Home › Forums › Closed Forums › Properties or Areas › Short Sale Realtor in collusion with buyer, is it legal.
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SD Realtor.
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February 15, 2011 at 11:25 PM #667951February 15, 2011 at 11:36 PM #666816
CA renter
Participant[quote=urbanrealtor][quote=CA renter]
I don’t care if the house was properly listed and got an offer from an unrelated buyer. I DO care if the deal was made before the house hit the MLS/market, and it’s particularly unethical if the deal was made between related parties (including anyone related in any way to the agents involved).
Yes, if banks/regulators required a minimum marketing time, that would be of great help. It would also help if they did periodic audits to ensure agents weren’t ripping them (and the taxpayers) off.
BTW, not sure where you got the “uninformed conspiracy nut” part, but most of my predictions made many years ago have been spot-on from the very beginning. I might be a lot of things, but “uninformed” isn’t one of them, particularly about things I’m willing to debate about (you’ll never hear me argue about things I’m “uninformed” about…I listen and learn from those who know more, rather than debate and make myself look like an idiot). Perhaps you shouldn’t trust so easily.[/quote]
Very few people who know me would describe me as “trusting”.
You have a very incomplete idea about how these things go.
One of my agents had a client who liked a condo but was beat out by a higher offer.
The agent then reached out to the other units/owners in the complex to see if they wanted to sell to her client.
The unit that responded and with which they made a deal was upside down.
They had a deal before the unit ever hit the MLS.
When they put it in the MLS, this was disclosed.
It was appropriate to put this in the MLS for comparative purposes.
There was no fraud.
There was no conspiracy.
The bank did not get screwed.
CAR, you don’t bring a lot to the table as a general rule.
You rant about “fraud” (apparently defined as any result you don’t endorse or understand) and call Realtors crooks.
Fraud has a very specific meaning.
It means a lie that damages another.
I don’t have a great love for most of my colleagues (many ARE crooks) but unless you have some actual examples of fraud please stop wasting pixels.I do pretty well without lying to anybody.
I think your incomplete understandings coupled with your declarations of moral turpitude put you about one step up from 911 truthers.
You are woefully ignorant and uninformed.
You are the kind of guy that is too smart by half and gets rolled by a dishonest agent and then brags about the deal he got.[/quote]If I’m so “woefully ignorant and uninformed,” perhaps you’ll trust that sdr is less ignorant and more informed? Here’s a post from a short while ago, on another thread regarding short sale fraud:
Submitted by sdrealtor on February 3, 2011 – 8:52pm.
Just popping in for a comment here. That house on Camphor was stolen by any measure. Finding a nice newer 1 story home in NCC is hard enough let alone a 2600 sq ft home. Throw in a pool and sit down panoramic ocean views and you have the single hottest and hardest to find commodity there is. Not only cant you compare it with non-view homes, you cant compare it with 2 story view homes either. There are always older cash rich buyers looking in this market for exactly what that home offered.A house like that would have sold easily on 9/11. The banks got totally hosed on that one.
To put it into perspective the last newer 1 story ocean view house I saw with that kind of view sold in the Bay Collection in December 2008 when the market looked about as grim as it ever has. It was 3500 sq ft and sold for $1.83M. House stolen….Case closed
http://piggington.com/another_short_steal?page=1
—————–Of course, I’m sure you are so much wiser, better informed, and less ignorant than I; but perhaps you ought to read the news.
“June 10 (Bloomberg) — Two Connecticut real estate agents found a way to profit in the U.S. housing bust: Buy low, sell fast. Their tactic was also illegal.
Sergio Natera and Anna McElaney are scheduled to be sentenced in Hartford’s federal court in August after pleading guilty to fraud. Their crime involved persuading lenders to approve the sale of homes for less than the balance owed –known as a short sale — without disclosing that there were better offers. They then flipped the houses for a profit.”
And there’s this:
“What is short payoff fraud?
According to a member of Freddie Mac’s Fraud Investigation Unit, a slight variation of our general definition of mortgage fraud also defines short payoff fraud – “Any misrepresentation or deliberate omission of fact that would induce the lender, investor or insurer to agree to the terms of a short payoff that it would not approve had all facts been known.” Misrepresentations in these schemes may include the buyer of the short payoff property, a subsequent transaction at a higher price, and/or the selling borrower’s hardship reason used to qualify for the short payoff. In many instances, the short payoff fraud will involve a “facilitator,” engaged by either the listing agent or the selling borrower, to assist with negotiating the transaction.How is short payoff fraud committed?
There are many variations of short payoff fraud. The example below is just one way this type of mortgage fraud can occur.A seller (delinquent borrower) owes $100,000 on a property that is worth $80,000.
The short payoff facilitator negotiates with the bank to accept a $70,000 offer to purchase the property. In several instances, Freddie Mac has seen that this offer will be made directly by the facilitator or through an entity under his/her control.
The lender/investor accepts the offer for $70,000.
The facilitator neglects to disclose to the lender/investor that there is an outstanding offer between the facilitator and a second end-buyer for $95,000.
Both transactions close on the same day with the net difference being pocketed by the facilitator and increasing the lender/investor’s net losses.”http://www.freddiemac.com/singlefamily/news/2010/0412_payoff_fraud.html
—————–“Maggiano said that under HAFA, the borrower is required to sign a Short Sale Agreement (SSA) and a sales contract asserting that the seller and buyer are conducting an arm’s length transaction and that they are unrelated by either family, marriage or commercial enterprise.
Mary Alice Short, a real estate agent in Minnesota, described a common type of fraud in the short sale arena where borrowers sometimes have a relative or partner purchase the property in a short sale and rent it back to the defaulted borrower. Other instances of third-party buyers short-changing lenders could haunt the new program as short sales rise in demand.”
http://www.housingwire.com/2010/03/11/hafa-is-buffer-enough-against-short-sale-fraud-treasury
——————That’s fine. But if you read Bee reporter Garth Stapley’s piece a week ago, nothing in this legislation addresses a real problem that has plagued the valley and Stanislaus County in particular: Unscrupulous real estate agents and investors who have manipulated the market through short-sale fraud.
In such cases, agents conspire to freeze out legitimate offers on short-sale properties only to submit their own lower offers through third parties or by hiding behind the anonymity of a limited liability corporation. The banks, trying to cut their losses, accept the lower offer because they were unaware of the higher one. The fraudmeister then quickly sells the property — possibly to someone who tried to bid on it earlier — for a higher sale price in a practice called “flopping.”
Read more: http://www.modbee.com/2010/09/11/1334880/jardine-no-help-for-short-sale.html##ixzz1E6fnIJLS
——————-Hey, but you’re right, Dan. You bring soooo much insight to this blog. Thanks for correcting this “conspiracy theory nut” who is “woefully ignorant and uninformed.”
Clearly, there is NO fraud, simply because you claimed there was no fraud. You’re right; the scenario described by the OP simply cannot be fraudulent because you, The Almighty Wise One, has spoken. Thanks for all your insightful wisdom!
/snark
Just in case you’ve missed it, negotiating a pre-arranged deal on a short sale that is between sellers/agents and related parties is FRAUD if they don’t market the property on the open market and claim that the deal is an open-market, arms-length transaction. It is FRAUD, plain and simple.
BTW, my family was in real estate before you were even born. I have every confidence in my ability, and have **proven** to have more insight and knowledge than the vast majority of realtors out there. BTW, just because I’m not licensed doesn’t mean I haven’t read all the books required for licensing; I probably have a better understanding of them than most agents do.
February 15, 2011 at 11:36 PM #666879Participant[quote=urbanrealtor][quote=CA renter]
I don’t care if the house was properly listed and got an offer from an unrelated buyer. I DO care if the deal was made before the house hit the MLS/market, and it’s particularly unethical if the deal was made between related parties (including anyone related in any way to the agents involved).
Yes, if banks/regulators required a minimum marketing time, that would be of great help. It would also help if they did periodic audits to ensure agents weren’t ripping them (and the taxpayers) off.
BTW, not sure where you got the “uninformed conspiracy nut” part, but most of my predictions made many years ago have been spot-on from the very beginning. I might be a lot of things, but “uninformed” isn’t one of them, particularly about things I’m willing to debate about (you’ll never hear me argue about things I’m “uninformed” about…I listen and learn from those who know more, rather than debate and make myself look like an idiot). Perhaps you shouldn’t trust so easily.[/quote]
Very few people who know me would describe me as “trusting”.
