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.

10Reply
174 views

Most Popular Reply

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.

See this reply in the discussion

115 Replies

Jump to latestLatest
  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    7y
    Originally posted by @Pratik P.:
    Originally posted by @Greg H.:
    Originally posted by @Pratik P.:
    Originally posted by @Jay Hinrichs:
    Originally posted by @Pratik P.:
    Originally posted by @Steve K.:

     Search on here for “Notice of Contract/ Memorandom of Purchase Agreement”, it’s how wholesalers cloud title when a seller backs out or another wholesaler is snaking their deal. Basically lays a land mine for the next buyer and screws the seller if they try to sell to somebody else. Totally unscrupulous and grounds for being sued but seems like that’s the type of people you’re dealing with. I only know about it from a recent thread on here. The seller had his attorney send a demand for the wholesaler to release the contract. 

     I know what post your talking about and that was definitely scammy and unethical. But you should know that clouding title is justified when the buyer is willing and ready to close but the seller backs out because they simply changed their mind. Both parties are expected to execute the contract which was agreed upon. Although I wouldn't record a memorandom of Purchase agreement or whatever. It would be a lis pendens.

    yes there is a mechanism for that and its call a specific performance suit.. I did one last year and well it took over 2 years..I had to put 100% of the cash price of the property into escrow on the contract close date.. and leave it there and this was right at 150k in cash.. plus spent another 20k in legal..  So when you actually figure out how U prosecute those.. most cant do it.. they don't have the stones for it or the wherewithal .. If you don't put the money into escrow on the close date then the contract dies..   its a nice thought that you can just file a lis pendance but that wont do it by itself.

     Jay that's exactly what I was talking about... A specific performance suit. I had this talk with my attorney and understand that it's not easy or quick. But if we're talking about a very profitable deal, I'd spend the money to fight it. Also, I'd think it would encourage the seller to work something out with me instead of just walk away with a clouded title and lawsuit. 

     Who are you going to sue at this point?  His client was not injured as he was not the high bidder at the time

    Yes the agent acted inappropriately. However, the seller received and accepted an offer that was acceptable. 

    Nobody has been “injured “ to warrant a lawsuit 

     Greg I assume you're not talking to me.. 

    But I 100% agree with you

    My bad. I was looking for an earlier post and saw “specific performance “.   

  • Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    7y
    Originally posted by @Greg H.:
    Originally posted by @Pratik P.:
    Originally posted by @Jay Hinrichs:
    Originally posted by @Pratik P.:
    Originally posted by @Steve K.:

     Search on here for “Notice of Contract/ Memorandom of Purchase Agreement”, it’s how wholesalers cloud title when a seller backs out or another wholesaler is snaking their deal. Basically lays a land mine for the next buyer and screws the seller if they try to sell to somebody else. Totally unscrupulous and grounds for being sued but seems like that’s the type of people you’re dealing with. I only know about it from a recent thread on here. The seller had his attorney send a demand for the wholesaler to release the contract. 

     I know what post your talking about and that was definitely scammy and unethical. But you should know that clouding title is justified when the buyer is willing and ready to close but the seller backs out because they simply changed their mind. Both parties are expected to execute the contract which was agreed upon. Although I wouldn't record a memorandom of Purchase agreement or whatever. It would be a lis pendens.

    yes there is a mechanism for that and its call a specific performance suit.. I did one last year and well it took over 2 years..I had to put 100% of the cash price of the property into escrow on the contract close date.. and leave it there and this was right at 150k in cash.. plus spent another 20k in legal..  So when you actually figure out how U prosecute those.. most cant do it.. they don't have the stones for it or the wherewithal .. If you don't put the money into escrow on the close date then the contract dies..   its a nice thought that you can just file a lis pendance but that wont do it by itself.

     Jay that's exactly what I was talking about... A specific performance suit. I had this talk with my attorney and understand that it's not easy or quick. But if we're talking about a very profitable deal, I'd spend the money to fight it. Also, I'd think it would encourage the seller to work something out with me instead of just walk away with a clouded title and lawsuit. 

