Agent is “wholesaling” property on MLS

Agent is “wholesaling” property on MLS

Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes

Wow, this one is a doozy. In all of my 10 years I have never seen anything like it.

Friday a client of mine discovered a property for sale that he has had his eye on for almost 4 years. Back then, it was listed for $300k as a short sale, and to be honest it may have worked for him at that price, although it wasn't worth it for him to go through the short sale process, only to be denied because he wanted to come in with a lowball number. Nevertheless, here we are 4 years later and it has finally run the foreclosure course and hit the market. I tried to get the lockbox code through our centralized showing system, but oddly I was directed to contact the agent. This is uncommon, but happens from time to time, so I called the agent, no answer, and then texted her. A minute later she responded with the LB code. I thanked her for the quick response, and told her my client will likely be interested so I asked her to give me a call when she had a chance. It's now listed at $225k. We spent, almost 2 hours touring the building, taking notes, discussing repairs, discussing the renovation plan etc etc. When we finished I immediately called the agent as they wanted to put an offer in. No answer. I sent another text letting her know my intentions in hopes she'd get back to me. When I got back to the office I pulled the property up on the MLS for the first time and everything appeared to be normal. At this point the only oddity we had noticed was that when it was listed on Zillow about 45 days ago at $150k, there was a price increase to $225k about 20 days later. Uncommon again, but Iv seen it before. As I start digging into the MLS and public records I find another MLS listing for the same property. In fact there were 3 total, the one from 4 years ago, the one listed for sale now, and a mysterious 3rd that was saying PENDING. My heart sunk into my stomach as I hate to find Pending listings on good opportunities, so I open it up and look around. First thing I notice is it's a carbon copy of the Active listing. The second thing I noticed was, my MLS shows the information for listing agents, and when properties go Pending or sold, they lost the buyers side agent information. I noticed the "Buyers" agent was the same agent as the "listing" agent on the New Active listing. Res flags and warning bells are going off now. I start lining up the dates. 4 days after the first listing goes Pending, the new listing is created. The seller is Hubzu, if anyone has any experience working with them, 100% chance that they do not close a deal in 4 days from execution of agreement. From this point I contact the original listing agent and inform her of what I found. Luckily she responds late on a Friday, but simply says that agent shouldn't be listing the property like that, and that she'd look into it Monday. At this point I'm pretty sure Iv solved the case. My guess is they are "wholesaling" this property, but what blew my mind was that they actually had the audacity to list it on the MLS. I sent a few more texts to the "new sellers" agent but was not able to get any answers. Later that night at 10pm I finally get a response. She replies, "it is for sale.... my partner is flipping the house....that is what you see a pending sale". Hmm. I reply "so they do actually own it then?" She replies Yes. I say that's weird, they should update the MLS, blah blah blah, and then she stops responding. Realizing what's happening I send a message to her saying my client is getting a little concerned with the shady ness of the deal, and that he's only willing to pay $150k, let me know if they'll accept that, otherwise we are just moving on." No answer. The next day I decide to research her brokerage, and broker of record. The office listed on the MLS doesn't exist. The broker of records cell phone number begins with (555). I was able to track down an 800 number that connected me to someone at charge in the office and I explained I had an interested buyer, couldn't get ahold of the agent to get answer and a seller disclosure which is required in my state, etc. He asked my to Text the address and agent info to him. He is a lot more responsive, although he isn't giving me any actual information. I continue to downplay my buyers interest, because at this point I'm going way far out of my way to track down this info, and I don't want to tip them off how interested my buyer is in this property, Incase they do not actually own it, and realize it's value and follow through with the sale. Finally, the broker or office manager responds to my text messages telling me " my buyer should probably move on to any property". I keep it cordial and inform him we kind of just want to get the story at this point, and he repsonds with "again, move on". So at this point I'm sure he got the story, and realized I'm on the them. What I'm not 100% sure of at this point is whether they actually settled or not. I'm praying that they have not, and that I can cut in and stop their attempt to flip the paper on this thing for $75k. I contact a title company because in this county they e-file title so the new owner would be recorded immediately. The title company informs me that the bank still owns the property. That's pretty much where we are now. What do I do? I NEED to stop their sale if it's still under contract. They are obviously intending on flipping it without making any repairs. My buyer intends on actually renovating and renting it out, and making the neighborhood a better place, faster, and not trying to make a quick buck. I'll admit we both dropped the ball not seeing the original listing 45 days ago. We have had our attention in 3 other deals and simply didn't have the time or resources to take on anymore. I know it's illegal to market properties on my MLS if your not the owner, my fear is that I can't stop their sale. Is the fact that attempted to flip it without owning it enough for the bank to cancel the contract with them? I am extremely scared of them actually closing on this deal, first of all it'll cost my buyer more money with zero benefit, but also now that I have basically pestered them the past 2 days, I'm afraid they either won't sell to us, or will just stand firm on a ridiculous price. Iv kept all of my communication professional, and like I said I have not indicated he'd be willing to pay much more than they paid, but if they had half a brain they'd be able to realize how high his interest is from how much we've been trying to get some answers. Anyone deal with this before? Any advice? Hoping to connect with the banks agent first thing tomorrow and lay out the facts, get them to cancel and slide in. I have a feeling it won't be that easy. All you "wholesalers" who see nothing wrong here need not reply, I don't need a debate about how many laws were broken here. To be clear, they were selling the house, not the contract. Looking forward to hearing what you veterans think.