You have a very incomplete idea about how these things go.
One of my agents had a client who liked a condo but was beat out by a higher offer.
The agent then reached out to the other units/owners in the complex to see if they wanted to sell to her client.
The unit that responded and with which they made a deal was upside down.
They had a deal before the unit ever hit the MLS.
When they put it in the MLS, this was disclosed.
It was appropriate to put this in the MLS for comparative purposes.
There was no fraud.
There was no conspiracy.
The bank did not get screwed.
CAR, you don’t bring a lot to the table as a general rule.
You rant about “fraud” (apparently defined as any result you don’t endorse or understand) and call Realtors crooks.
Fraud has a very specific meaning.
It means a lie that damages another.
I don’t have a great love for most of my colleagues (many ARE crooks) but unless you have some actual examples of fraud please stop wasting pixels.I do pretty well without lying to anybody.
I think your incomplete understandings coupled with your declarations of moral turpitude put you about one step up from 911 truthers.
You are woefully ignorant and uninformed.
You are the kind of guy that is too smart by half and gets rolled by a dishonest agent and then brags about the deal he got.[/quote]If I’m so “woefully ignorant and uninformed,” perhaps you’ll trust that sdr is less ignorant and more informed? Here’s a post from a short while ago, on another thread regarding short sale fraud:
Submitted by sdrealtor on February 3, 2011 – 8:52pm.
Just popping in for a comment here. That house on Camphor was stolen by any measure. Finding a nice newer 1 story home in NCC is hard enough let alone a 2600 sq ft home. Throw in a pool and sit down panoramic ocean views and you have the single hottest and hardest to find commodity there is. Not only cant you compare it with non-view homes, you cant compare it with 2 story view homes either. There are always older cash rich buyers looking in this market for exactly what that home offered.A house like that would have sold easily on 9/11. The banks got totally hosed on that one.
To put it into perspective the last newer 1 story ocean view house I saw with that kind of view sold in the Bay Collection in December 2008 when the market looked about as grim as it ever has. It was 3500 sq ft and sold for $1.83M. House stolen….Case closed
http://piggington.com/another_short_steal?page=1
—————–Of course, I’m sure you are so much wiser, better informed, and less ignorant than I; but perhaps you ought to read the news.
“June 10 (Bloomberg) — Two Connecticut real estate agents found a way to profit in the U.S. housing bust: Buy low, sell fast. Their tactic was also illegal.
Sergio Natera and Anna McElaney are scheduled to be sentenced in Hartford’s federal court in August after pleading guilty to fraud. Their crime involved persuading lenders to approve the sale of homes for less than the balance owed –known as a short sale — without disclosing that there were better offers. They then flipped the houses for a profit.”
And there’s this:
“What is short payoff fraud?
According to a member of Freddie Mac’s Fraud Investigation Unit, a slight variation of our general definition of mortgage fraud also defines short payoff fraud – “Any misrepresentation or deliberate omission of fact that would induce the lender, investor or insurer to agree to the terms of a short payoff that it would not approve had all facts been known.” Misrepresentations in these schemes may include the buyer of the short payoff property, a subsequent transaction at a higher price, and/or the selling borrower’s hardship reason used to qualify for the short payoff. In many instances, the short payoff fraud will involve a “facilitator,” engaged by either the listing agent or the selling borrower, to assist with negotiating the transaction.How is short payoff fraud committed?
There are many variations of short payoff fraud. The example below is just one way this type of mortgage fraud can occur.A seller (delinquent borrower) owes $100,000 on a property that is worth $80,000.
The short payoff facilitator negotiates with the bank to accept a $70,000 offer to purchase the property. In several instances, Freddie Mac has seen that this offer will be made directly by the facilitator or through an entity under his/her control.
The lender/investor accepts the offer for $70,000.
The facilitator neglects to disclose to the lender/investor that there is an outstanding offer between the facilitator and a second end-buyer for $95,000.
Both transactions close on the same day with the net difference being pocketed by the facilitator and increasing the lender/investor’s net losses.”http://www.freddiemac.com/singlefamily/news/2010/0412_payoff_fraud.html
—————–“Maggiano said that under HAFA, the borrower is required to sign a Short Sale Agreement (SSA) and a sales contract asserting that the seller and buyer are conducting an arm’s length transaction and that they are unrelated by either family, marriage or commercial enterprise.
Mary Alice Short, a real estate agent in Minnesota, described a common type of fraud in the short sale arena where borrowers sometimes have a relative or partner purchase the property in a short sale and rent it back to the defaulted borrower. Other instances of third-party buyers short-changing lenders could haunt the new program as short sales rise in demand.”
http://www.housingwire.com/2010/03/11/hafa-is-buffer-enough-against-short-sale-fraud-treasury
——————That’s fine. But if you read Bee reporter Garth Stapley’s piece a week ago, nothing in this legislation addresses a real problem that has plagued the valley and Stanislaus County in particular: Unscrupulous real estate agents and investors who have manipulated the market through short-sale fraud.
In such cases, agents conspire to freeze out legitimate offers on short-sale properties only to submit their own lower offers through third parties or by hiding behind the anonymity of a limited liability corporation. The banks, trying to cut their losses, accept the lower offer because they were unaware of the higher one. The fraudmeister then quickly sells the property — possibly to someone who tried to bid on it earlier — for a higher sale price in a practice called “flopping.”
Read more: http://www.modbee.com/2010/09/11/1334880/jardine-no-help-for-short-sale.html##ixzz1E6fnIJLS
——————-Hey, but you’re right, Dan. You bring soooo much insight to this blog. Thanks for correcting this “conspiracy theory nut” who is “woefully ignorant and uninformed.”
Clearly, there is NO fraud, simply because you claimed there was no fraud. You’re right; the scenario described by the OP simply cannot be fraudulent because you, The Almighty Wise One, has spoken. Thanks for all your insightful wisdom!
/snark
Just in case you’ve missed it, negotiating a pre-arranged deal on a short sale that is between sellers/agents and related parties is FRAUD if they don’t market the property on the open market and claim that the deal is an open-market, arms-length transaction. It is FRAUD, plain and simple.
BTW, my family was in real estate before you were even born. I have every confidence in my ability, and have **proven** to have more insight and knowledge than the vast majority of realtors out there. BTW, just because I’m not licensed doesn’t mean I haven’t read all the books required for licensing; I probably have a better understanding of them than most agents do.
February 15, 2011 at 11:36 PM #667482Participant[quote=urbanrealtor][quote=CA renter]
I don’t care if the house was properly listed and got an offer from an unrelated buyer. I DO care if the deal was made before the house hit the MLS/market, and it’s particularly unethical if the deal was made between related parties (including anyone related in any way to the agents involved).
Yes, if banks/regulators required a minimum marketing time, that would be of great help. It would also help if they did periodic audits to ensure agents weren’t ripping them (and the taxpayers) off.
BTW, not sure where you got the “uninformed conspiracy nut” part, but most of my predictions made many years ago have been spot-on from the very beginning. I might be a lot of things, but “uninformed” isn’t one of them, particularly about things I’m willing to debate about (you’ll never hear me argue about things I’m “uninformed” about…I listen and learn from those who know more, rather than debate and make myself look like an idiot). Perhaps you shouldn’t trust so easily.[/quote]
Very few people who know me would describe me as “trusting”.
You have a very incomplete idea about how these things go.
One of my agents had a client who liked a condo but was beat out by a higher offer.
The agent then reached out to the other units/owners in the complex to see if they wanted to sell to her client.
The unit that responded and with which they made a deal was upside down.
They had a deal before the unit ever hit the MLS.
When they put it in the MLS, this was disclosed.
It was appropriate to put this in the MLS for comparative purposes.
There was no fraud.
There was no conspiracy.
The bank did not get screwed.
CAR, you don’t bring a lot to the table as a general rule.
You rant about “fraud” (apparently defined as any result you don’t endorse or understand) and call Realtors crooks.
Fraud has a very specific meaning.
It means a lie that damages another.
I don’t have a great love for most of my colleagues (many ARE crooks) but unless you have some actual examples of fraud please stop wasting pixels.I do pretty well without lying to anybody.
I think your incomplete understandings coupled with your declarations of moral turpitude put you about one step up from 911 truthers.
You are woefully ignorant and uninformed.
