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There is an agent in my neck of the woods that is approaching buyers and writing with a new strategy. It may not be intentionally set up exactly seen from my perspective and I'm betting all perfectly legit, but not without risks.
My market has a shortage of available homes for sale (in all price ranges). This agent is telling buyers, pick out houses (not on the market) you want to live in. They pick out a home and she does a CMA work up. And let's say this home in question suggests a value of 435K, they write up an offer for 595K, using a VA no money down contract and 2% seller assistance. They give the seller 30 days to find home of their choice. This agent writes in 1.5% commission (she's an independent broker). The sellers go buy (not contingent but to coincide) a new home and all contracts are pushed 120 days out. Then when all are happy, the appraisal is ordered and is, surprise, low. I am not sure if by coincidence or design, the seller in this case has been in the home for over 20 years and has tons of equity. But they also have the seller where they want them, tasting and feeling the new home they now want.
How did I come across this? I am helping the sellers buy the new home. I mentioned the scenario to a couple of lunch pals, and they too, have seen the same - crazy high offers on homes not on the market and letting the appraisal control the final sales price. We've all seen this gamble with multiple offers requiring bidding contests. But, where I am having objections is approaching the seller with an offer there is no intention of meeting. I asked the seller (well before the appraisal was ordered) for the other agent to pull comps. Based on what she turned in, the offer should have been just under 450K. The sellers hear what they want to hear and those in the crossfire pick up the pieces.
If a Realtor, an ethics violation.
I'm not going to go look for book, chapter and verse and exact language,
but Realtors may not mislead as to value.
When there is a pattern of deception, I think it would also be illegal and prosecutable.
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