     Who are you going to sue at this point?  His client was not injured as he was not the high bidder at the time

    Yes the agent acted inappropriately. However, the seller received and accepted an offer that was acceptable. 

    Nobody has been “injured “ to warrant a lawsuit 

     You are confusing posters.  I am OP.  I am not suing anyone.  They are referring about different deals I think

  • Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    7y
    Originally posted by @Greg H.:

    I have been very anti-wholesaler as well on BP over the years. In 30 years, I have never even considered making an offer nor would on a property with one. 

    My only experience with wholesalers marketing a foreclosure is thru HUD and they basically give them a slap on the wrist by just saying stop

    Not knowing who the seller is, my best guess is that nothing will happen regarding canceling the contract as there is just to much bureaucracy involved. The agent has no power at all. In fact with most auction property, they are often the last people that knows what it going on

    Putting all fact aside that I believe the agent/wholesaler is totally in the wrong, I would be pressuring them to take the $30,000 profit by telling them what I knew about the transaction and what I was prepared to do. That is if my client truly wanted the property.  I would definitely be holding my nose the whole time

    You clearly have not read the entire thread, and I cant blame you, Its long, and I tend to ramble. Sorry, it must be my ADD. Fake sellers will not accept out offer of 30k more than they are paying. In fact my buyer would be happy to pay that amount, that happens to be about the same amount his backup offer is to the actual seller. You also must have missed the update I gave earlier. The real listing agent, who is working for the bank replied to me this morning, apologized, told me to submit back up offer, is cancelling the contract and moving to back up offers, or relisting the property. So at this point things are moving in the right direction, we'll see though, until I have the agreement of sale in hand I am preparing for the worst. If she for whatever reason is unsuccessful in cancelling the contact, unfortunately we'll have to map out our next move. I'm sure you can imagine how difficult the position we will be in if we A. refer them to the state board, MLS, etc and try to make a stink before settlement. Then B. if we don't succeed, now I'm forced to negotiate with these scammers, who have been lying since the first text she sent me.    We will likely just move on if they end up purchasing the property.  Its not really THAT good of a deal.  And maybe it'll be a blessing in disguise when they find out the foundation is falling apart the building needs to be condemned....obviously an extreme example buy you get the point.  

  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    7y
    Originally posted by @William C.:
    Originally posted by @Greg H.:

    I have been very anti-wholesaler as well on BP over the years. In 30 years, I have never even considered making an offer nor would on a property with one. 

    My only experience with wholesalers marketing a foreclosure is thru HUD and they basically give them a slap on the wrist by just saying stop

    Not knowing who the seller is, my best guess is that nothing will happen regarding canceling the contract as there is just to much bureaucracy involved. The agent has no power at all. In fact with most auction property, they are often the last people that knows what it going on

    Putting all fact aside that I believe the agent/wholesaler is totally in the wrong, I would be pressuring them to take the $30,000 profit by telling them what I knew about the transaction and what I was prepared to do. That is if my client truly wanted the property.  I would definitely be holding my nose the whole time

    You clearly have not read the entire thread, and I cant blame you, Its long, and I tend to ramble. Sorry, it must be my ADD. Fake sellers will not accept out offer of 30k more than they are paying. In fact my buyer would be happy to pay that amount, that happens to be about the same amount his backup offer is to the actual seller. You also must have missed the update I gave earlier. The real listing agent, who is working for the bank replied to me this morning, apologized, told me to submit back up offer, is cancelling the contract and moving to back up offers, or relisting the property. So at this point things are moving in the right direction, we'll see though, until I have the agreement of sale in hand I am preparing for the worst. If she for whatever reason is unsuccessful in cancelling the contact, unfortunately we'll have to map out our next move. I'm sure you can imagine how difficult the position we will be in if we A. refer them to the state board, MLS, etc and try to make a stink before settlement. Then B. if we don't succeed, now I'm forced to negotiate with these scammers, who have been lying since the first text she sent me.    We will likely just move on if they end up purchasing the property.  Its not really THAT good of a deal.  And maybe it'll be a blessing in disguise when they find out the foundation is falling apart the building needs to be condemned....obviously an extreme example buy you get the point.  