You are the kind of guy that is too smart by half and gets rolled by a dishonest agent and then brags about the deal he got.[/quote]If I’m so “woefully ignorant and uninformed,” perhaps you’ll trust that sdr is less ignorant and more informed? Here’s a post from a short while ago, on another thread regarding short sale fraud:
Submitted by sdrealtor on February 3, 2011 – 8:52pm.
Just popping in for a comment here. That house on Camphor was stolen by any measure. Finding a nice newer 1 story home in NCC is hard enough let alone a 2600 sq ft home. Throw in a pool and sit down panoramic ocean views and you have the single hottest and hardest to find commodity there is. Not only cant you compare it with non-view homes, you cant compare it with 2 story view homes either. There are always older cash rich buyers looking in this market for exactly what that home offered.A house like that would have sold easily on 9/11. The banks got totally hosed on that one.
To put it into perspective the last newer 1 story ocean view house I saw with that kind of view sold in the Bay Collection in December 2008 when the market looked about as grim as it ever has. It was 3500 sq ft and sold for $1.83M. House stolen….Case closed
http://piggington.com/another_short_steal?page=1
—————–Of course, I’m sure you are so much wiser, better informed, and less ignorant than I; but perhaps you ought to read the news.
“June 10 (Bloomberg) — Two Connecticut real estate agents found a way to profit in the U.S. housing bust: Buy low, sell fast. Their tactic was also illegal.
Sergio Natera and Anna McElaney are scheduled to be sentenced in Hartford’s federal court in August after pleading guilty to fraud. Their crime involved persuading lenders to approve the sale of homes for less than the balance owed –known as a short sale — without disclosing that there were better offers. They then flipped the houses for a profit.”
And there’s this:
“What is short payoff fraud?
According to a member of Freddie Mac’s Fraud Investigation Unit, a slight variation of our general definition of mortgage fraud also defines short payoff fraud – “Any misrepresentation or deliberate omission of fact that would induce the lender, investor or insurer to agree to the terms of a short payoff that it would not approve had all facts been known.” Misrepresentations in these schemes may include the buyer of the short payoff property, a subsequent transaction at a higher price, and/or the selling borrower’s hardship reason used to qualify for the short payoff. In many instances, the short payoff fraud will involve a “facilitator,” engaged by either the listing agent or the selling borrower, to assist with negotiating the transaction.How is short payoff fraud committed?
There are many variations of short payoff fraud. The example below is just one way this type of mortgage fraud can occur.A seller (delinquent borrower) owes $100,000 on a property that is worth $80,000.
The short payoff facilitator negotiates with the bank to accept a $70,000 offer to purchase the property. In several instances, Freddie Mac has seen that this offer will be made directly by the facilitator or through an entity under his/her control.
The lender/investor accepts the offer for $70,000.
The facilitator neglects to disclose to the lender/investor that there is an outstanding offer between the facilitator and a second end-buyer for $95,000.
Both transactions close on the same day with the net difference being pocketed by the facilitator and increasing the lender/investor’s net losses.”http://www.freddiemac.com/singlefamily/news/2010/0412_payoff_fraud.html
—————–“Maggiano said that under HAFA, the borrower is required to sign a Short Sale Agreement (SSA) and a sales contract asserting that the seller and buyer are conducting an arm’s length transaction and that they are unrelated by either family, marriage or commercial enterprise.
Mary Alice Short, a real estate agent in Minnesota, described a common type of fraud in the short sale arena where borrowers sometimes have a relative or partner purchase the property in a short sale and rent it back to the defaulted borrower. Other instances of third-party buyers short-changing lenders could haunt the new program as short sales rise in demand.”
http://www.housingwire.com/2010/03/11/hafa-is-buffer-enough-against-short-sale-fraud-treasury
——————That’s fine. But if you read Bee reporter Garth Stapley’s piece a week ago, nothing in this legislation addresses a real problem that has plagued the valley and Stanislaus County in particular: Unscrupulous real estate agents and investors who have manipulated the market through short-sale fraud.
In such cases, agents conspire to freeze out legitimate offers on short-sale properties only to submit their own lower offers through third parties or by hiding behind the anonymity of a limited liability corporation. The banks, trying to cut their losses, accept the lower offer because they were unaware of the higher one. The fraudmeister then quickly sells the property — possibly to someone who tried to bid on it earlier — for a higher sale price in a practice called “flopping.”
Read more: http://www.modbee.com/2010/09/11/1334880/jardine-no-help-for-short-sale.html##ixzz1E6fnIJLS
——————-Hey, but you’re right, Dan. You bring soooo much insight to this blog. Thanks for correcting this “conspiracy theory nut” who is “woefully ignorant and uninformed.”
Clearly, there is NO fraud, simply because you claimed there was no fraud. You’re right; the scenario described by the OP simply cannot be fraudulent because you, The Almighty Wise One, has spoken. Thanks for all your insightful wisdom!
/snark
Just in case you’ve missed it, negotiating a pre-arranged deal on a short sale that is between sellers/agents and related parties is FRAUD if they don’t market the property on the open market and claim that the deal is an open-market, arms-length transaction. It is FRAUD, plain and simple.
BTW, my family was in real estate before you were even born. I have every confidence in my ability, and have **proven** to have more insight and knowledge than the vast majority of realtors out there. BTW, just because I’m not licensed doesn’t mean I haven’t read all the books required for licensing; I probably have a better understanding of them than most agents do.
February 15, 2011 at 11:36 PM #667620Participant[quote=urbanrealtor][quote=CA renter]
I don’t care if the house was properly listed and got an offer from an unrelated buyer. I DO care if the deal was made before the house hit the MLS/market, and it’s particularly unethical if the deal was made between related parties (including anyone related in any way to the agents involved).
Yes, if banks/regulators required a minimum marketing time, that would be of great help. It would also help if they did periodic audits to ensure agents weren’t ripping them (and the taxpayers) off.
BTW, not sure where you got the “uninformed conspiracy nut” part, but most of my predictions made many years ago have been spot-on from the very beginning. I might be a lot of things, but “uninformed” isn’t one of them, particularly about things I’m willing to debate about (you’ll never hear me argue about things I’m “uninformed” about…I listen and learn from those who know more, rather than debate and make myself look like an idiot). Perhaps you shouldn’t trust so easily.[/quote]
Very few people who know me would describe me as “trusting”.
You have a very incomplete idea about how these things go.
One of my agents had a client who liked a condo but was beat out by a higher offer.
The agent then reached out to the other units/owners in the complex to see if they wanted to sell to her client.
The unit that responded and with which they made a deal was upside down.
They had a deal before the unit ever hit the MLS.
When they put it in the MLS, this was disclosed.
It was appropriate to put this in the MLS for comparative purposes.
There was no fraud.
There was no conspiracy.
The bank did not get screwed.
CAR, you don’t bring a lot to the table as a general rule.
You rant about “fraud” (apparently defined as any result you don’t endorse or understand) and call Realtors crooks.
Fraud has a very specific meaning.
It means a lie that damages another.
I don’t have a great love for most of my colleagues (many ARE crooks) but unless you have some actual examples of fraud please stop wasting pixels.I do pretty well without lying to anybody.
I think your incomplete understandings coupled with your declarations of moral turpitude put you about one step up from 911 truthers.
You are woefully ignorant and uninformed.
You are the kind of guy that is too smart by half and gets rolled by a dishonest agent and then brags about the deal he got.[/quote]If I’m so “woefully ignorant and uninformed,” perhaps you’ll trust that sdr is less ignorant and more informed? Here’s a post from a short while ago, on another thread regarding short sale fraud:
Submitted by sdrealtor on February 3, 2011 – 8:52pm.
Just popping in for a comment here. That house on Camphor was stolen by any measure. Finding a nice newer 1 story home in NCC is hard enough let alone a 2600 sq ft home. Throw in a pool and sit down panoramic ocean views and you have the single hottest and hardest to find commodity there is. Not only cant you compare it with non-view homes, you cant compare it with 2 story view homes either. There are always older cash rich buyers looking in this market for exactly what that home offered.A house like that would have sold easily on 9/11. The banks got totally hosed on that one.
To put it into perspective the last newer 1 story ocean view house I saw with that kind of view sold in the Bay Collection in December 2008 when the market looked about as grim as it ever has. It was 3500 sq ft and sold for $1.83M. House stolen….Case closed
http://piggington.com/another_short_steal?page=1
—————–Of course, I’m sure you are so much wiser, better informed, and less ignorant than I; but perhaps you ought to read the news.
