San Diego Housing Bubble News and Analysis

We had sham sales going up. Why not sham sales coming down?

Now I am wondering, what regulatory mechanism exists to prevent banks and realtors from teaming up and selling the foreclosed homes to their friends for a song? Who can I talk to about this? The free market is being prevented from working and us taxpayers are paying for insiders to get cheap homes.
I am interested in pursuing this to the hilt. It has the potential to wreck the financial system.

Welcome to the new Soviet, comrade. Good housing is for political insiders only. The rest of you get the dregs. The parallels to the old USSR are amazing. Instead of the communist party system we now have a crony capitalist system where the insiders game everything to advance themselves at the expense of the rest of us. The colors are different but the results are the same.

Give us an MLS # and we'll talk.

MLS number is 090008427.

File a grievance with the local realtor board and also try to find out who owned the loan and contact the servicer. They might have never heard the offer.

First, that home has an ocean view? Sorry, I'm not seeing it. Maybe if you stand out in the middle of the street with binoculars. Am I missing something?

http://www.zillow.com/homedetails/615-Le...

Second, that Oceanside house is pending right now. You are assuming it is pending for list price. How do you know it didn't go for $100K over list and that is why they refused your offer?

Third, that Oceanside house had a list of $374K for 952sf.

Three other recent sales within about two blocks:

9/9/08 $549K 1312 sf ($418/sf)
9/22/08 $553K 1074 sf ($514/sf)
9/24/08 $537K 1180 sf ($455/sf)

If your Oceanside house goes for list only, it is $392/sf which is only slightly lower than the 9/9 sale.

If it went pending for more than that, then obviously that puts it in the range of the sales from last September.

Have you considered that house prices may have slid some since September 2008?

Just to clarify, I am looking for recourse to the current situation where the free market is being prevented from operating because bidding on houses is kept from the public.

This does not serve the interest of the taxpayer. If the free market were allowed to operate, the bank could likely have recouped 20% more of its loss. This is not an isolated case, but is happening on 100's or 1000's of houses. This could be causing 100's of millions of dollars lost through insider home deals.

Does anyone know of any mechanism such as a law or regulatory body that is in place to prevent the bank from selling foreclosed homes to their friends for a song? Maybe a journalist who would investigate it?

Thanks so much

It sounds like you are choosing to ignore potential evidence that the house is not underpriced and sticking to your theory that an underhanded, inside deal took place.

why are you so sure there is market manipulation going on? DO you really have evidence? I mean hard evidence but not rumor!

Banks are private institutions, not government entities (yeah, I know that all the bailouts blur this distinction, but it is still fundamentally true).

If it is happening, there are certainly some questionable ethics involved in the situation. But this is a problem for the bank and it's shareholders. The general public really can't do much about it unless there is a specific regulation to prohibit this (and I doubt that there is).

Honest Abe,

I like that name although it doesn't fit well with reality in the "free markets".

Free Markets? Free Markets? Did somebody say free markets? Nobody rides for free..it's a myth.

Here is my advice. Get on MEET UP and find a group of people who work at the banks. Go MEET UP and "Network", buy them their favorite drinks and talk about "REO Homes" that "Their" bank has and how you might be able to get them on the cheap. Also, find out their favorite vacation destination.

Or you can find a good BPO outfit that likes to value the property you want to buy VERY LOW...kinda like how the appraiser valued it VERY HIGH during the boom.

This is the real world Honest Abe and it will NEVER change as long as there are humans and Maslows Hierarchy of needs....

Sorry to burst your Utopian bubble...

svelte and ddm it was good to see your measured responses.

Honestabe why don't you call the broker for the listing agent and ask them what happened, why the home went so quick and see what sort of information that you get. If there was an inside job then why would the bank even list the home with a brokerage? Are you implying that someone at the bank told the brokerage, "psst, hey take Joe Sheisters offer to purchase".

Now the listing says that the list date was 2/5/09 and that the listing went off market on 2/10/09 so that is 5 days. Given the bizarre activity it is absolutely reasonable that many offers were received after the first day or two. I keep harping on how bizarre a time it is right now.... I will say it again, it is a frustrating time if you are a buyer.

Also please note... in some cases a brokerage will receive the listing from a lender BUT will not receive a price yet. In those cases the broker may indeed put a sign out so that potential buyers will contact the broker and in some cases even send in offers. Once the broker receives the pricing from the bank they can then put the home on the MLS.

Now could there have been a situation where some buyers came in without an agent so the listing agent will get both sides? Yes... However if there was an offer from a buyer with a different agent that did not get accepted and it was substantially higher then the offer that got accepted that listing agent could be in serious hot water. Especially if that other buyers agent tracked the deal and then reported it to the DRE.

Anyways... this tranny doesn't seem like anything underhanded.. Not to say underhanded stuff does not occur...

To reply to some posts... Thanks for your comments everyone. Very helpful!

You can see the ocean from the bedroom; I was inside it. The list date was 2/5/9 but the home was not entered into the MLS system until 2/8/9, which was Sunday. On Monday 2/9/9 there were multiple offers. Rather than counter them, the seller accepted one offer on the same day. Why wouldn't they counter multiple offers? In the free market, a bank that acts like that would go out of business.

I still would be willing to bid and allow the free market to set the price for the house. There are not many like it that come on the market, small, big lot, walk to the beach and see the ocean from your bedroom.

My point was not so much about what anyone else may think this house was worth. In a functioning market, the seller would be glad to sell it to me for more than it is worth.

My point is that, in the current climate where banks are getting bailed out, there is nothing in place to make sure they maximize their selling prices on these foreclosed homes. There is no regulation and weakened free market force to stop insider selling.

This is not an isolated event. My realtor just had another client in the same situation and my lender had a friend in the same situation recently as well.

Excellent post, honest_abe. It seems as if no one gives a rat's about having fair markets anymore. Everyone's all about 'how can I get mine?'

I would definitely encourage you to pursue this. I think SDR had a good suggestion above. If that doesn't get you anywhere, you can try the FBI or even local law enforcement. Here's the FBI's contact in San Diego:

http://sandiego.fbi.gov/

Unfortunately, it will probably be tough for you to get law enforcement to pursue a case like this. However, if the listing/RE agent committed fraud against the bank, and the bank wasn't in on it, the bank might be able to get law enforcement involved.

I say pursue this thing to the hilt. I'm sick of seeing fraudulent transactions like this. My solution has been to just stay the heck away from the RE market since it seems to be the most crooked thing ever. However, if you really want to buy a house, you're probably going to have to fight to get any kind of even moderately fair transaction. Our own government is going to be working against you getting a fair price pretty much every step of the way, so I wish you luck.

Abe if I were to venture a speculative guess based on no facts but what you presented I would guess the agent is getting both ends of the deal. That is all I could guess at this point. When it closes we will know. Or you could call the brokerage and just poke around a little bit. It does not hurt and let's see a little bit more fact finding.

Your point about the free market bidding is well taken and understood. I get that. Especially for properties that have something nice to offer.

Again though I don't see this as a friend of the bank buying the home.

Frankly, it's a cruddy sellers market. "Bird in hand" makes a lot of sense.

Things to consider:
1. The highest offer isn't necessarily the best offer.
2. The seller doesn't have to take multiple offers. More time means more expense. More expense means a greater loss.
3. The best REOs never make it to the MLS.