Unfair/Fraudulent sales tactics by REA/REO

by jpulido on August 20, 2009

The practices I have been subjected to during my recent home buying experience are disgusting! My husband & I have bid on over 30 homes, with an FHA pre-approval in hand, at asking/over asking/WAY over asking/and sometimes in the market range of below asking for properties for a year. Only 2 agents have actually contacted our agent, without promting, to respond as to an acceptance/rejection/or final & best on a multiple offer situation. ONLY TWO!!!! We have been told we need a PRE-approval with the lender designated by the seller/BANK in order to even submit an offer. WHAT?! I have a pre-approval in hand, and, will send it to you, with the loan officers contact info to forward all docs, and, still they won’t accept a BID!! A pre-approval from a BANK, to a BANK, with the same criteria is not sufficient?! The last straw was today. Two days ago a property came on the market publicly and was so new it listed at 0 days on the market. I called my agent. He contacted the seller, and, they wanted a pre-approval done with Prospect Mtg before an offer could be submitted. My agent asked to contact the Mtg. Co, as he was aware my husband & I would not be ok with this. The loan officer was very friendly, per my agent, and agreed that all she needed was to contact our loan agent for docs, and, we would be okay to submit an offer. The next day, our loan officer contacted my husband, and, said he was willing to send them anything they needed but, why would we be willing to go thru another pre-approval as that is what the selling mtg. co. agent was going to do? My husband said forget it don’t send them anything and called our real estate agent right away. Turns out, the “friendly” loan officer at the sellers mtg. co., neglected to reiterate, regardless whether she talked to our loan officer or not, she was still going to pre-approve us(run our credit) to get the offer submitted. This was yesterday morning. I found out today my real estate agent went ahead and submitted our offer anyway. GOOD FOR HIM. I’m glad, after what I found out today. First thing today, the property comes up CONTINGENT. WOWEEEE!!! Man, those banks move fast now, don’t they. It took weeks, MONTHS & many, many phone calls to jerk even a rejection/non-response out of most of our offerers unless we found the property listed publicy as “SOLD” first. Something is definitely wrong here. I aint stupid. I aint even ignorant, but, can’t just put my fingr on it…ha ha! This is just the latest in many instances of unfair tactics used by the sellers/banks/selling agents/mtg. co.’s. The best ones are when you submit an offer on a property that has been on the market for less than 8 hours, and, you get no response at all, but, the next day it’s CONTIGENT or PENDING. How the heck did that happen I wonder? Hmmm……. is coincidentily… accidental that you listed a property for sale that…maybe….really wasn’t a public offering….for…..sale? I have had numerous, NUMEROUS, similar experiences. I am in this for 1 year, and over 30 offers. As of this day, I have decided to take action. You see, if these practices are left unchecked, and, to continue, when the bank owned/foreclosed/short-sale’s are left in the past, the pratctices they have come so comfortable with that bring no repercusion become common and accepted to the realtors AND the financial institutions involved. This is wrong. I say FRAUD. I say BAIT&SWITCH. I was subjected to an instance similar to Sherry McDonalds’ & Taryn Stults, and, many, many other situations which are completely illegal. Our economy is in a bad way right now, but, this is NOT the “WILD WEST”. Even then we had a common respect and lawfulness. We are the United States of America. We have rules that “we” vote on to keep the honest, honest. I’m pursuing that. Everyone/entity/bank has the right to sell their home to whomever they choose, but, to bait an unassuming individual to invest their time, effort, and, subject their credit score to REQUIRED pre-approval status thru the lender of THEIR choice, even when a pre-approval is in hand by the bidder, on the premise that this is the ONLY way your offer will even be C O N S I D E R E D, AND, to have no confidence that your offer will even be handed over by the listing agent for the sellers inspection is terribly wrong!!! After over 30 offers in 1year, I am glad I know LOTS about my credit rating. My & my husbands credit rating of over 800 could be in the toilet right now had I not been savvy enough to not go for this tactic. I am appalled. This has got to stop. I would like anyone to join me that has real, VALID proof of these instances being inflicted on them also. If we don’t change it now, what’s going to become the norm in our near future? My word, when I do get my next home, and, want to or have to sell it in the future, what am I going to be up against? That’s a scary thought. Way more scary than 7% right now. I can’t live with that. Please contact me by replying to this. I am serious. My realtor, his lawyer, the Department of Realtors, are all on my side, but, I need real people to stand with me to get to the masses. I’m sorry for your pain as much as I feel my own. I’m gonna keep going. It’s my nature. All the best. Oh, and for pete’s sake, don’t let ANYONE run your credit as a REQUIREMENT to BID on a home if you are allready aware of your credit rating/financial status, or have a pre-approval. If you dont’, then proceed with caution. Every time someone runs your credit, your lowering your credit score. BEst.