“June 10 (Bloomberg) — Two Connecticut real estate agents found a way to profit in the U.S. housing bust: Buy low, sell fast. Their tactic was also illegal.
Sergio Natera and Anna McElaney are scheduled to be sentenced in Hartford’s federal court in August after pleading guilty to fraud. Their crime involved persuading lenders to approve the sale of homes for less than the balance owed –known as a short sale — without disclosing that there were better offers. They then flipped the houses for a profit.”
And there’s this:
“What is short payoff fraud?
According to a member of Freddie Mac’s Fraud Investigation Unit, a slight variation of our general definition of mortgage fraud also defines short payoff fraud – “Any misrepresentation or deliberate omission of fact that would induce the lender, investor or insurer to agree to the terms of a short payoff that it would not approve had all facts been known.” Misrepresentations in these schemes may include the buyer of the short payoff property, a subsequent transaction at a higher price, and/or the selling borrower’s hardship reason used to qualify for the short payoff. In many instances, the short payoff fraud will involve a “facilitator,” engaged by either the listing agent or the selling borrower, to assist with negotiating the transaction.How is short payoff fraud committed?
There are many variations of short payoff fraud. The example below is just one way this type of mortgage fraud can occur.A seller (delinquent borrower) owes $100,000 on a property that is worth $80,000.
The short payoff facilitator negotiates with the bank to accept a $70,000 offer to purchase the property. In several instances, Freddie Mac has seen that this offer will be made directly by the facilitator or through an entity under his/her control.
The lender/investor accepts the offer for $70,000.
The facilitator neglects to disclose to the lender/investor that there is an outstanding offer between the facilitator and a second end-buyer for $95,000.
Both transactions close on the same day with the net difference being pocketed by the facilitator and increasing the lender/investor’s net losses.”http://www.freddiemac.com/singlefamily/news/2010/0412_payoff_fraud.html
—————–“Maggiano said that under HAFA, the borrower is required to sign a Short Sale Agreement (SSA) and a sales contract asserting that the seller and buyer are conducting an arm’s length transaction and that they are unrelated by either family, marriage or commercial enterprise.
Mary Alice Short, a real estate agent in Minnesota, described a common type of fraud in the short sale arena where borrowers sometimes have a relative or partner purchase the property in a short sale and rent it back to the defaulted borrower. Other instances of third-party buyers short-changing lenders could haunt the new program as short sales rise in demand.”
http://www.housingwire.com/2010/03/11/hafa-is-buffer-enough-against-short-sale-fraud-treasury
——————That’s fine. But if you read Bee reporter Garth Stapley’s piece a week ago, nothing in this legislation addresses a real problem that has plagued the valley and Stanislaus County in particular: Unscrupulous real estate agents and investors who have manipulated the market through short-sale fraud.
In such cases, agents conspire to freeze out legitimate offers on short-sale properties only to submit their own lower offers through third parties or by hiding behind the anonymity of a limited liability corporation. The banks, trying to cut their losses, accept the lower offer because they were unaware of the higher one. The fraudmeister then quickly sells the property — possibly to someone who tried to bid on it earlier — for a higher sale price in a practice called “flopping.”
Read more: http://www.modbee.com/2010/09/11/1334880/jardine-no-help-for-short-sale.html##ixzz1E6fnIJLS
——————-Hey, but you’re right, Dan. You bring soooo much insight to this blog. Thanks for correcting this “conspiracy theory nut” who is “woefully ignorant and uninformed.”
Clearly, there is NO fraud, simply because you claimed there was no fraud. You’re right; the scenario described by the OP simply cannot be fraudulent because you, The Almighty Wise One, has spoken. Thanks for all your insightful wisdom!
/snark
Just in case you’ve missed it, negotiating a pre-arranged deal on a short sale that is between sellers/agents and related parties is FRAUD if they don’t market the property on the open market and claim that the deal is an open-market, arms-length transaction. It is FRAUD, plain and simple.
BTW, my family was in real estate before you were even born. I have every confidence in my ability, and have **proven** to have more insight and knowledge than the vast majority of realtors out there. BTW, just because I’m not licensed doesn’t mean I haven’t read all the books required for licensing; I probably have a better understanding of them than most agents do.
February 15, 2011 at 11:36 PM #667961Participant[quote=urbanrealtor][quote=CA renter]
I don’t care if the house was properly listed and got an offer from an unrelated buyer. I DO care if the deal was made before the house hit the MLS/market, and it’s particularly unethical if the deal was made between related parties (including anyone related in any way to the agents involved).
Yes, if banks/regulators required a minimum marketing time, that would be of great help. It would also help if they did periodic audits to ensure agents weren’t ripping them (and the taxpayers) off.
BTW, not sure where you got the “uninformed conspiracy nut” part, but most of my predictions made many years ago have been spot-on from the very beginning. I might be a lot of things, but “uninformed” isn’t one of them, particularly about things I’m willing to debate about (you’ll never hear me argue about things I’m “uninformed” about…I listen and learn from those who know more, rather than debate and make myself look like an idiot). Perhaps you shouldn’t trust so easily.[/quote]
Very few people who know me would describe me as “trusting”.
You have a very incomplete idea about how these things go.
One of my agents had a client who liked a condo but was beat out by a higher offer.
The agent then reached out to the other units/owners in the complex to see if they wanted to sell to her client.
The unit that responded and with which they made a deal was upside down.
They had a deal before the unit ever hit the MLS.
When they put it in the MLS, this was disclosed.
It was appropriate to put this in the MLS for comparative purposes.
There was no fraud.
There was no conspiracy.
The bank did not get screwed.
CAR, you don’t bring a lot to the table as a general rule.
You rant about “fraud” (apparently defined as any result you don’t endorse or understand) and call Realtors crooks.
Fraud has a very specific meaning.
It means a lie that damages another.
I don’t have a great love for most of my colleagues (many ARE crooks) but unless you have some actual examples of fraud please stop wasting pixels.I do pretty well without lying to anybody.
I think your incomplete understandings coupled with your declarations of moral turpitude put you about one step up from 911 truthers.
You are woefully ignorant and uninformed.
You are the kind of guy that is too smart by half and gets rolled by a dishonest agent and then brags about the deal he got.[/quote]If I’m so “woefully ignorant and uninformed,” perhaps you’ll trust that sdr is less ignorant and more informed? Here’s a post from a short while ago, on another thread regarding short sale fraud:
Submitted by sdrealtor on February 3, 2011 – 8:52pm.
Just popping in for a comment here. That house on Camphor was stolen by any measure. Finding a nice newer 1 story home in NCC is hard enough let alone a 2600 sq ft home. Throw in a pool and sit down panoramic ocean views and you have the single hottest and hardest to find commodity there is. Not only cant you compare it with non-view homes, you cant compare it with 2 story view homes either. There are always older cash rich buyers looking in this market for exactly what that home offered.A house like that would have sold easily on 9/11. The banks got totally hosed on that one.
To put it into perspective the last newer 1 story ocean view house I saw with that kind of view sold in the Bay Collection in December 2008 when the market looked about as grim as it ever has. It was 3500 sq ft and sold for $1.83M. House stolen….Case closed
http://piggington.com/another_short_steal?page=1
—————–Of course, I’m sure you are so much wiser, better informed, and less ignorant than I; but perhaps you ought to read the news.
“June 10 (Bloomberg) — Two Connecticut real estate agents found a way to profit in the U.S. housing bust: Buy low, sell fast. Their tactic was also illegal.
Sergio Natera and Anna McElaney are scheduled to be sentenced in Hartford’s federal court in August after pleading guilty to fraud. Their crime involved persuading lenders to approve the sale of homes for less than the balance owed –known as a short sale — without disclosing that there were better offers. They then flipped the houses for a profit.”
And there’s this:
“What is short payoff fraud?
According to a member of Freddie Mac’s Fraud Investigation Unit, a slight variation of our general definition of mortgage fraud also defines short payoff fraud – “Any misrepresentation or deliberate omission of fact that would induce the lender, investor or insurer to agree to the terms of a short payoff that it would not approve had all facts been known.” Misrepresentations in these schemes may include the buyer of the short payoff property, a subsequent transaction at a higher price, and/or the selling borrower’s hardship reason used to qualify for the short payoff. In many instances, the short payoff fraud will involve a “facilitator,” engaged by either the listing agent or the selling borrower, to assist with negotiating the transaction.How is short payoff fraud committed?
There are many variations of short payoff fraud. The example below is just one way this type of mortgage fraud can occur.A seller (delinquent borrower) owes $100,000 on a property that is worth $80,000.