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Real Estate Agent · Salt Lake City, UT · Member since 2018 · 247 posts · 247 votes
7y

I would submit a complaint against all the agents involved to your local Association of Realtors. At the very least, what they're doing sounds pretty unethical. And if they're marketing the property on the MLS without any sort of listing agreement or consent of the true owner, then they're also breaking the law. I would also report those involved to whatever your state agency is that governs real estate laws and licensing.

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  • Investor · Pensacola, FL · Member since 2017 · 1 post · 1 vote
    7y

    That's crazy. I always wondered if this type of thing was going on.

  • Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    7y

    @Blake Selby I was searching google yesterday regarding the issue, curious if it's common and landed on a BP post and the OP was crying about how crazy it was his agent refused to list his wholesale on the MLS. I had to giggle.

  • Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    7y

    Yeah, lots of wholesalers trying to flip properties "under contract" from REO auction sites.....they usually fail, look for it to be listed on Hubzu again.

  • Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    7y

    @Wayne Brooks already put a backup offer in. Hoping to it’s falls out of contract quickly.

  • Real Estate Agent · Salt Lake City, UT · Member since 2018 · 247 posts · 247 votes
    7y

    I would submit a complaint against all the agents involved to your local Association of Realtors. At the very least, what they're doing sounds pretty unethical. And if they're marketing the property on the MLS without any sort of listing agreement or consent of the true owner, then they're also breaking the law. I would also report those involved to whatever your state agency is that governs real estate laws and licensing.

  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    7y

    @William C.  Did you contact the bank that owns the home?  Worst case if your buyer is really interested, offer $201K-he might pay $1K more, but that money goes to the bank not to the 'flipper'.

  • Specialist · Huntsville, UT · Member since 2015 · 458 posts · 249 votes
    7y

    I would ask a real estate attorney if there's anything you can do to stop the sale. And contacting the banks agent and the brokerage they belong to along with the Realtor's association should get you some answers too.

  • Real Estate Agent · Harrisburg, PA · Member since 2016 · 56 posts · 28 votes
    7y

    @William C.

    Has your MLS migrated over to "Bright MLS?"

  • Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    7y

    @Theresa Harris I contacted the agent. She’s looking into it tomorrow. The bank will likely not be able to help. They are a big auction house...deals just revolving through the door. The agent will understand the context.

  • Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    7y

    @Brian Faust yep

  • Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    7y

    @Lori Greene hoping I don’t need to go down the attorney route. I think once I bring light to the situation and the agent and the bank finds out what they are doing they’ll drop the agreement of sale. We’ll see.

  • Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    7y

    @Theresa Harris I offered to buy the assignment actually. The broker told me to “move on”. He knows I can’t buy the contract. It worked with this bank before. They don’t allow you to assign, for this exact reason.

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Lori Greene:

    I would ask a real estate attorney if there's anything you can do to stop the sale. And contacting the banks agent and the brokerage they belong to along with the Realtor's association should get you some answers too.

     a real estate attorney is no help in this.. the buyer has no standing.. 

    the proper action here is 

    1. file a complaint with the department of real estate.. let them investigate its free. and they are the controlling entity not an attorney.

    2. file a grievance with the ethics committee in your MLS system..

    I am going through this right now in Oregon were wholesalers are trying to market properties without owning them in the same manner a real estate agent does.. and then assigning the contracts..Oregon stance is you cannot market a property you dont own in any fashion without a license those with websites and those sending out flyers on their wholesale deals will get cease and desists. also an agent listing something that seller does not actually own is not allowed by the state or the MLS system Although some MLS will allow it if the seller gives written authority. but most wholesalers are not going to do that.

    If HUBZU is actually listing these with this broker then the broker is low balling then relisting.  That broker is going to have an issue HUBZU / the bank that owns it is the one that would be contacting an attorney.. this agent needs to buy it then resell it. 

    lastly on our MLS system we have a history button and it pulls up any listing or status change on a particular address going back 10 plus years. this should be easy information on the MLS system.. and same with finding out who owns it.. that should be a simple e mail like you did.

    and well that was one long paragraph.. good luck.. back up offer was appropriate you might want to think about raising your offer to beat out the first guy..

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @William C.:

    @Theresa Harris I offered to buy the assignment actually. The broker told me to “move on”. He knows I can’t buy the contract. It worked with this bank before. They don’t allow you to assign, for this exact reason.

    so in this instance they are trying to do a double close or do you think they have the money to close. ?? in our state you cant do pass through closings anymore.. no title company will do them

    although in your state with all the little independent lawyers that do RE closing I suspect one will do it as they need the revenue

  • Real Estate Agent · Harrisburg, PA · Member since 2016 · 56 posts · 28 votes
    7y

    @William C.

