[quote=SD Squatter]I think it’s ridiculous that banks accept such obvious fake attempts at salesmanship as legit. It’s right there in the open, all it takes is to look at the listing.[/quote]
They don’t CARE because they’re being paid (or are going to be paid) for the defaulted loan by the PTB. They are planning on giving any jr lienholders <=6% of what they're owed ... or nothing. Their mindset is, "Take it or leave it. Foreclose yourself."
The "sellers" listing agent is only required to furnish the 1st TD holder (who will approve or not approve any SS offers) with a "legitimate" MLS number. They do not usually prove their "marketing strategy" because they were actually hired by the "sellers" and have no fiduciary relationship to the sellers lender. A MLS number is assigned to the property when the LA "markets" it online in the MLS at midnight for a minute and a half, at which time he/she e-mails the "online listing" to the defaulted-upon lender (or prints it out for later use).
When LA's friend or relative's cash offer is miraculously presented to the lender the next day, the LA has used sold comps in their SS pkg that may be in the same zip code but are not legitimate comparables to the listed property sought to be deeply shorted. They may be of comparable sf but that is where the comparison stops. They are on busy streets, in much worse shape, are lacking garages, have unpermitted additions or have structural problems found by buyers' inspectors which caused them to be sold for much less. A distant lender doesn't know the difference and accepts the deeply shorted offer to get rid of the "deadbeat" sellers whom they have let squat for months/years. In doing so, the lenders themselves have created their own problem and were complicit in the depth and breadth of how bad they allowed the problem to get.
I'm not currently active but this is my take on how a lender (usually distant and ignorant of the local market) is bamboozled into accepting an offer >=40% below market. Even if they order a “local broker opinion” before accepting offers, they are not completely in control of who that broker is and their relationship, if any with the LA. In each micro-market, most of the longtime brokers and agents are VERY well acquainted with one another and some even know each other from as far back as HS! A distant lender is in the dark about all this and just wants to get the deal done and get out of it.
There is a house a couple of blocks from me that sold for ~$620K in 2006 to a buyer whose family owned a quarry. Not only did the “sellers” do extensive iron and stonework inside and outside of the property, it was situated on a 10K+ lot and the extensive work done to it in recent years was really quality. The LA (a relative of the “sellers”) took pictures of a flooded easement that was NOT part of the property, set the sellers (and the neighbors) trash, recycle and yard waste bins in the front and lined them up in a row so as to block the stone facade on this ~100′ wide perfectly flat lot. Then they took two more photos of a deep hole dug in the unfinished backyard. Of course, no photos were shown of the fabulous granite kitchen with 12′ island, floor to ceiling stone FP and extensive wide-plank rustic wood flooring. Of course, those listing photos (mentioned above) were only displayed online in the MLS for a day. Miraculously, the property sold for $265K all cash in 2011 after a 22-day closing to a person who didn’t have the same last name of the “seller” but was likely another one of their “relatives.” The “sellers” still live there today. Obviously, they are now “renting” the property they used to own (and worked so hard on) from the new buyer. Maybe they are finishing the improvements in lieu of rent :=0
The subject’s lot alone (if vacant) was worth more than $265K. A property next door to the subject is worth approx $1.8M.
This type of fraudulent transaction deeply harms the value of the surrounding properties, at least for the six months the appraisal stemming from the bogus SS is used as a “sold comparable.” In this case, the surrounding properties varied widely in value from $400K to $2M. Until the PTB will no longer make up (or come close to making up) the short difference to 1st TD holders of FF mortgages, this travesty will be allowed to continue.