The short payoff facilitator negotiates with the bank to accept a $70,000 offer to purchase the property. In several instances, Freddie Mac has seen that this offer will be made directly by the facilitator or through an entity under his/her control.
The lender/investor accepts the offer for $70,000.
The facilitator neglects to disclose to the lender/investor that there is an outstanding offer between the facilitator and a second end-buyer for $95,000.
Both transactions close on the same day with the net difference being pocketed by the facilitator and increasing the lender/investor’s net losses.”http://www.freddiemac.com/singlefamily/news/2010/0412_payoff_fraud.html
—————–“Maggiano said that under HAFA, the borrower is required to sign a Short Sale Agreement (SSA) and a sales contract asserting that the seller and buyer are conducting an arm’s length transaction and that they are unrelated by either family, marriage or commercial enterprise.
Mary Alice Short, a real estate agent in Minnesota, described a common type of fraud in the short sale arena where borrowers sometimes have a relative or partner purchase the property in a short sale and rent it back to the defaulted borrower. Other instances of third-party buyers short-changing lenders could haunt the new program as short sales rise in demand.”
http://www.housingwire.com/2010/03/11/hafa-is-buffer-enough-against-short-sale-fraud-treasury
——————That’s fine. But if you read Bee reporter Garth Stapley’s piece a week ago, nothing in this legislation addresses a real problem that has plagued the valley and Stanislaus County in particular: Unscrupulous real estate agents and investors who have manipulated the market through short-sale fraud.
In such cases, agents conspire to freeze out legitimate offers on short-sale properties only to submit their own lower offers through third parties or by hiding behind the anonymity of a limited liability corporation. The banks, trying to cut their losses, accept the lower offer because they were unaware of the higher one. The fraudmeister then quickly sells the property — possibly to someone who tried to bid on it earlier — for a higher sale price in a practice called “flopping.”
Read more: http://www.modbee.com/2010/09/11/1334880/jardine-no-help-for-short-sale.html##ixzz1E6fnIJLS
——————-Hey, but you’re right, Dan. You bring soooo much insight to this blog. Thanks for correcting this “conspiracy theory nut” who is “woefully ignorant and uninformed.”
Clearly, there is NO fraud, simply because you claimed there was no fraud. You’re right; the scenario described by the OP simply cannot be fraudulent because you, The Almighty Wise One, has spoken. Thanks for all your insightful wisdom!
/snark
Just in case you’ve missed it, negotiating a pre-arranged deal on a short sale that is between sellers/agents and related parties is FRAUD if they don’t market the property on the open market and claim that the deal is an open-market, arms-length transaction. It is FRAUD, plain and simple.
BTW, my family was in real estate before you were even born. I have every confidence in my ability, and have **proven** to have more insight and knowledge than the vast majority of realtors out there. BTW, just because I’m not licensed doesn’t mean I haven’t read all the books required for licensing; I probably have a better understanding of them than most agents do.
February 16, 2011 at 12:43 AM #666836Participant[quote=urbanrealtor][quote=CA renter]
You’re making the assumption that just because your deals *might not* be fraudulent, that none of them are. I know for a fact that short sale fraud is rampant, and have seen a few examples, personally, in addition to reading about others.
[/quote][quote=urbanrealtor]Again, fraud has a specific meaning and without a lie or a damaged party, there is, by definition, no fraud.[/quote]
The “damaged party” is the lender, and the govt/taxpayer, as the case may be these days. If they are losing money because of a pre-arranged deal, then they are most certainly being damaged by the collusion, and it is fraud. The lie consists of claiming that the presented offer is an “arms-length” transaction and/or that it is the “highest and best” (or only) offer. Again, if there is a better offer that is intentionally not being presented to the lender –so that one buyer may be favored over another — then it is fraud. If you doubt what I’m saying, do some research yourself regarding short sale fraud. See what the regulators have to say about it.
[quote=CA renter]
Even in the example you give regarding the condo; if the short seller or agent claimed that the deal was an open-market and arms-length transaction, that would be a lie. If they sold the condo for less than it would have gotten on the open market with adequate market time (at least two weeks), then they defrauded the bank, and probably defrauded the govt/taxpayers/mortgage insurers as a result.
[/quote][quote=urbanrealtor]Making an offer to a seller is, by definition, an open market transaction.
The buyer defines the market as much as the seller.
Putting it on the MLS does not make it more open market.
There is no defrauding going on here.[/quote]Let’s see what the definition of “open market” is, shall we?…
“open market
DefinitionA market which is widely accessible to all investors or consumers.”
Read more: http://www.investorwords.com/3446/open_market.html#ixzz1E6p7gwGi
—————-
open market
n
(Business / Commerce)
a. a market in which prices are determined by supply and demand, there are no barriers to entry, and trading is not restricted [by a realtor who’s conspiring with a particular buyer, for instance – CAR] to a specific area.http://www.thefreedictionary.com/open+market
—————“Market value is the price at which an asset would trade in a competitive auction setting [a competitive auction would presumably be one where there are **competing** buyers, rather than a pre-arranged buyer – CAR]. Market value is often used interchangeably with open market value, fair value or fair market value, although these terms have distinct definitions in different standards, and may differ in some circumstances.
International Valuation Standards defines market value as “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion.”[1]
http://en.wikipedia.org/wiki/Market_value
——————In a general sense used in economics and political economy, an open market refers to a market which is accessible to all economic actors. In an open market so defined, all economic actors have an equal opportunity of entry in that market.
http://en.wikipedia.org/wiki/Open_market
—————-open market
American Heritage Dictionary:
open marketn.
A freely competitive market operating without restrictions.Read more: http://www.answers.com/topic/open-market#ixzz1E6sZp9EC
=====================
Now, I’m always open to hearing different opinions on this, but this “woefully ignorant and uninformed conspiracy nut” just can’t seem to find the definition you seem to be referring to, where an “open market transaction” referrs to a pre-arranged buyer’s offer being the ONLY one submitted to the lender (even when there are higher/better offers) and where other offers/buyers are blocked.
February 16, 2011 at 12:43 AM #666898Participant[quote=urbanrealtor][quote=CA renter]
You’re making the assumption that just because your deals *might not* be fraudulent, that none of them are. I know for a fact that short sale fraud is rampant, and have seen a few examples, personally, in addition to reading about others.
[/quote][quote=urbanrealtor]Again, fraud has a specific meaning and without a lie or a damaged party, there is, by definition, no fraud.[/quote]
The “damaged party” is the lender, and the govt/taxpayer, as the case may be these days. If they are losing money because of a pre-arranged deal, then they are most certainly being damaged by the collusion, and it is fraud. The lie consists of claiming that the presented offer is an “arms-length” transaction and/or that it is the “highest and best” (or only) offer. Again, if there is a better offer that is intentionally not being presented to the lender –so that one buyer may be favored over another — then it is fraud. If you doubt what I’m saying, do some research yourself regarding short sale fraud. See what the regulators have to say about it.
[quote=CA renter]
Even in the example you give regarding the condo; if the short seller or agent claimed that the deal was an open-market and arms-length transaction, that would be a lie. If they sold the condo for less than it would have gotten on the open market with adequate market time (at least two weeks), then they defrauded the bank, and probably defrauded the govt/taxpayers/mortgage insurers as a result.
[/quote][quote=urbanrealtor]Making an offer to a seller is, by definition, an open market transaction.
The buyer defines the market as much as the seller.
Putting it on the MLS does not make it more open market.
There is no defrauding going on here.[/quote]Let’s see what the definition of “open market” is, shall we?…
“open market
DefinitionA market which is widely accessible to all investors or consumers.”
Read more: http://www.investorwords.com/3446/open_market.html#ixzz1E6p7gwGi
—————-
open market
n
(Business / Commerce)
a. a market in which prices are determined by supply and demand, there are no barriers to entry, and trading is not restricted [by a realtor who’s conspiring with a particular buyer, for instance – CAR] to a specific area.http://www.thefreedictionary.com/open+market
—————“Market value is the price at which an asset would trade in a competitive auction setting [a competitive auction would presumably be one where there are **competing** buyers, rather than a pre-arranged buyer – CAR]. Market value is often used interchangeably with open market value, fair value or fair market value, although these terms have distinct definitions in different standards, and may differ in some circumstances.
