This week we got a very powerful email from one of our readers. It was a list of questionable practices some agents, specializing in REO, are using at the expense of others. The following email is rich with information. Please take a read and let us know what you’ve seen. At RE-Insider, we believe that we can all benefit by sharing our experiences.
I’ve been tracking activities in my area for at least five years. I am unusual in that I work in, and am very familiar with, an area that covers more than three counties. My background as an engineer, and my experience in trends and forensics, makes it feel (to me) as though I can almost see these activities growing in practice before my eyes.
– MANY local REO agents have been, and still are, manipulating their sales by hiring buyers’ agents at a very low split compensation and then suppressing other agent’s offers in favor of their sub-agent’s offers. The framework of the team is only known to the brokerage, and not to the banks, since all the employees are 10-99 employees. This is out-and-out fraud, and I can name names, even.
– Other REO agents are continuing practices that are blatant RESPA violations. In the past two months alone, I have had two separate buyers told to pay title/escrow fees in SPITE of the fact that they were forced to use the Bank’s [Seller’s] own escrow company.
The agents use the trick this way: The buyer receives the bank addendum stating that they should “check one” of two boxes: either they will use THEIR chosen escrow company and pay the title insurance and escrow fees, OR, they may choose to use the bank’s RECOMMENDED escrow company and the bank will pay an escrow fee.
Once the buyer agent sends back the form and the buyer has elected their own title company, the selling agent then says, “I already put this PENDING, and if I have to re-write this form NOW, I will have to let it go back on the market, and you will have to hope we don’t get any more offers. OR, you can just check the box that says that you are choosing OUR escrow company.” <--- Violation Number 1 Then, AFTER ALL THIS, and the Buyer has been strong-armed into going with the escrow company that the Bank/Seller wants to use, the listing agent then provides a "disclosure" stating that the escrow company is in part or wholly owned by the bank. <--- Violation Number 2 Of course, the capper is that the Buyer ends up paying all sorts of junk fees to the pseudo-escrow company before all is said and done, so that the reality of the bank "paying" those fees is mitigated, and the buyer has basically paid them anyway. - Another insidious thing that agents are doing is that there are some agents who OBVIOUSLY never intend to work a short sale listing they get. It's quite transparent that they only took the listing in order to get buyer leads as long as they can. These days, there is NO REASON not to close nearly every short sale out there. I find it a sad state of affairs that everybody--the public and real estate agents as well--have completely gone numb to doing the right thing, and to being honest and accountable.