Buyers Beware Of The Golden Deals
Caveat emptor is Latin for “Let the buyer beware.”
The traditional doctrine of caveat emptor is encouraging buyers to make sure that they are cautious of the conditions of the property they are purchasing. I am just using it for a catchy title and for the purpose of bringing to light a bank pricing strategy and Realtors who are playing the game out of bounds to the markets detriment.
I get calls weekly from buyers who see homes for sell in the area that are priced over 10% lower than all of the other homes around. Even the foreclosures! Another too good to be true story.
What is going on. I will tell you. Some banks have started pricing homes way below even foreclosure market value. Will they really accept that price. I haven’t seen it happen. They want a pile of offers brought to them. There are times after all of the offers come in, that the bank simply comes back and tells all of the purchasers to bring their “BEST AND FINAL OFFER,” to get people to bump up their price again.
How does this hurt anyone?
- First of all, it continues the appearance of a market decline where legitimate sellers feel that they have to compete with this low price.
- It causes appraisal issues for banks looking at properties in the area. And YES, banks doing FHA loans are now beginning to look at Active comps.
- It constipates a flow of buyers who could be out purchasing many of the realistically priced homes or foreclosure deals.
What are Realtors doing wrong?
- Not taking them off of the market after a contract has been accepted in writing. If you have a contract on a foreclosed or short-sale home and it is not off of the market within 48 hours after it has been signed by the seller or bank it is important that you take action.
You can start by having your agent call the listing agent and reminding them to remove it from active status. If they refuse to remove it (some say the bank won’t let them stop marketing it), there is a strong chance they are in violation MRIS codes (the Northern VA, DC, Southern MD MLS Provider). This can affect your neighborhood, your contract (if accepted), and your chances of loosing a bid. Contact MRIS at (Toll Free): 888-838-8200 to report it.
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Hey Jonathan, very useful information to all parties invlolved. Using active comps should be used to compare donuts to donuts! Keep up the great work.