International Valuation Standards defines market value as “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion.”[1]
http://en.wikipedia.org/wiki/Market_value
——————In a general sense used in economics and political economy, an open market refers to a market which is accessible to all economic actors. In an open market so defined, all economic actors have an equal opportunity of entry in that market.
http://en.wikipedia.org/wiki/Open_market
—————-open market
American Heritage Dictionary:
open marketn.
A freely competitive market operating without restrictions.Read more: http://www.answers.com/topic/open-market#ixzz1E6sZp9EC
=====================
Now, I’m always open to hearing different opinions on this, but this “woefully ignorant and uninformed conspiracy nut” just can’t seem to find the definition you seem to be referring to, where an “open market transaction” referrs to a pre-arranged buyer’s offer being the ONLY one submitted to the lender (even when there are higher/better offers) and where other offers/buyers are blocked.
February 16, 2011 at 12:43 AM #667502Participant[quote=urbanrealtor][quote=CA renter]
You’re making the assumption that just because your deals *might not* be fraudulent, that none of them are. I know for a fact that short sale fraud is rampant, and have seen a few examples, personally, in addition to reading about others.
[/quote][quote=urbanrealtor]Again, fraud has a specific meaning and without a lie or a damaged party, there is, by definition, no fraud.[/quote]
The “damaged party” is the lender, and the govt/taxpayer, as the case may be these days. If they are losing money because of a pre-arranged deal, then they are most certainly being damaged by the collusion, and it is fraud. The lie consists of claiming that the presented offer is an “arms-length” transaction and/or that it is the “highest and best” (or only) offer. Again, if there is a better offer that is intentionally not being presented to the lender –so that one buyer may be favored over another — then it is fraud. If you doubt what I’m saying, do some research yourself regarding short sale fraud. See what the regulators have to say about it.
[quote=CA renter]
Even in the example you give regarding the condo; if the short seller or agent claimed that the deal was an open-market and arms-length transaction, that would be a lie. If they sold the condo for less than it would have gotten on the open market with adequate market time (at least two weeks), then they defrauded the bank, and probably defrauded the govt/taxpayers/mortgage insurers as a result.
[/quote][quote=urbanrealtor]Making an offer to a seller is, by definition, an open market transaction.
The buyer defines the market as much as the seller.
Putting it on the MLS does not make it more open market.
There is no defrauding going on here.[/quote]Let’s see what the definition of “open market” is, shall we?…
“open market
DefinitionA market which is widely accessible to all investors or consumers.”
Read more: http://www.investorwords.com/3446/open_market.html#ixzz1E6p7gwGi
—————-
open market
n
(Business / Commerce)
a. a market in which prices are determined by supply and demand, there are no barriers to entry, and trading is not restricted [by a realtor who’s conspiring with a particular buyer, for instance – CAR] to a specific area.http://www.thefreedictionary.com/open+market
—————“Market value is the price at which an asset would trade in a competitive auction setting [a competitive auction would presumably be one where there are **competing** buyers, rather than a pre-arranged buyer – CAR]. Market value is often used interchangeably with open market value, fair value or fair market value, although these terms have distinct definitions in different standards, and may differ in some circumstances.
International Valuation Standards defines market value as “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion.”[1]
http://en.wikipedia.org/wiki/Market_value
——————In a general sense used in economics and political economy, an open market refers to a market which is accessible to all economic actors. In an open market so defined, all economic actors have an equal opportunity of entry in that market.
http://en.wikipedia.org/wiki/Open_market
—————-open market
American Heritage Dictionary:
open marketn.
A freely competitive market operating without restrictions.Read more: http://www.answers.com/topic/open-market#ixzz1E6sZp9EC
=====================
Now, I’m always open to hearing different opinions on this, but this “woefully ignorant and uninformed conspiracy nut” just can’t seem to find the definition you seem to be referring to, where an “open market transaction” referrs to a pre-arranged buyer’s offer being the ONLY one submitted to the lender (even when there are higher/better offers) and where other offers/buyers are blocked.
February 16, 2011 at 12:43 AM #667641Participant[quote=urbanrealtor][quote=CA renter]
You’re making the assumption that just because your deals *might not* be fraudulent, that none of them are. I know for a fact that short sale fraud is rampant, and have seen a few examples, personally, in addition to reading about others.
[/quote][quote=urbanrealtor]Again, fraud has a specific meaning and without a lie or a damaged party, there is, by definition, no fraud.[/quote]
The “damaged party” is the lender, and the govt/taxpayer, as the case may be these days. If they are losing money because of a pre-arranged deal, then they are most certainly being damaged by the collusion, and it is fraud. The lie consists of claiming that the presented offer is an “arms-length” transaction and/or that it is the “highest and best” (or only) offer. Again, if there is a better offer that is intentionally not being presented to the lender –so that one buyer may be favored over another — then it is fraud. If you doubt what I’m saying, do some research yourself regarding short sale fraud. See what the regulators have to say about it.
[quote=CA renter]
Even in the example you give regarding the condo; if the short seller or agent claimed that the deal was an open-market and arms-length transaction, that would be a lie. If they sold the condo for less than it would have gotten on the open market with adequate market time (at least two weeks), then they defrauded the bank, and probably defrauded the govt/taxpayers/mortgage insurers as a result.
[/quote][quote=urbanrealtor]Making an offer to a seller is, by definition, an open market transaction.
The buyer defines the market as much as the seller.
Putting it on the MLS does not make it more open market.
There is no defrauding going on here.[/quote]Let’s see what the definition of “open market” is, shall we?…
“open market
DefinitionA market which is widely accessible to all investors or consumers.”
Read more: http://www.investorwords.com/3446/open_market.html#ixzz1E6p7gwGi
—————-
open market
n
(Business / Commerce)
a. a market in which prices are determined by supply and demand, there are no barriers to entry, and trading is not restricted [by a realtor who’s conspiring with a particular buyer, for instance – CAR] to a specific area.http://www.thefreedictionary.com/open+market
—————“Market value is the price at which an asset would trade in a competitive auction setting [a competitive auction would presumably be one where there are **competing** buyers, rather than a pre-arranged buyer – CAR]. Market value is often used interchangeably with open market value, fair value or fair market value, although these terms have distinct definitions in different standards, and may differ in some circumstances.
International Valuation Standards defines market value as “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion.”[1]
http://en.wikipedia.org/wiki/Market_value
——————In a general sense used in economics and political economy, an open market refers to a market which is accessible to all economic actors. In an open market so defined, all economic actors have an equal opportunity of entry in that market.
http://en.wikipedia.org/wiki/Open_market
—————-open market
American Heritage Dictionary:
open marketn.
A freely competitive market operating without restrictions.Read more: http://www.answers.com/topic/open-market#ixzz1E6sZp9EC
=====================
Now, I’m always open to hearing different opinions on this, but this “woefully ignorant and uninformed conspiracy nut” just can’t seem to find the definition you seem to be referring to, where an “open market transaction” referrs to a pre-arranged buyer’s offer being the ONLY one submitted to the lender (even when there are higher/better offers) and where other offers/buyers are blocked.
February 16, 2011 at 12:43 AM #667981Participant[quote=urbanrealtor][quote=CA renter]
You’re making the assumption that just because your deals *might not* be fraudulent, that none of them are. I know for a fact that short sale fraud is rampant, and have seen a few examples, personally, in addition to reading about others.
[/quote][quote=urbanrealtor]Again, fraud has a specific meaning and without a lie or a damaged party, there is, by definition, no fraud.[/quote]
The “damaged party” is the lender, and the govt/taxpayer, as the case may be these days. If they are losing money because of a pre-arranged deal, then they are most certainly being damaged by the collusion, and it is fraud. The lie consists of claiming that the presented offer is an “arms-length” transaction and/or that it is the “highest and best” (or only) offer. Again, if there is a better offer that is intentionally not being presented to the lender –so that one buyer may be favored over another — then it is fraud. If you doubt what I’m saying, do some research yourself regarding short sale fraud. See what the regulators have to say about it.
[quote=CA renter]
Even in the example you give regarding the condo; if the short seller or agent claimed that the deal was an open-market and arms-length transaction, that would be a lie. If they sold the condo for less than it would have gotten on the open market with adequate market time (at least two weeks), then they defrauded the bank, and probably defrauded the govt/taxpayers/mortgage insurers as a result.
[/quote][quote=urbanrealtor]Making an offer to a seller is, by definition, an open market transaction.
The buyer defines the market as much as the seller.
Putting it on the MLS does not make it more open market.