     This is the 2nd time You have said I did not read the thread. I get it if you do not agree with me but clearly I have

    The listing Agent has no power to cancel as I am sure you understand that Agents are not parties to a real estate contract. We/she can advise to do so but in no way can unilaterally do so

    My suggestion to deal with the buyer/wholesaler was referring to your statement that the buyer “wants the property “.  I would never die this as there has never been a property I had to have  

    Again, I am trying to help and suggest ways to solve the problem based on my experience in the auction/ foreclosure arena

  • Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    7y
    Originally posted by @Josh C.:

    @William C. And @Jay Hinrichs

    I’m not a wholesaler. I’ve been pretty open about how I feel about wholesalers that take advantage of uneducated sellers that are low income or elderly or both.

    That being said I think you mentioned this was listed on the MLS. Open market. Yes they marketed it too early, but they still bought in open market.

    I once bought something for 140k I know they paid 80k for just one year prior. 35k for something bought for 6k. And others. I cringed a bit, but still paid as it was a good deal for me. I too said they added no value. But that didn’t matter. Market value is market value.

    Heck one of our skyscrapers here in Indy was flipped for 30MM more than purchased in just 2 years.

    Not defending anyone, I just don’t see the big issue with making money in the open market. Yes some things weren’t handled right, but they still bought and sold in open market.

    Just wanted to clear up what I said. I’ll bow out now.

    I didn't disagree with what you had to say or your point of view. I think you might be missing my point as what they have done wrong. Listing the property on the MLS "too early" is not a minor infraction. It's fraud, deceit, misrepresentation. The only change they made was the owners name, to make it appear as thought they in fact owned it. Then, when I questioned her about the other listing, she replied by saying the OTHER listing was in error, and they were in fact the owners. Then AFTER her broker forced he to remove the listing, she continued to negotiate the deal with me, as thought they owned the property. My tone and temper would be completely different if they were HONEST from the outset they were wholesaling, and did not own the property. I simply would have never ever requested a showing, I never would have shown my buyers interest, and I certainly would have never submitted an offer. See the issue with misrepresentation? It put the scammers in a win win situation. And Iv admitted they would have been 100% in the clear if they simply waited to list. That is their fault for trying to skit the laws. I just cringe how so many people in this thread are trying to downplay the severity of this practice of listing in the MLS. It's as serious as it gets in my opinion. Without the sellers consent, and by not disclosing that you do not have ownership, it's a SCAM, not wholesaling. Wholesalers have their place. Assuming they have OVER disclosed to the seller all of their options, and this happens to actually be the best situation for them to get the most amount of money with the least amount of hassle. And the OVER disclose to all the buyers they are wholesaling the property and not the actual owner. I'd be the first to work with an honest and legit wholesaler if someone could actually show me one, and they had a deal I was interested in. I have yet to meet one thought, in the 10 years I have been doing this. So I just want to be clear I appreciate your input, and I understand your point of view.

  • Investor · Philadelphia, PA · Member since 2010 · 739 posts · 372 votes
    7y

    @William C.

    In all the time you have spent posting in this thread and worrying about solving a CSI case - you could have found and went directly to the the seller and negotiated the deal for your client.

  • Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    7y
    Originally posted by @Greg H.:
    Originally posted by @William C.:
    Originally posted by @Greg H.:

    I have been very anti-wholesaler as well on BP over the years. In 30 years, I have never even considered making an offer nor would on a property with one. 