This post was submitted by jpulido.

Leave a Comment

 

{ 13 comments… read them below or add one }

Jon September 6, 2009 at 7:57 am

I know exactly what you are talking about. My wife and I have tried to buy a dozen or so foreclosure properties in the last year with similar experiences. Properties with unusualy long delays in response, unfair negotiations, properties sold as they hit the market, requirements for their own mortgage approval, not allowing certain types of offers(those with time limits), and even a property we purchased and were about to close on that the bank lost title to by not paying homeowners association dues. The bank that foreclosed on the property got foreclosed on by the association. They even lied to us for 2 months saying they were going to get the property back, and to reschedule the closing for them. We have found some agents bending real estate laws to help their friends get first crack at homes, and ignoring and discouraging others to make offers saying the property was sold, when it was not. As slow as banks are to respond to offers, how can a foreclosure have an accepted offer on its first day on the market? Almost every foreclosure, when you call for a showing, the sellers agent automatically tells you that there is an offer on the home, but that you can look at it and make an offer if you like. How can every home that hits the market have an offer pending?? We also believe that these large corporations selling these homes think that they are above the law, above fair business practices, and truly believe they are doing you a favor letting you buy their property.

Jon September 6, 2009 at 8:07 am

One more statement on foreclosures. Isn’t it an unfair advantage for any seller to receive a mortgage pre-approval with them?? The seller gets to examine your credit, savings amounts, and ability to pay giving the seller the advantage of knowing how far they can push you on a counter offer. Regardless of what you are selling, knowing how much the buyer has in their wallet allows the seller the ability to ask for all the money. Shouldn’t we be entitled to the same info about the seller too in order to keep the negotiations fair???

Berta Whitacre September 7, 2009 at 11:36 am

Hello,
I am writing because of how treacherous the REO people are; I have a friend who is disabled, and her and her husband have been renting a home for four years after moving back to Ohio after her disability retirement. The home they rented was only owned by their landlord for two months before they moved in four years ago and he did nothing; she was in the hospital with heart failure when the notice for foreclosure came; that man who was an actual licensed realtor who rented the property to her was taking her money for over a year while going through bankruptcy and foreclosure without her knowledge; since the foreclosure her and her husband have been preapproved by a bank for the home but the bank would not even talk to her; then the REO would not even speak to her either until she called the Trustee and then they got an assistant of the REO to come over but I believe it is all a ruse because after looking at his public records at the Hamilton County Ohio Auditor site you can see where he is usually the one who ends up with the bank owned properties. There are three pages of properties of his that mainly were bankowned and then a few went to his assistant or someone who worked for him and within about six months the property was put in his name sometimes with $0 paid for it by him; now please tell me how this is happening. This is at the very least FRAUDULENT and I am going to say this and I really do not want to believe it because this friend and I have been close for many, many, years but the stress of having to move from a house she can buy very well could kill her and I am sorry to sound dramatic but besides heart failure, she has diabetes, spinal cord injuries, breathing problems due to her heart. Who can I contact to help her? There must be someone but meanwhile everyone who has been through this follow the trail on your county Auditor website and find your REO and follow the names and how the owner property goes back to the bank and then someone gets it and then within a few months the agent has the house for a much cheaper amount then the person who made the offer with money in hand. This is not what the home buyer plans were made for; it was done to help first time home buyers get these properties; not some fat cat, doing illegal means to do it and getting away with it. These people must be stopped and as far as I am concerned any banks that do this and know it is happening should have to give back every penny they borrowed from the government; that is if they even know; if they did not know then they should prosecute the guilty REO’s or give the money back then also. Some of the REO people are either the investment companies themselves or have friends that are and either way they make out like what they are; BANDITS
Thank You
Berta

ken September 21, 2009 at 9:04 am

Yes, my wife and I have run into simmilar problems. We have been looking for a house in Southern Cal (San Gabriel area of Los Angeles) We also are FHA approved and have the loan, each time we bid we provide a letter from the lender stating that they will fund the loan, Lately we run into banks that want us to become “pre-approved” with thier lender. This is rediculus and the only reason for it is a kickback to the banks or realtor selling the property. It should be illegal! The banks have now figgured a new scam, wait for months to list the property to keep the prices high, then when they do list it way below market for the area to create a bidding war. Then have them go through you lender to be approved and try to convince them that thier loan is better then the one they have so you can pocket more money!I wish someone would sue one of these realtors and banks and publisize it in the paper, news, what have you only then will these shenanigans stop.