There is no defrauding going on here.[/quote]Let’s see what the definition of “open market” is, shall we?…
“open market
DefinitionA market which is widely accessible to all investors or consumers.”
Read more: http://www.investorwords.com/3446/open_market.html#ixzz1E6p7gwGi
—————-
open market
n
(Business / Commerce)
a. a market in which prices are determined by supply and demand, there are no barriers to entry, and trading is not restricted [by a realtor who’s conspiring with a particular buyer, for instance – CAR] to a specific area.http://www.thefreedictionary.com/open+market
—————“Market value is the price at which an asset would trade in a competitive auction setting [a competitive auction would presumably be one where there are **competing** buyers, rather than a pre-arranged buyer – CAR]. Market value is often used interchangeably with open market value, fair value or fair market value, although these terms have distinct definitions in different standards, and may differ in some circumstances.
International Valuation Standards defines market value as “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion.”[1]
http://en.wikipedia.org/wiki/Market_value
——————In a general sense used in economics and political economy, an open market refers to a market which is accessible to all economic actors. In an open market so defined, all economic actors have an equal opportunity of entry in that market.
http://en.wikipedia.org/wiki/Open_market
—————-open market
American Heritage Dictionary:
open marketn.
A freely competitive market operating without restrictions.Read more: http://www.answers.com/topic/open-market#ixzz1E6sZp9EC
=====================
Now, I’m always open to hearing different opinions on this, but this “woefully ignorant and uninformed conspiracy nut” just can’t seem to find the definition you seem to be referring to, where an “open market transaction” referrs to a pre-arranged buyer’s offer being the ONLY one submitted to the lender (even when there are higher/better offers) and where other offers/buyers are blocked.
February 16, 2011 at 1:43 AM #666841ParticipantSince we’re working on definitions, let’s be sure we understand what an “arm’s length transaction” is.
——————Business Definition for: arm’s length transaction
Dictionary of Accounting Terms
arm’s length transaction
one entered into by unrelated parties, each acting in their own best interest. It is assumed that in this type of transaction the prices used are the fair market values of the property or services being transferred in the transaction.Dictionary of Finance and Investment Terms
arm’s length transaction
transaction that is conducted as though the parties were unrelated, thus avoiding any semblance of conflict of interest. For example, under current law parents may rent real estate to their children and still claim business deductions such as depreciation as long as the parents charge their children what they would charge if someone who is not a relative were to rent the same property.Dictionary of Banking Terms
arm’s length transaction
transaction carried out by unrelated or unaffiliated parties, as by a willing buyer and a willing seller, each acting in his own self-interest. Pricing based on such transactions is the basis of fair market valuations.Dictionary of Real Estate Terms
arm’s length transaction
a transaction among parties, each of whom acts in his or her own best interest.Examples: Transactions between the following parties would, in most cases, NOT be considered arm’s length:
a husband and wife
a father and son
a corporation and one of its subsidiarieshttp://www.allbusiness.com/glossaries/arms-length-transaction/4942859-1.html
——————What Does Arm’s Length Transaction Mean?
A transaction in which the buyers and sellers of a product act independently and have no relationship to each other. The concept of an arm’s length transaction is to ensure that both parties in the deal are acting in their own self interest and are not subject to any pressure or duress from the other party. Investopedia explains Arm’s Length Transaction
The concept of an arm’s length transaction commonly comes into play in the real estate market. When determining the fair market value of a piece of property, the price for the property must be obtained through a potential buyer and seller operating through an arm’s length transaction, otherwise, the agreed-upon price will likely differ from the actual fair market value of the property.For example, if two strangers are involved in the sale and purchase of a house, it is likely that the final agreed-upon price will be close to market value (assuming that both parties have equal bargaining power and equal information about the situation). This is because the seller would want a price that is as high as possible and the buyer would want a price that is as low as possible.
This contrasts with a situation in which the two parties are not strangers. For example, it is unlikely that the same transaction involving a father and his son would yield the same result, because the father may choose to give his son a discount.
http://www.investopedia.com/terms/a/armslength.asp
——————One of the problems with short sales is that it’s not the seller who is taking the loss; therefore, the seller has no incentive to get the “highest and best” price for the property — there is no incentive for him/her to act in his/her own best interest, except when they get to benefit at the expense of the lender. There is a tremendous conflict of interest here. If the seller or the agent is in any way related to the buyer (by blood, marriage, acquaintance, etc.), then the best way to ensure that the transaction is “arm’s length” would be to market the property on the open market (in real estate, that means a public listing service, almost always referring to the local MLS) for a minimum duration, and then take the higest and best offer to the lender. Anything less than this is fraud, as it causes losses for the banks/govt/taxpayers/mortgage insurers, for the benefit of the buyer/seller/agent. Because so many of these loans are being backed by the govt/taxpayers, either directly or indirectly, it is imperative that the lenders receive the highest/best offers possible to minimize losses.
The rules traditionally followed by realtors/buyers/sellers in regular short sale transactions (before the govt backing of the mortgage market) do not supercede the right of the govt/taxpayers to recover all the money they are entitled to from these short sales.
Once again, I couldn’t care less if the banks were taking the hit, directly (as long as the FDIC isn’t required to bail them out), nor would I care if an equity seller wanted to sell for below market to a related party — taking the losses themselves, rather than foisting them on the shoulders of the lenders/taxpayers. But once the government/taxpayers stepped in to take the losses, their right to recover whatever possible from the sales takes precedence over the rights of buyers/sellers/agents/investors to profit in any way.
February 16, 2011 at 1:43 AM #666903ParticipantSince we’re working on definitions, let’s be sure we understand what an “arm’s length transaction” is.
——————Business Definition for: arm’s length transaction
Dictionary of Accounting Terms
arm’s length transaction
one entered into by unrelated parties, each acting in their own best interest. It is assumed that in this type of transaction the prices used are the fair market values of the property or services being transferred in the transaction.Dictionary of Finance and Investment Terms
arm’s length transaction
transaction that is conducted as though the parties were unrelated, thus avoiding any semblance of conflict of interest. For example, under current law parents may rent real estate to their children and still claim business deductions such as depreciation as long as the parents charge their children what they would charge if someone who is not a relative were to rent the same property.Dictionary of Banking Terms
arm’s length transaction
transaction carried out by unrelated or unaffiliated parties, as by a willing buyer and a willing seller, each acting in his own self-interest. Pricing based on such transactions is the basis of fair market valuations.Dictionary of Real Estate Terms
arm’s length transaction
a transaction among parties, each of whom acts in his or her own best interest.Examples: Transactions between the following parties would, in most cases, NOT be considered arm’s length:
a husband and wife
a father and son
a corporation and one of its subsidiarieshttp://www.allbusiness.com/glossaries/arms-length-transaction/4942859-1.html
——————What Does Arm’s Length Transaction Mean?
A transaction in which the buyers and sellers of a product act independently and have no relationship to each other. The concept of an arm’s length transaction is to ensure that both parties in the deal are acting in their own self interest and are not subject to any pressure or duress from the other party. Investopedia explains Arm’s Length Transaction
The concept of an arm’s length transaction commonly comes into play in the real estate market. When determining the fair market value of a piece of property, the price for the property must be obtained through a potential buyer and seller operating through an arm’s length transaction, otherwise, the agreed-upon price will likely differ from the actual fair market value of the property.For example, if two strangers are involved in the sale and purchase of a house, it is likely that the final agreed-upon price will be close to market value (assuming that both parties have equal bargaining power and equal information about the situation). This is because the seller would want a price that is as high as possible and the buyer would want a price that is as low as possible.
This contrasts with a situation in which the two parties are not strangers. For example, it is unlikely that the same transaction involving a father and his son would yield the same result, because the father may choose to give his son a discount.
http://www.investopedia.com/terms/a/armslength.asp
——————One of the problems with short sales is that it’s not the seller who is taking the loss; therefore, the seller has no incentive to get the “highest and best” price for the property — there is no incentive for him/her to act in his/her own best interest, except when they get to benefit at the expense of the lender. There is a tremendous conflict of interest here. If the seller or the agent is in any way related to the buyer (by blood, marriage, acquaintance, etc.), then the best way to ensure that the transaction is “arm’s length” would be to market the property on the open market (in real estate, that means a public listing service, almost always referring to the local MLS) for a minimum duration, and then take the higest and best offer to the lender. Anything less than this is fraud, as it causes losses for the banks/govt/taxpayers/mortgage insurers, for the benefit of the buyer/seller/agent. Because so many of these loans are being backed by the govt/taxpayers, either directly or indirectly, it is imperative that the lenders receive the highest/best offers possible to minimize losses.