    My only experience with wholesalers marketing a foreclosure is thru HUD and they basically give them a slap on the wrist by just saying stop

    Not knowing who the seller is, my best guess is that nothing will happen regarding canceling the contract as there is just to much bureaucracy involved. The agent has no power at all. In fact with most auction property, they are often the last people that knows what it going on

    Putting all fact aside that I believe the agent/wholesaler is totally in the wrong, I would be pressuring them to take the $30,000 profit by telling them what I knew about the transaction and what I was prepared to do. That is if my client truly wanted the property.  I would definitely be holding my nose the whole time

    You clearly have not read the entire thread, and I cant blame you, Its long, and I tend to ramble. Sorry, it must be my ADD. Fake sellers will not accept out offer of 30k more than they are paying. In fact my buyer would be happy to pay that amount, that happens to be about the same amount his backup offer is to the actual seller. You also must have missed the update I gave earlier. The real listing agent, who is working for the bank replied to me this morning, apologized, told me to submit back up offer, is cancelling the contract and moving to back up offers, or relisting the property. So at this point things are moving in the right direction, we'll see though, until I have the agreement of sale in hand I am preparing for the worst. If she for whatever reason is unsuccessful in cancelling the contact, unfortunately we'll have to map out our next move. I'm sure you can imagine how difficult the position we will be in if we A. refer them to the state board, MLS, etc and try to make a stink before settlement. Then B. if we don't succeed, now I'm forced to negotiate with these scammers, who have been lying since the first text she sent me.    We will likely just move on if they end up purchasing the property.  Its not really THAT good of a deal.  And maybe it'll be a blessing in disguise when they find out the foundation is falling apart the building needs to be condemned....obviously an extreme example buy you get the point.  

     This is the 2nd time You have said I did not read the thread. I get it if you do not agree with me but clearly I have

    The listing Agent has no power to cancel as I am sure you understand that Agents are not parties to a real estate contract. We/she can advise to do so but in no way can unilaterally do so

    My suggestion to deal with the buyer/wholesaler was referring to your statement that the buyer “wants the property “.  I would never die this as there has never been a property I had to have  

    Again, I am trying to help and suggest ways to solve the problem based on my experience in the auction/ foreclosure arena

     You are right, agents do not have the ability to actually cancel the contract.  I apologize I misunderstood what you meant, and I really do appreciate your input and advice.  Regarding the agent not being the owner, That is exactly why I'm still not high fiving my client.  We still have a ways to go.  This thing might hit the open market again for all I know.  In fact, before the real agent ever got back to me with the news she would be cancelling the contract, I was just expecting she would not have the time or energy to even deal with it, nor would she be inclined to cancel a contract with a ready, willing, and able and buyer, assuming they are.  I wish the lying agents broker responded via text like she has been.   Evidence in writing is way more compelling than he said she said. The lying agents broker mentioned they were attempting a concurrent close.  I don't know if he meant that literally, but Concurrent in my opinion is at the same time.  That sounds like using end buyers cash to fund the deal with seller.  I am making assumptions here, but this "investment group" isn't exactly lighting the world on fire.  They don't exist anywhere in real life or on the internet, and I can only see record of 3 sales in 4 years.  It seems to me they are a couple of hacks who saw a large house priced under market value, and figured they'd try to make a quick buck.  The zestimate is super high because of the square footage, but knowing the market very well I know its a bit inflated.  She made way too many mistakes to make me believe she has been very successful with closing these in the past.  Again, more assumptions on my end.    But just trying to give as much context as I can.

  • Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    7y
    Originally posted by @Chris Purcell:

    @William C.

    In all the time you have spent posting in this thread and worrying about solving a CSI case - you could have found and went directly to the the seller and negotiated the deal for your client.

     LOL.  Too long didnt read?  

    I'm on BP to communicate with other like minded individuals. Truth is I spent a ton of time on here pleading my case, giving my opinions, and laying out the facts, and debating right and wrong. My time spent on BP is not ROI positive, I understand that. I also understand this problem wont be solved on BP either. But I would appreciate it if you at least take a minute or two and read some of the thread before putting in your 2 cents. I'm pretty sure I made it clear in OP that the seller is a bank. I appreciate your input nonetheless, no matter how invaluable it is to the discussion.

