Last year, the Reno Gazette-Journal reported on abuses that were suffered by many Northern Nevada homeowners who got caught up in short sale flipping schemes. The investigation revealed that several agencies took advantage of legal loopholes to increase their earnings by as much as double, triple and, in some extreme cases, quadruple what they would have. Recently, though, signs show that Nevada has cracked the whip on short sale abuse when a local Reno broker and his agent were brought up in front of the Nevada Real Estate Commission.
The Reno Gazette-Journal's investigation found that some local agencies provided special privileges to certain investors by keeping listings off the open market long enough to allow the cash Buyer to come in and purchase the properties for way below market value. These all-cash Buyers would then turn around and "flip" the houses shortly afterward for as much as $100,000 over the purchase price. By representing the Buyer and the Seller, the agencies were able to earn double the commissions on the first sale and then double the commissions on its resale when the home was "flipped" within just two or three months from the initial sale. This brought on a sharp increase in "flipping" Northern Nevada homes.
The broker and his agent were charged and found responsible for 39 separate violations. They were fined and required to pay back part of their commissions from the sales. However, many people are upset that they this was just a slap on the wrist. After all, neither the broker nor his agent have had their licenses revoked or even suspended. Some homes sold for six figures higher than the initial short sale price while others resold for higher than the original mortgage, making some wonder whether the short sale was actually necessary in the first place. By not striving to get the best possible price on the short sale, both the distressed Sellers and the mortgage companies were being short-changed while the investors and Brokers made huge profits.
It is great that Nevada cracks the ship on short sale abuse. Distressed homeowners are already in a delicate situation. They don't need to have this situation taken advantage of by unscrupulous agencies. Please make sure you do your homework on your Broker before you sign them up to represent you. It infuriates me that these few bad seeds can cast a shadow over the entire industry. There are plenty of good Reno REALTORS® out there that have your best interests at heart, including myself!
Charlene Hamilton, Your Reno Real Estate Specialist
Originally posted on my Reno real estate blog here: http://charlenehamiltonrealestate.com/reno-news/nevada-cracks-the-whip-on-short-sale-abuse.
Comments (0)Subscribe to CommentsComment