john T October 31, 2009 at 3:53 pm

THEN LET’S DO SOMETHING ABOUT IT.. GET THE WORD OUT!!! IM SICK AND TIRED OF THE REO AGENTS HAVING US JUMP THROUGH THEIR HOOPS AND CALL ALL THE SHOTS WHEN THE SALE GOES TO THEMSELVES OR THEIR GOOD OL’ BUDDY.
I JUST LOST MY SECOND MILLION PLUS BUYER TO AN REO AGENT BECAUSE WE’VE BEEN WRITING OFFER AFTER OFFER AND ALWAYS MISSING OUT, WELL MY BUYERS GOT SMART AND WENT DIRECTLY TO THE LISTING AGENT AND FIRST OFFER WAS MAGICAL …
IM SICK OF WHERE THIS INDUSTRY IS GOING!!
MY EMAIL IS JRT@RETOPAGENT.COM… SIGN ME UP FOR ANY GROUP THAT WILL COMBAT THESE AGENTS AND LENDERS!!!

Metric Mc Gillander November 11, 2009 at 11:44 am

To whom this concern
My father was murdered by the kkk on april 3
1967 in pineville Louisiana.On aug. 22 1967
the then mayor of pineville Floyd w. Smith
forced my grandmother to sell the 30 acers
to him she was 100 years old.The land belonged
to Linzy Mc Gillander she was his mother n law
with no right to sell,no title search,and it has been turned over so many times,in hope no
one tries to may this wrong right.

Kelly August 16, 2010 at 5:05 pm

I’ve just run into my 2nd REO deal with a broker that handles mostly these types of sales. He had me look at a house that was bank owed. The front door was open and hack-job work was being done on the home without a permit. After taking pictures and assessing the property, red flags because apparent. I know the town inspectors and they had told me no permits were pulled. Additional living space was added, fireplace closed up\abandoned, and new doors\windows. Now the bank owns this property and has pleaded completely ignorant to even owning it. I was told to go to the listing agent and given a story about the possibility of the property being sold. The property isn’t sold and hasn’t even hit mls. The REO agent has a sign on the door for potential investors like myself. I was able to walk through the house unassisted after the reo agent tipped me off that the back door might be open! Took pictures & assessed the site. Now the agent will not call me back to answer questions about closing up the fireplace and creating living space over a cracked foundation with no frost barrier. My gut tells me that this is not right. Bank is unaware or playing stupid, no permits, and agent is allowing renovations along with sneak peeks from potential buyers.

The problem is—all information was yanked from the bank owned web-site and phone calls have gone unanswered by the agent. This smells like a pocket deal and the Bank appears to be in on everything going on. I know banks sometimes will fix up a property before listing it on MLS. My concerns is that a ton of work is being done without any permits! So this cannot be legitimate.

So I researched another house in a different town, under the same reo agent, owned by a different bank. The agent promptly told that there was a cash offer and that i should waste my time. I’m a cash investor and that house is still sitting on MLS after two weeks. The agent candidly told me not to bother with submitting my offer. I contacted another agent to investigate further. That agent had many people walk through the property and word on the street was that it was sold—but he also question why it’s still on MLS. Then he shared with me the same kind of hack-renovation jobs that took place (same thing: abandoned closed up fireplace & severely cheap fixes). There is deffinitly something more going on with this agent who represents a bunch of banks on REO deals. I’m not sure if the banks are in on it or his reputation proceeds him in recovering more for the property while pocketing more on side.

This is a big waste of time for agents bringing clients to see REO homes and for investors or buyers interested in landing a good deal. You cannot win if the listing agent has already been showing the home to pocket investors for months while doing hack-job updates to increase potential sales.

WHAT can we do? I don’t think buyers understand enough to do anything! So far I’m alerting more legitimate agents in both towns about this particular reo agent. I will track and report any work without a permit. Next week I’m planning to take the town inspectors to lunch and enlighten them! I’m doing a lot of leg work regardless—so why not get something accomplished?!

