Bribe needed to get REO in Detroit
Sunday, December 7, 2008 at 09:50AM In some of the more desireable areas of Detroit, realtors who list REOs are demanding bribes of $20,000 - $30,000 on a $250,000 home. These homes used to sell in the mid $700's.
Yesterday, I received a call from a Detroit resident with an eye on a gorgeous home in a wooded area of Detroit, in Dearborn. She was googling all matters of ways in which she could buy a particular REO before it was listd on the MLS, and ended up on my website?
Why did she think she could buy a house directly from the bank, and why would she want to?
It turns out that in this area of Dearborn, REO listing agents need to be bribed to submit offers to the bank. It appears they only submit offers that are their own (if they want the house), their friends', or those of people who paid bribe money.
She reported this practice and the realtor to the regulatory agencies in Michigan many months ago, but nothing has been done.
I've googled this topic, but could find nothing to corrobate her story. However, she seemed very believable. Her brother is a realtor, and her husband is a physician, one of the few industries in Detroit not affected by the downturn.
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Reader Comments (5)
She should buy at the county courthouse, that's normally the best time to get bank owned property these days, she can get a list of properties that are scheduled for auction from many sources now and do some research on what houses she might be interest in including doing title search etc. She needs a cashier's check, no financing.
Why is this surprising? You have to bribe realtors to get them to tell you the addresses of REOs. Sure, the stakes are smaller. You only have to pay a monthly access fee or give them your contact information but it's basically a bribe. It makes sense that as you get closer to buying the house, the bribe gets bigger.
ron, great idea - I told her that, but she doesn't have cash to pay for the house.
I sure hope this type of fraud does not get started in other cities.
Dougie - you can get REO lists free from title companies, and check auctions in the newspaper. I also provide addresses from the ForeclosureRadar list, but do require some kind of contact info so I can relay the information. You can also subscribe to the foreclosure Radar search yourself.
You never have to use a realtor. You an represent yourself. Always remember that commissions are negotiable, although most agents won't reduce their fee. I only do it if I represent a seller who is also buying. If you ever fell pressured by a realtor, run, don't walk!!!!
The county records will show the bank owner and she can then arrange financing and make a direct offer, nothing like contacting the owner directly sometimes with a price.
Ron, that is what many people think, but that is not correct. County records show the servicer, other times the bank. Often, you see the owner as something like "HSBC 2006-HS-1", the name of the MBS which holds the mortgage.
Even if you could find the bank, it's extremely difficult to get a live person. Just ask the professionals at Community Housing Works, whose job it is to do loan mods. You are lucky to get a phone number, luckier if you can leave a voice mail, luckier sitll if someone calls you back, and kiss the ground if you have a live person answer the phone.
Now, the next obstacle - even if you could (and you won't be able to 99% of the time) approach the bank, they will not take a direct offer. Like any astute seller, they will put their asset for sale to the market. That results in a higher price.
Banks list their homes on the MLS, so they can get thousands of buyers to see the home, and get multiple bids. They also don't want to deal with the real estate aspects, preferring to let a local realtor make sure all laws are followed, the house is inspected properly, etc. They are not in the real estate business, and they don't want to break any local laws. For example, in CA they must comply with water heater and smoke detector laws - if they sold a house with that not to code, they could be sued. So they don't want the liability.
The only way to deal direct with a bank, is if you make bulk purchases of homes.
However, this is not set in stone, and the system is constantly evolving.
By 2012, when everybody hates real estate, perhaps the bank will deal with buyers directly.