Foreclosures and realtors

[daenku32]

We are finally in the market to get us a nicely priced foreclosure. When we take a look of those put on the market by the banks (I assume), we find some nice deals. But the moment we show interest, the deals are gone. We are in a very early part of looking into this, but it seems that a lot of realtors are "buying up" the foreclosures the moment they receive interest, and then turning around and listing them as regular listings.

I remember readings an article some time ago about various foreclosure frauds which involved a realtor and a loan originator. In those I believe they also had a part in forcing the property into foreclosure by not discouraging buyers, and then when the foreclosure happened, buying up the foreclosure at well below the market value and turning about and listing it as a regular property.

If you have any info on this please post it. I'm sure we'll be finding out more about this as we are working with a realtor right now who's "specialty" are these foreclosures, and when the wife confronted him about the issue in the first paragraph, his tone changed a bit as he talked on the phone.

 

[zeggman]

It probably varies depending on what area of the country you're in (& that assumes you're in the United States), but in California bankers will typically work with a realtor who lists their properties. They would appear as regular listings when you first see them, because that's what they'd be.

If you want to get them before the bank lists them as REO ("real estate owned"), you typically either need to have a relationship with the bank (some professional investors who specialize in foreclosures do this, but even in that case the relationship is more with the bank's realtor than the bank itself), or you need to be working with the owner before the foreclosure process is complete.

I'm not familiar with the "fraud" you're describing. In a down market, the holder of the first mortgage can sometimes acquire a house for below-market value because no one bids on it at the foreclosure auction. In that case, the bank takes title by paying itself the amount owed on the first mortgage, and the foreclosure process wipes out subsequent mortgages. This is not fraud, it's simply how the system works.

The only buyers who could really be discouraged before that would be those who are seeking a short sale, that is, to get the mortgage holder to accept less than is owed to let the property be sold. Sometimes it is in their interest to do so, and sometimes it isn't. Sometimes they don't do so even when it is in their interest to do so.

Where are you located?

 

[The Central Scrutinizer]

We are finally in the market to get us a nicely priced foreclosure. When we take a look of those put on the market by the banks (I assume), we find some nice deals. But the moment we show interest, the deals are gone. We are in a very early part of looking into this, but it seems that a lot of realtors are "buying up" the foreclosures the moment they receive interest, and then turning around and listing them as regular listings.

I remember readings an article some time ago about various foreclosure frauds which involved a realtor and a loan originator. In those I believe they also had a part in forcing the property into foreclosure by not discouraging buyers, and then when the foreclosure happened, buying up the foreclosure at well below the market value and turning about and listing it as a regular property.

If you have any info on this please post it. I'm sure we'll be finding out more about this as we are working with a realtor right now who's "specialty" are these foreclosures, and when the wife confronted him about the issue in the first paragraph, his tone changed a bit as he talked on the phone.

I'm not sure how this is a fraud. If you want to get the house at the lowest price, you need to get in ahead of the realtor (and everyone else for that matter).

 

[balrog666]

We are finally in the market to get us a nicely priced foreclosure. When we take a look of those put on the market by the banks (I assume), we find some nice deals. But the moment we show interest, the deals are gone. We are in a very early part of looking into this, but it seems that a lot of realtors are "buying up" the foreclosures the moment they receive interest, and then turning around and listing them as regular listings.

I remember readings an article some time ago about various foreclosure frauds which involved a realtor and a loan originator. In those I believe they also had a part in forcing the property into foreclosure by not discouraging buyers, and then when the foreclosure happened, buying up the foreclosure at well below the market value and turning about and listing it as a regular property.

If you have any info on this please post it. I'm sure we'll be finding out more about this as we are working with a realtor right now who's "specialty" are these foreclosures, and when the wife confronted him about the issue in the first paragraph, his tone changed a bit as he talked on the phone.

It's an old and time-honored tradition. Realtors, in general, have routinely and deliberately downplayed market prices, independent appraisals, and the comparative value so they could have a compatriot buy properties at a debased value.

How did you think they got so rich and influential?

 

[NewtonTrino]

All I know is that the market is heating up around here again fairly quickly. New subdivisions are being built like crazy and inventory is draining. We still aren't at 2008 levels though.

I managed to snag a 5 acre tract that was part of a failed subdivision. I'm planning on building a giant mansion on it but it's going up in value so fast (already double) that I might just sell it.

Yeeehaww the circle goes around and around.

 

[Gord_in_Toronto]

We are finally in the market to get us a nicely priced foreclosure. When we take a look of those put on the market by the banks (I assume), we find some nice deals. But the moment we show interest, the deals are gone. We are in a very early part of looking into this, but it seems that a lot of realtors are "buying up" the foreclosures the moment they receive interest, and then turning around and listing them as regular listings.

I remember readings an article some time ago about various foreclosure frauds which involved a realtor and a loan originator. In those I believe they also had a part in forcing the property into foreclosure by not discouraging buyers, and then when the foreclosure happened, buying up the foreclosure at well below the market value and turning about and listing it as a regular property.

If you have any info on this please post it. I'm sure we'll be finding out more about this as we are working with a realtor right now who's "specialty" are these foreclosures, and when the wife confronted him about the issue in the first paragraph, his tone changed a bit as he talked on the phone.

I presume the high lighted words should be "discouraging"? Otherwise, I don't understand what is happening.

In most jurisdictions realtors are licenced and have a Code of Conduct. If they act contrary to the interests of their client they can/should/maybe subject to penalties.

 

[daenku32]

I presume the high lighted words should be "discouraging"? Otherwise, I don't understand what is happening.

In most jurisdictions realtors are licenced and have a Code of Conduct. If they act contrary to the interests of their client they can/should/maybe subject to penalties.

Yeah, I think I got that all wrong with changing words around.

Well, a small update is that it may not be very wrong yet. Some of the sites we had use to look up foreclosures are ones that have a free and paid options. They list homes that may or may not be in foreclosure anymore and are not terrible reliable. Our realtor mentioned that they typically have the first peek at the MLS listing before they become public, and that he'll keep a close eye on it. There still appears to be plenty of foreclosures in our area.

So for now at least our realtor seems to be dealing with us fairly openly about it. Here's to hoping that I was wrong on my initial feelings about the realtors and the foreclosures. We are buyers in the market so we just need to watch carefully about the price we pay.