Carlos Arenas September 27, 2010 at 10:22 am

I too have been faced with the unfair manner in which banks are allowed to dispose of their forclosed properties and the cozy arrangements they have with their listing agents. So we know that the banks are inundated with foreclosedproperties and that theyhave to dispose of them as per Federal Govt. regulastions. OK, so why do they constantly play ther gimmick? I happen to be in a position to pay cash for mhy properties and I too have the same problems as I read on these comments. I find a house, I offer ALL CASH for their asking price and then I find that a sale is pending, or I get put on a list of bidders, and on and on and on and on.
If the bank haa a house for sale and they list it for sale, they should be able to sell it to the person that offers their asking price be it cash or finance. If the buyer is already pre approved for a loan,there should be no reson for the put off. SO, how de we form a very strong group and present these facts to our govt. representatives to see that this practice is stopped. Of is it possible that the government reps are n bed with these banks??? Write me, let me know your thoughts

mike December 15, 2010 at 7:31 am

my god! I thought i was alone.

Christopher February 7, 2011 at 11:01 am

Another tactic that is gaining popularity and is seemingly unchanging is the “phantom” multiple offer situation. Two separate offers we have made within the last month, on homes listed less than 24 hours, have come back with this delimma. The listing agent asking for our “highest & best” offer. Once the offer is submitted we get a verbal acceptance. The first time we lost the house to a better offer while they were waiting on addendums. This was part of the offer paperwork the had us complete. (1) This seems totally shady since you have no idea if there truly is another buyer. (2) Allowing for the additional time when we are offering more than the list price is absurd. (3) Finally we get a rate locked in, not paying cash on this one, and they take so long it actually goes up.
We have a pending deal on a house now and we have to get the contract into the lender today or the rate changes again. Fingers crossed since we already paid for the inspection. I will say that while Fannie Mae does not negotiate much on their property prices listed on Homepath.com they generally are quick to respond to your offer. The prices general drop every 30 days so just keep an eye out.
Good luck to all in the home search.

Atlantagent February 11, 2011 at 12:38 pm

Hopefully this helps. I too have submitted more than 50 offers from pre approved buyers attempting to purchase reos without acceptance. Most being at or above list price.
Keep this in mind while submitting an offer: A listing agent working for the bank/seller, must keep the listing active/available until he/she recieves a notice in writing from the seller. During this time many offers may come in. The bank/seller has no obligation to anyone looking until a binding agreement has been reached.( I believe some sellers are not interested in properties that have finance contingencies at all! Banks are notorious for denying properties at the last minute.)
Buyers must be aware that banks can not only deny the buyer, but also deny the property. This is especially true for FHA loans.
That being said buyers also do not have an accepted offer until binding agreement is reached and should always continue the search until written agreement is in hand and all contingencies are met.
I advise my clients of this before the process begins. I know what FHA is looking for in a home depending on what type of loan and will advise my client if I think FHA may have issue ( such as a vandalized property, missing HVACs roof leaks, missing components, etc…)
I will not let my client spend any money on a home(inspections/appraisals/ additional credit checks etc…) until we have binding agreement (after all negotiations have been made and agreed upon)
Get a good buyers agent who can prepare you ahead of time. Its always best to have a pre approval from a lender before the search begins. You can submitt an offer using your own pre-approval and have it written in offer that you will have the banks/seller lender once negotiations begin.
I too have wasted tons of time searching through properties listed as active/available and even called the agent to verify availability without a return call only to submit an offer and get a call days later stating a dif offer was accepted. Sucks!
While its true some agents are not ethical, most are only doing what the seller/bank requires them to do.
We are in a time unlike any before. We are working with banks not regular sellers who have no emotional attachments to properties.
When homes are listed and immediately under contract sometimes the bank may be in negotiations prior to home being on mls. (courthouse steps , offer submitted to asset manager, previous owner redemption period) Its all a pain!!!
Before submitting an offer have your realtor check the history of the home to see which bank owns it and if it was listed with a different agent. When listings are expired with one agent and goes to another, it comes back on the market as a “new” listing.
I hope this helps a little

John March 3, 2011 at 3:47 pm

We just bid on an REO – cash offer, close in 30-days, ABOVE listing price. We had been advised that there was another bidder. After evaluating both bids, the bank (Regions) went back to the initial offer and solicited another higher bid from him … BUT, did not do the same for us. Then, when the other bid came in above ours, the advised the other bidder that they were approved on the property!!

There seems to be no regulatory group keeping these banks in line — they simply do what they want and take somewhat of a ‘tough luck’ approach on complaints.

tina November 9, 2011 at 8:28 am

i agree something fishy here when the house is pending when it just is day 1 at 7 am in the morning and i dont even get a chance to bid and its pending . are the rich investors paying off the realitors or what?