  • Investor · Philadelphia, PA · Member since 2010 · 739 posts · 372 votes
    7y
    Originally posted by @William C.:
    Originally posted by @Chris Purcell:

    @William C.

    In all the time you have spent posting in this thread and worrying about solving a CSI case - you could have found and went directly to the the seller and negotiated the deal for your client.

     LOL.  Too long didnt read?  

    I'm on BP to communicate with other like minded individuals. Truth is I spent a ton of time on here pleading my case, giving my opinions, and laying out the facts, and debating right and wrong. My time spent on BP is not ROI positive, I understand that. I also understand this problem wont be solved on BP either. But I would appreciate it if you at least take a minute or two and read some of the thread before putting in your 2 cents. I'm pretty sure I made it clear in OP that the seller is a bank. I appreciate your input nonetheless, no matter how invaluable it is to the discussion.

    Sorry must’ve got lost in the novel

    If someone else can get a contract on a bank owned property why can’t you?

  • Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    7y
    Originally posted by @Chris Purcell:
    Originally posted by @William C.:
    Originally posted by @Chris Purcell:

    @William C.

    In all the time you have spent posting in this thread and worrying about solving a CSI case - you could have found and went directly to the the seller and negotiated the deal for your client.

     LOL.  Too long didnt read?  

    I'm on BP to communicate with other like minded individuals. Truth is I spent a ton of time on here pleading my case, giving my opinions, and laying out the facts, and debating right and wrong. My time spent on BP is not ROI positive, I understand that. I also understand this problem wont be solved on BP either. But I would appreciate it if you at least take a minute or two and read some of the thread before putting in your 2 cents. I'm pretty sure I made it clear in OP that the seller is a bank. I appreciate your input nonetheless, no matter how invaluable it is to the discussion.

    Sorry must’ve got lost in the novel

    If someone else can get a contract on a bank owned property why can’t you?

     Find a different thread to troll.  Thanks

  • Ian WalshBusiness Member
    Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    7y

    I see this all the time.  If all parties are fully aware of the situation and it's transparent, I don't see the harm.

  • Rental Property Investor · Austin, TX · Member since 2016 · 294 posts · 104 votes
    7y

    @William C. Omg as if hubzu is not complicated enougth... Just wait, it will reappear on their website. Contact them directly about violations. I am surprised selling agent is involved, they usually have one that lists hundred of properties (one for entire state).

  • Darren SagerPro Member
    Investor · Tampa, FL · Member since 2013 · 2k+ posts · 1k+ votes
    7y

    I would have had my broker call the listing agent's broker regarding the situation and lodge the complaint.  At the end of the day it's the broker who's doing the transaction and the agent working for them, so they're ultimately responsible for that agent's actions.   If the listing agent's broker was okay with it, that would say a lot about the quality of that office or company.  We're personally required to show proof of ownership or power of attorney on every listing we take where I'm at.  At the end of the day hearing all of this solidifies my views on my beliefs on the majority of those who wholesale out there.  

  • Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    7y
    Originally posted by @Ian Walsh:

    I see this all the time.  If all parties are fully aware of the situation and it's transparent, I don't see the harm.

     And when one of the parties is completely lying, and making misrepresentations?  

  • Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    7y
    Originally posted by @Kate J.:

    @William C. Omg as if hubzu is not complicated enougth... Just wait, it will reappear on their website. Contact them directly about violations. I am surprised selling agent is involved, they usually have one that lists hundred of properties (one for entire state).

     Not sure what you mean.  I involved the selling agent.  Shes seems to be on my side here, and she is also the listing agent for about 10 states.  So believe you me I was surprised as anyone when she immediately responded to my first email to her on a Friday afternoon, and then again on Monday morning to notify me how to proceed and that she was cancelling the contract.

