by the original post).

and Two, the homeowner just does not care about how much the bank gets and they just want to be done with it at the lowest price.

Homeowners do not have an interest in the price if they're short selling, that was my only real point.

42   corntrollio   ignore (1)   2011 Aug 22, 9:33am   ↑ like (0)   ↓ dislike (1)   quote   flag        

kronicade says

A homeowner selling their property as a short sale will almost always start by listing their home LOWER than the home could actually sell for.

It depends on when you're talking about. When the short sales first started en masse, it seemed like more of the short sales were for "approved" amounts. Later on, with more and more short sales and as the amounts got further and further from the loan value, the amounts weren't necessarily approved.

The incentive for the bankster is 1) not having to go through the expensive of foreclosure, which can take quite a while, and 2) not having to take the liability on themselves. It seems like banks have plenty of incentive to do this stuff quickly, but are choosing not to do so. They could easily get the advice to set good short sale prices if they wanted to do so, and it'd be cheaper than letting a property languish for several months and then foreclosing.

43   kronicade   ignore (0)   2011 Aug 23, 2:10am   ↑ like (0)   ↓ dislike (0)   quote   flag        

I agree corntrollio, just trying to explain the inefficiencies and ineptitude of the banksters

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