A prospective client owns a for unit complex which is valued at approx. $1,200,000.00. She wants to list the property on a short sale basis for approx. $800,000.00. Once the property is listed she wants to sell the property to her brother. Once escrow closes her brother will then quitclaim the deed back to her. The reasons for her selling the property in this manner is not clear to her realtor but he takes the listing anyway.
Has the realtor taken the listing with the potential of commiting an illegal real estate transaction?
The property is in Southern California in LA county.
2007-11-01 11:19:38 · 8 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
A prospective client owns a four unit complex which is valued at approx. $1,200,000.00. She wants to list the property on a short sale basis for approx. $800,000.00. Once the property is listed she wants to sell the property to her brother. Once escrow closes her brother will then quitclaim the deed back to her. The reasons for her selling the property in this manner is not clear to her realtor but he takes the listing anyway.
Has the realtor taken the listing with the potential of commiting an illegal real estate transaction?
The property is in Southern California in LA county.
2007-11-01 11:21:02 · update #1
This is definitely unethical practice, if not downright illegal. Of course the lender would have to approve a shortfall of $400K if this were to occur. Does this woman have the approval of the lender to go forward with this price figure ? What will this woman do if someone ELSE offers the stated price ? Or MORE than the stated price ?
If I were that realtor, I'd cancel that listing, and FAST. He doesn't need to be involved with loan fraud.
2007-11-01 11:27:57 · answer #1 · answered by acermill 7 · 0⤊ 0⤋
Ugly stuff.
Not sure what the CA RE codes that would apply, but this is certainly an ethics violation. License forfeiture and fraud problems will certainly follow.
The lender probably wouldn't allow the short sale anyway. As soon as the lender discovered the sale was to a relative, the deal would be off.
Only a very naive or desperate Realtor would get involved in this.
2007-11-01 12:49:40 · answer #2 · answered by godged 7 · 0⤊ 0⤋
A real estate agent (Realtor or not) can not knowingly participate in a fraudulent transaction. A lot of Georgia real estate agents who where involved in transactions where mortgage fraud took place have learned that the hard way.
It sounds like you are the agent in this transaction. Please don't be stupid -- this is highly illegal and you will go to jail along with this woman and her brother. If you have already taken the listing, get out of it and let your broker know what has happened.
2007-11-05 04:33:11 · answer #3 · answered by rochelletherealtor 2 · 0⤊ 0⤋
Why don't you just cut out all the illegal stuff and go straight to the bank and ask them to just "forgive" $400k of the loan...... sounds ridiculous when it's phrased this way, doesn't it?
Yes, the Realtor is being unethical and illegal if he participates. Banks won't allow a short sale to a relative anyhow, but if the seller and Realtor (and possibly Title agent) perpetrate this fraud, they should get their affairs in order, because they will become guests of the Federal Government after their prosecutions and convictions.......
2007-11-01 12:24:32 · answer #4 · answered by teran_realtor 7 · 0⤊ 0⤋
If the real estate agent knows that this is what is going to happen, then yes.
Only out of ignorance (and GROSS ignorance) can the agent get by with out a problem. However, this will be difficult as any agent's job is to get the most out of a sale. For the agent to list a property that far below market value and then to sell to a known relative... well.. they can't be that stupid. So it wouldn't be to difficult for someone (authorities) to prove the agent was in on the deal.
Sounds like a deal I wouldn't want to be involved in!
2007-11-01 11:30:03 · answer #5 · answered by wrkey 5 · 1⤊ 0⤋
It is definitely against the natioal Association of REALTORS (NAR) code of ethics to do the transaction this way. All parties to the transaction should be informed as to the brokers relationship to the buyer or seller. Also, I think the IRS will question the disparity of the selling price and appraisal price.
2007-11-01 11:28:00 · answer #6 · answered by menasha_rabinowitz 3 · 0⤊ 0⤋
Chances are they may not be able to get a loan on it anyway when a potential lender looks at the deal. This is considered a non-arms length transaction and would have to be disclosed properly.
The relator is involved in something fradulent if she knows what is going on.
2007-11-02 03:44:26 · answer #7 · answered by Anonymous · 0⤊ 0⤋
the Realtor is only selling the complex. what the current & past owners do after the transaction has nothing to do with the realitor. as long as the agent isnt cut in this seedy deal he's only doing his job. he is under no responsibilty to forecast future events/transactions
2007-11-01 11:33:57 · answer #8 · answered by wareagle30 2 · 0⤊ 2⤋