    I’ve been noticing a lot more “junk” similar to the situation you explain flowing since we’ve merged; suspect listings, agents and brokerages.

    Overall I like the system but worry it’s becoming too large for the overseers to manage and investigate shady & suspect listings/agents/brokerages......

  • Specialist · Huntsville, UT · Member since 2015 · 458 posts · 249 votes
    7y
    Originally posted by @William C.:

    @Lori Greene hoping I don’t need to go down the attorney route. I think once I bring light to the situation and the agent and the bank finds out what they are doing they’ll drop the agreement of sale. We’ll see.

     Sure, but it never hurts to get advice. I gotten some good free advice from attorneys right here on BiggerPockets.

  • Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    7y

    @Jay Hinrichs I'm guessing...but it looks like they are trying to get an agreement of sale on a house they don't own. Or at least market it as if they own it. Then they would close, and resell days later. Can't market a home you don't own on our MLS. Nor can you lie as a real estate agent and say they own it, when they really don't.

  • Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    7y

    @Jay Hinrichs Hubzu has no idea this is happening. Any deal Iv done with them had language in the contract that did no allow it to be assigned, or wholesaled. I contacted the original broker, who has the listing with Hubzu, and she confirmed the other broker who is trying to market it illegally, is in fact breaking the law.

    Bottom line is I need to stop the sale. I know it hasn't happened. I'm just not sure if I can step in. If they have a valid agreement of sale to purchase, they may the the right to act on it and actually close. BUT I'm hoping if I reveal their intention to "flip" it, and the fact they have been marketing it on the MLS while not actually owning it, that Hubzu will cancel their agreement, and accept mine. Should know more tomorrow.

  • Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
    7y

    Suggest you file a complaint through State license Bureau about irregularities. Often the broker and listing agent are both on it. Local MLS probably does not care. Licensing is the likely agency at least officially put a warning. You did quote a lot of redflags let the state determine it.

  • Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    7y

    UPDATE: agents broker just called and claimed a "new" agent had a seller who has "equitable interest" in a property, and she thought she had the right to market it for sale on the MLS. This is BS. They were trying to find buyers willing to pay $75k more than they did before closing. If they couldn't, they simply walk away. If they do, great, they make $75k. This is why my goal in life is to bring scammers like this to the light, and make sure they never succeed in taking advantage of people like this in the future.

    PLEASE...does anyone have any ideas of how I can stop the original sale? They committed fraud, is this enough for the seller to cancel? My buyer is willing to beat their offer, willing to have repair money for hard, basically anything that will make the seller comfortable enough to cancel a contract with one buyer to enter into one with another. Any advice? Thai right here is why investors get a bad name. Trying to “flip” a property for $75k with no risk, and take advantage of buyer and sellers by making misrepresentations.

    I also have to walk a fine line. Do I go after these scammers with the full letter of the law? And clearly piss them off? What if they actually buy it....they’ll never sell to my buyer, at least not at a reasonable price.

  • Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    7y

    Fake listing has been removed.

  • Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    7y

    Well, they may not be breaking any “laws”....I don’t know PA’s laws on “marketing a property you don’t own”.

    They most likely are breaking mls rules since they certainly don’t have the Owner’s permission to market it and put it on the mls, which requires a listing agreement.

    Hubzu/REO Owner may, or may not, have language disallowing marketing of the property in Their contract, similar to HUD's agreement. If not, they are not violating their contract with hinzu/REO Owner.

    Otherwise, wholesalers use transactional funding for these double closes every day.

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @William C.:

    UPDATE: agents broker just called and claimed a "new" agent had a seller who has "equitable interest" in a property, and she thought she had the right to market it for sale on the MLS. This is BS. They were trying to find buyers willing to pay $75k more than they did before closing. If they couldn't, they simply walk away. If they do, great, they make $75k. This is why my goal in life is to bring scammers like this to the light, and make sure they never succeed in taking advantage of people like this in the future.

    PLEASE...does anyone have any ideas of how I can stop the original sale? They committed fraud, is this enough for the seller to cancel? My buyer is willing to beat their offer, willing to have repair money for hard, basically anything that will make the seller comfortable enough to cancel a contract with one buyer to enter into one with another. Any advice? Thai right here is why investors get a bad name. Trying to “flip” a property for $75k with no risk, and take advantage of buyer and sellers by making misrepresentations.

    I also have to walk a fine line. Do I go after these scammers with the full letter of the law? And clearly piss them off? What if they actually buy it....they’ll never sell to my buyer, at least not at a reasonable price.

    yes guru's teach that just having a contract gives equitable interest.. that simply is not true it is in their mind but the only one who can rule on that would be a judge if it ever got that far.  500 .  00 EM is not equitable interest especially if they don't acutally have the funds to close 

  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    7y

    @Wayne Brooks 

    It is hard to follow the OP but I suspect the agent is breaking their fiduciary duty and of Realtor Code of ethics.

  • Raleigh, NC · Member since 2017 · 347 posts · 94 votes
    7y

    Yep. That does sound like a headache. I've had issues with hubzu before in the past and try to avoid them.

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