    I understand it's along read, and I understand wanting to skim through and get the cliff notes.  But I have been live updating the story as the story has unfolded.   I appreciate the input.  I just don't see the need to repeat myself every time someone reads the OP, jumps to the bottom and leaves their 2 cents.

  • Investor · Philadelphia, PA · Member since 2010 · 739 posts · 372 votes
    7y
    Originally posted by @William C.:
    Originally posted by @Ian Walsh:

    I see this all the time.  If all parties are fully aware of the situation and it's transparent, I don't see the harm.

     And when one of the parties is completely lying, and making misrepresentations?  

     Have you confirmed this

  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Pratik P.:
    Originally posted by @Jay Hinrichs:
    Originally posted by @Pratik P.:
    Originally posted by @Steve K.:

     Search on here for “Notice of Contract/ Memorandom of Purchase Agreement”, it’s how wholesalers cloud title when a seller backs out or another wholesaler is snaking their deal. Basically lays a land mine for the next buyer and screws the seller if they try to sell to somebody else. Totally unscrupulous and grounds for being sued but seems like that’s the type of people you’re dealing with. I only know about it from a recent thread on here. The seller had his attorney send a demand for the wholesaler to release the contract. 

     I know what post your talking about and that was definitely scammy and unethical. But you should know that clouding title is justified when the buyer is willing and ready to close but the seller backs out because they simply changed their mind. Both parties are expected to execute the contract which was agreed upon. Although I wouldn't record a memorandom of Purchase agreement or whatever. It would be a lis pendens.

    yes there is a mechanism for that and its call a specific performance suit.. I did one last year and well it took over 2 years..I had to put 100% of the cash price of the property into escrow on the contract close date.. and leave it there and this was right at 150k in cash.. plus spent another 20k in legal..  So when you actually figure out how U prosecute those.. most cant do it.. they don't have the stones for it or the wherewithal .. If you don't put the money into escrow on the close date then the contract dies..   its a nice thought that you can just file a lis pendance but that wont do it by itself.

     Jay that's exactly what I was talking about... A specific performance suit. I had this talk with my attorney and understand that it's not easy or quick. But if we're talking about a very profitable deal, I'd spend the money to fight it. Also, I'd think it would encourage the seller to work something out with me instead of just walk away with a clouded title and lawsuit. 

    Iget the attitude.. but the reality especially in your market were your dealing with 200 to 500k props.. not many are going to plop 200 to 500k in CASH  ( since your contract says your a cash buyer) into escrow and let it sit there interest free for years

    that's why U never really see this.. what you see is the bush league filing of the memorandum.. anyone did that to me I would be suing them for slander of title in a heart beat.  I only did mine because the numbers were affordable to us 150k on the side lines is no issue and we had huge upside since we don't flip we create value.. and there was 400k of value to create which we did. 

  • Real Estate Investor · FL · Member since 2011 · 586 posts · 360 votes
    7y

    I'll preface this post by saying again, the agent should be fired and possibly lose their license for listing the property on the MLS and representing it as being owned by themselves or their investment group.

    With that said, I think the OP is way off on a couple of points he is trying to make. First, the wholesaler saw an opportunity with an underpriced asset and jumped on it. If your buyer saw it at the same price as the wholesaler, would they have emailed the listing agent and insisted on paying $75k more because that's what it was worth to them? The wholesaler did a lot wrong here, but contracting the property at the price they did wasn't one of them. They went wrong when they tried to represent themselves as the CURRENT owner. Had they just disclosed they have it under contract and are wholesaling it, it probably wouldn't have been a big deal for most logical investors. 

    Second, the argument that wholesaling is wrong because they aren't adding any value to the property and stealing equity seems flawed to me. When I make improvements on a property that I buy, I am adding value for myself, not the former owner. If MY profit drops a bit because I paid the wholesaler a fee then that hurts my bottom line, not the former owner. Here is a real life example of my point: 

    Seller approaches me with a property they want to sell and are asking $X. I run my comps, take a look at the property and decide it's a good deal so I agree to the price. 