The rules traditionally followed by realtors/buyers/sellers in regular short sale transactions (before the govt backing of the mortgage market) do not supercede the right of the govt/taxpayers to recover all the money they are entitled to from these short sales.
Once again, I couldn’t care less if the banks were taking the hit, directly (as long as the FDIC isn’t required to bail them out), nor would I care if an equity seller wanted to sell for below market to a related party — taking the losses themselves, rather than foisting them on the shoulders of the lenders/taxpayers. But once the government/taxpayers stepped in to take the losses, their right to recover whatever possible from the sales takes precedence over the rights of buyers/sellers/agents/investors to profit in any way.
February 16, 2011 at 1:43 AM #667508ParticipantSince we’re working on definitions, let’s be sure we understand what an “arm’s length transaction” is.
——————Business Definition for: arm’s length transaction
Dictionary of Accounting Terms
arm’s length transaction
one entered into by unrelated parties, each acting in their own best interest. It is assumed that in this type of transaction the prices used are the fair market values of the property or services being transferred in the transaction.Dictionary of Finance and Investment Terms
arm’s length transaction
transaction that is conducted as though the parties were unrelated, thus avoiding any semblance of conflict of interest. For example, under current law parents may rent real estate to their children and still claim business deductions such as depreciation as long as the parents charge their children what they would charge if someone who is not a relative were to rent the same property.Dictionary of Banking Terms
arm’s length transaction
transaction carried out by unrelated or unaffiliated parties, as by a willing buyer and a willing seller, each acting in his own self-interest. Pricing based on such transactions is the basis of fair market valuations.Dictionary of Real Estate Terms
arm’s length transaction
a transaction among parties, each of whom acts in his or her own best interest.Examples: Transactions between the following parties would, in most cases, NOT be considered arm’s length:
a husband and wife
a father and son
a corporation and one of its subsidiarieshttp://www.allbusiness.com/glossaries/arms-length-transaction/4942859-1.html
——————What Does Arm’s Length Transaction Mean?
A transaction in which the buyers and sellers of a product act independently and have no relationship to each other. The concept of an arm’s length transaction is to ensure that both parties in the deal are acting in their own self interest and are not subject to any pressure or duress from the other party. Investopedia explains Arm’s Length Transaction
The concept of an arm’s length transaction commonly comes into play in the real estate market. When determining the fair market value of a piece of property, the price for the property must be obtained through a potential buyer and seller operating through an arm’s length transaction, otherwise, the agreed-upon price will likely differ from the actual fair market value of the property.For example, if two strangers are involved in the sale and purchase of a house, it is likely that the final agreed-upon price will be close to market value (assuming that both parties have equal bargaining power and equal information about the situation). This is because the seller would want a price that is as high as possible and the buyer would want a price that is as low as possible.
This contrasts with a situation in which the two parties are not strangers. For example, it is unlikely that the same transaction involving a father and his son would yield the same result, because the father may choose to give his son a discount.
http://www.investopedia.com/terms/a/armslength.asp
——————One of the problems with short sales is that it’s not the seller who is taking the loss; therefore, the seller has no incentive to get the “highest and best” price for the property — there is no incentive for him/her to act in his/her own best interest, except when they get to benefit at the expense of the lender. There is a tremendous conflict of interest here. If the seller or the agent is in any way related to the buyer (by blood, marriage, acquaintance, etc.), then the best way to ensure that the transaction is “arm’s length” would be to market the property on the open market (in real estate, that means a public listing service, almost always referring to the local MLS) for a minimum duration, and then take the higest and best offer to the lender. Anything less than this is fraud, as it causes losses for the banks/govt/taxpayers/mortgage insurers, for the benefit of the buyer/seller/agent. Because so many of these loans are being backed by the govt/taxpayers, either directly or indirectly, it is imperative that the lenders receive the highest/best offers possible to minimize losses.
The rules traditionally followed by realtors/buyers/sellers in regular short sale transactions (before the govt backing of the mortgage market) do not supercede the right of the govt/taxpayers to recover all the money they are entitled to from these short sales.
Once again, I couldn’t care less if the banks were taking the hit, directly (as long as the FDIC isn’t required to bail them out), nor would I care if an equity seller wanted to sell for below market to a related party — taking the losses themselves, rather than foisting them on the shoulders of the lenders/taxpayers. But once the government/taxpayers stepped in to take the losses, their right to recover whatever possible from the sales takes precedence over the rights of buyers/sellers/agents/investors to profit in any way.
February 16, 2011 at 1:43 AM #667646ParticipantSince we’re working on definitions, let’s be sure we understand what an “arm’s length transaction” is.
——————Business Definition for: arm’s length transaction
Dictionary of Accounting Terms
arm’s length transaction
one entered into by unrelated parties, each acting in their own best interest. It is assumed that in this type of transaction the prices used are the fair market values of the property or services being transferred in the transaction.Dictionary of Finance and Investment Terms
arm’s length transaction
transaction that is conducted as though the parties were unrelated, thus avoiding any semblance of conflict of interest. For example, under current law parents may rent real estate to their children and still claim business deductions such as depreciation as long as the parents charge their children what they would charge if someone who is not a relative were to rent the same property.Dictionary of Banking Terms
arm’s length transaction
transaction carried out by unrelated or unaffiliated parties, as by a willing buyer and a willing seller, each acting in his own self-interest. Pricing based on such transactions is the basis of fair market valuations.Dictionary of Real Estate Terms
arm’s length transaction
a transaction among parties, each of whom acts in his or her own best interest.Examples: Transactions between the following parties would, in most cases, NOT be considered arm’s length:
a husband and wife
a father and son
a corporation and one of its subsidiarieshttp://www.allbusiness.com/glossaries/arms-length-transaction/4942859-1.html
——————What Does Arm’s Length Transaction Mean?
A transaction in which the buyers and sellers of a product act independently and have no relationship to each other. The concept of an arm’s length transaction is to ensure that both parties in the deal are acting in their own self interest and are not subject to any pressure or duress from the other party. Investopedia explains Arm’s Length Transaction
The concept of an arm’s length transaction commonly comes into play in the real estate market. When determining the fair market value of a piece of property, the price for the property must be obtained through a potential buyer and seller operating through an arm’s length transaction, otherwise, the agreed-upon price will likely differ from the actual fair market value of the property.For example, if two strangers are involved in the sale and purchase of a house, it is likely that the final agreed-upon price will be close to market value (assuming that both parties have equal bargaining power and equal information about the situation). This is because the seller would want a price that is as high as possible and the buyer would want a price that is as low as possible.
This contrasts with a situation in which the two parties are not strangers. For example, it is unlikely that the same transaction involving a father and his son would yield the same result, because the father may choose to give his son a discount.
http://www.investopedia.com/terms/a/armslength.asp
——————One of the problems with short sales is that it’s not the seller who is taking the loss; therefore, the seller has no incentive to get the “highest and best” price for the property — there is no incentive for him/her to act in his/her own best interest, except when they get to benefit at the expense of the lender. There is a tremendous conflict of interest here. If the seller or the agent is in any way related to the buyer (by blood, marriage, acquaintance, etc.), then the best way to ensure that the transaction is “arm’s length” would be to market the property on the open market (in real estate, that means a public listing service, almost always referring to the local MLS) for a minimum duration, and then take the higest and best offer to the lender. Anything less than this is fraud, as it causes losses for the banks/govt/taxpayers/mortgage insurers, for the benefit of the buyer/seller/agent. Because so many of these loans are being backed by the govt/taxpayers, either directly or indirectly, it is imperative that the lenders receive the highest/best offers possible to minimize losses.
The rules traditionally followed by realtors/buyers/sellers in regular short sale transactions (before the govt backing of the mortgage market) do not supercede the right of the govt/taxpayers to recover all the money they are entitled to from these short sales.
Once again, I couldn’t care less if the banks were taking the hit, directly (as long as the FDIC isn’t required to bail them out), nor would I care if an equity seller wanted to sell for below market to a related party — taking the losses themselves, rather than foisting them on the shoulders of the lenders/taxpayers. But once the government/taxpayers stepped in to take the losses, their right to recover whatever possible from the sales takes precedence over the rights of buyers/sellers/agents/investors to profit in any way.
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