Dysfunctional Multiple Listing Service

Lately, we ( my partner and my team) have been looking daily and diligently for rehab properties, and making offers (or trying to ) on the ones we like.

However, a peculiar thing is happening with bank-owned (REO ) home in northern VA. There have been rumors of dishonesty and unscrupulous operators. And we are seeing some evidence of this as well.

The banks have been telling us as shareholders and borrowers, that all homes will be marketed as widely as possible, using the MLS. I do not see how that is happening.

We monitor the MLS almost daily, as does our Realtor ^tm agent. As we see homes that fit our criteria, we immediately schedule a walkthrough within the day, and in many cases, write an offer within a few hours. There have been several instances where we have had opportunity to make our offer through our agent and then the banks listing agent, knowing that there is competition. This is a decent sealed bid process. It is far from normal for real estate, but in these abnormal times, we are dealing with it. Those seem legitimate, if awkward when compared to the usual “price discovery by negotiation”.

BUT there is a question of how such rapid timing constitutes widespread and appropriate marketing by the bank. Especially if not all the buyers can make their offer. We have come a dozen instances where a property is under contract within the first day on the market. Extremely odd and questionable action.

The dysfunctional part is here. It is banks that have houses under contract before noon on the day they are offered on the MLS. They claim its an open and transparent process. How can it be that selling bank officer(s) can receive, review and make decisions on the highest and best offer.

The MLS is being used as a trojan horse, and it appears that the winning offerors are getting their information about the houses on the INSIDE. Isnt there any one else outraged?

Negotiation is out the window this season. Maybe normalcy will come back this fall or winter, but I look forward to it returning as son as possible. This foreclosure market appears rigged.

Tags: RE investment