    Scenario 1- I spend $50k and do a rehab, list the property and make a nice profit

    Scenario 2- I spend $30k to make the property a rental, find great tenants and cash flow from day 1

    Scenario 3- I close on the property, list it on the MLS as-is, make a profit and move to the next deal

    Scenario 4- I wholesale the deal to a cash buyer, make a small profit and keep looking for deals

    Each scenario is different and each has a different exit strategy, but seller is still receiving $X for each and every outcome. So saying by wholesaling deals you're stealing equity from a seller because you aren't adding any value to the property doesn't hold up for me. You only add value for yourself, it doesn't benefit the seller in any way whatsoever. 

    Third, the OP failed his buyer big time as an agent. You had a buyer with a lot of interest on the property, all you had to do was keep an eye on it and he would've not only got the property but he would've got a great deal on it. You openly said that the deal had been on the market for a while and you missed it; that's your job! I am not sure about your MLS, but on mine it takes me about two minutes to setup property alerts so the second something hits the MLS I get notified. If you really wanted to go above and beyond you could've checked county records weekly, found out when the bank took the property back, cross searched the specific bank with other properties and found the handful of agents they use to list their properties, reached out to each one and said "hey, if you get this asset can you call me so we can put in a very strong cash offer the day it gets listed?". But you didn't do any of this, you let the deal go to someone else and now you're pissed. You have every right to be upset at the wholesaler but man, I would be super disappointed with myself if I was you. I would use this situation as a way to improve yourself as an agent.

  • Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    7y
    Originally posted by @Chris Purcell:
    Originally posted by @William C.:
    Originally posted by @Ian Walsh:

    I see this all the time.  If all parties are fully aware of the situation and it's transparent, I don't see the harm.

     And when one of the parties is completely lying, and making misrepresentations?  

     Have you confirmed this

     Umm yes..  "You  actually OWN the property Mrs Seller?"  "Yes" ....simple title search revealed otherwise.  That there is fraud my friend.  And text messages are in writing, so It's not even as though I'm referring to something said over the phone.  

  • Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    7y
    Originally posted by @Braden C.:

    I'll preface this post by saying again, the agent should be fired and possibly lose their license for listing the property on the MLS and representing it as being owned by themselves or their investment group.

    With that said, I think the OP is way off on a couple of points he is trying to make. First, the wholesaler saw an opportunity with an underpriced asset and jumped on it. If your buyer saw it at the same price as the wholesaler, would they have emailed the listing agent and insisted on paying $75k more because that's what it was worth to them? The wholesaler did a lot wrong here, but contracting the property at the price they did wasn't one of them. They went wrong when they tried to represent themselves as the CURRENT owner. Had they just disclosed they have it under contract and are wholesaling it, it probably wouldn't have been a big deal for most logical investors. 

    Second, the argument that wholesaling is wrong because they aren't adding any value to the property and stealing equity seems flawed to me. When I make improvements on a property that I buy, I am adding value for myself, not the former owner. If MY profit drops a bit because I paid the wholesaler a fee then that hurts my bottom line, not the former owner. Here is a real life example of my point: 

    Seller approaches me with a property they want to sell and are asking $X. I run my comps, take a look at the property and decide it's a good deal so I agree to the price. 

    Scenario 1- I spend $50k and do a rehab, list the property and make a nice profit

    Scenario 2- I spend $30k to make the property a rental, find great tenants and cash flow from day 1

    Scenario 3- I close on the property, list it on the MLS as-is, make a profit and move to the next deal

    Scenario 4- I wholesale the deal to a cash buyer, make a small profit and keep looking for deals

    Each scenario is different and each has a different exit strategy, but seller is still receiving $X for each and every outcome. So saying by wholesaling deals you're stealing equity from a seller because you aren't adding any value to the property doesn't hold up for me. You only add value for yourself, it doesn't benefit the seller in any way whatsoever. 

