Following my post last week on Short Sales-Welcome the New Straw Buyer another conversation with an agent again leaves me shaking my head.
One of my clients heard a "rumor" about a terrific property about to come on the market in a neighborhood they were interested in. It was one of those "friend of a friend" types of rumors so they made a call to the person who said they knew all about the property. It turns out that the number went to another agent and after they left a message they passed on the information to me.
When I got in touch with the agent they told me how they were getting their investor clients great deals on properties all over Northern Virginia, before they ever went on the market. Seems his team works with a number of lenders as REO agents. When they are assigned a property to list, if it is in good shape and in top location they start making calls to their investors. Before the property is formally listed in the MLS the investor makes an offer at below market price. In many cases the bank accepts the offer and the home never makes it to market.
When I questioned the price he was quoting on the property my clients were interested in, far below market value, he said since my clients were already represented he would not share any additional information as he had an investor lined up. WHAT????? One of the properties we talked about I knew was coming on the market and had talked to the listing agent to confirm the listing price range. It was significantly higher than what they first agent quoted. Now I'm watching to see if it actually makes it to the MLS.
Do lenders know this is going on and turn their heads? If they turn a blind eye to REO "insider trading" why do they make buyers of short sales jump through so many hoops? Now obviously not every agent or group of agents are up to this type of "insider trading" or creating "straw buyers" but at the same time for every one we hear about how many more are there?
Just another reason to wonder how long it will take us to straighten out the housing crisis and why banks shouldn't be in the real estate business.