    Third, the OP failed his buyer big time as an agent. You had a buyer with a lot of interest on the property, all you had to do was keep an eye on it and he would've not only got the property but he would've got a great deal on it. You openly said that the deal had been on the market for a while and you missed it; that's your job! I am not sure about your MLS, but on mine it takes me about two minutes to setup property alerts so the second something hits the MLS I get notified. If you really wanted to go above and beyond you could've checked county records weekly, found out when the bank took the property back, cross searched the specific bank with other properties and found the handful of agents they use to list their properties, reached out to each one and said "hey, if you get this asset can you call me so we can put in a very strong cash offer the day it gets listed?". But you didn't do any of this, you let the deal go to someone else and now you're pissed. You have every right to be upset at the wholesaler but man, I would be super disappointed with myself if I was you. I would use this situation as a way to improve yourself as an agent.

     I agree with you 100%.  I apologize if I had made it seem as though they have no right to purchase a home at one price, and sell at another.  This is perfectly legal, and I d be the first to congratulate them, had they done this.  My ONLY issue is the lying and misrepresentation as being the rightful owner.  That's where they went wrong, and big time.   The original purchase price, and eventual sales price is irrelevant, and I did not mean to imply they must do work, or improve  a property in order to sell it for more.  I was just simply giving the numbers as reference.  I'll be the first to admit when I have made a mistake.  Which Iv done plenty in this thread, either by misunderstand someones point of view, or simply speaking out of emotion, and referancing instances I feel to be "wrong" whether legal or not.  Iv admitted now possibly 3 times, they would have been totally above board, and legal had they just closed on the property, and then resold.  Iv also admitted 3 times now that we dropped the ball and missed the original listing, there is no question about that.   I do not have an issue with wholesaling in the honest form, where ALL parties are well informed as to who owns what.   I just find that in every case I have ever encountered, either seller is way under informed, or end buyer is way under informed.  Hope this clears things up.  Thanks for you input, glad we were both each able to clarify.

  • Rental Property Investor · Canton, MI · Member since 2018 · 20 posts · 7 votes
    7y

    @Cason Acor definitely. If you know the bank of record I would also contact the REO group there.

  • Rental Property Investor · Canton, MI · Member since 2018 · 20 posts · 7 votes
    7y

    @Jay Hinrichs Do you see this happening on sites like RealtyTrac?

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

    @Jay Hinrichs Do you see this happening on sites like RealtyTrac?

    sorry I personally do not get on any of those websites  but I know my vendors do.. by the time it gets to my desk the deal is done and ready to be funded 

  • Real Estate Agent · Merritt Island, FL · Member since 2017 · 974 posts · 1k+ votes
    7y
    Originally posted by @Greg H.:

    @William C.

    -If you buyer is still ready to pay $30k more and wants the property, why not make the offer to the agent and just “play the game”? I get the principle of it but at the end of the day standing on principle may not get the property 

    And perpetuate the scam? How does that help us clean up the industry of the shady?

  • Greg H.Pro Member
    Moderator
    Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes
    7y
    Originally posted by @Tchaka Owen:
    Originally posted by @Greg H.:

    @William C.

    -If you buyer is still ready to pay $30k more and wants the property, why not make the offer to the agent and just “play the game”? I get the principle of it but at the end of the day standing on principle may not get the property 

    And perpetuate the scam? How does that help us clean up the industry of the shady?

     As my other posts in this thread and many others on BP, I am all for cleaning up the industry 

    However, the OP also stated several times that his client wanted the property and was willing to pay that. As a Broker/Agent, we must put our clients interest above all others and there is no indication the “seller” could not deliver clear title. Not all seller and buyers in this industry are good people. Some are just downright bad.  However, if they can deliver clear title sometimes you just hold your nose and get it done

Join the conversationCreate a free account to reply, vote on answers and follow this thread.