This is about listing a property at an absurdly low asking pric::

from Florida Realtor Magazine, January 2009 | page 11

Q & A Short Sales

The increase in the number of short sales throughout the state prompted two legal questions. FAR’s General Counsel Randy Schwartz responds:

If a real estate licensee lists a property at a below-market-price that he knows the seller probably won’t accept, is the licensee in violation of Florida real estate license law?

A violation of the Florida real estate license law is a matter to be determined by the Florida Real Estate Commission, however, FAR attorneys believe that, if a licensee lists a property for a price the licensee and the seller know is not acceptable, a case of misrepresentation and false advertisement can be made under Chapter 475.25(1)(c) Florida Statutes. It would not make any difference if the listing indicated that the selling price was subject to a third party lender or not; it is more a matter of advertising something that is known to be unacceptable.

Is the seller in violation of any law if he states he would sell a property at a certain price even though he knew it would not actually sell at that price?

FAR attorneys do not believe the seller would be violating any license law because Chapter 475, Florida Statutes, does not regulate the public.

However, Chapter 817, Florida Statutes, might come into play for the licensee and a member of the public. Whether the seller could be held accountable for civil damages, due to his or her misrepresentation, would be completely determined by the individual facts of the case.

Paul,
If a home comps out at $249k based on previous sales then the asking price of the next home (assuming similar houses of course) should have an asking price of $249k, less any market corrections. Throwing in the competition factor one might see some listings below $249k, but they should all be in that range + or minus their upgrades, condition, etc.
This should include a short sale property. But what is happening is agents are putting homes well below what true market would bear to solicit an offer (becuase the banks won't do anything unless there is one), and in some cases I have seen them grossly undervalued, thus ending up in multiple offer situations that drives the price well above the asking price. Is the MLS to be used as an auction site? We are SUPPOSED to put in a price that is within what the bank may accept based on past sales and our "professionalism"?
Why shouldn't a lender, knowing they are about to foreclose on a homeowner start the process of the short sale, by ordering a BPO and establishing an acceptable contract and asking price from the start.
Buyers have put in offers, been in love with the home and truly wanted it, but from lack of timely response walked away... So the buyers are out a home, the bank now has to be prepared for an offer that will be less than what the original one (the markets NOT going up), the community now has this home vacant, plus the one that came on the market last week, everyone loses....

To answer your investor mitigator question: Why is it unethical?? Because nothing is told to the lender that the listing agent just received another offer on the home $30k more than the original one. I have been in this situation as a buyers agent and asked the questions. The home remained active (even though MLS rules dictate the home should be in pending status because of a signed offer by the seller). Our offer was the one going to put the $30k into the investors pocet, yet the bank had absolutely no knowledge of our offer... This type of greed helped get us into this mess. As listing agents we are under contract to do our best for our sellers including short sale situations. I wonder what is explained to the sellers when this investor places the offer?? Are they advised of the offer for $30K more? What if they had a second and are asked to sign a promissory note based on the investor offer? Would they have had to sign that note if the other offer was accepted.
I guess it does get me heated... it's legal?? Yep, but if it don't pass my smell test i don't do it. I'm the one who has to wake up and smile at the person I see in the mirror. Right now I can and I want to keep it that way!!

Mark, how can someone misrepresent a price? Can you expand on this a little?
Also, doesn't it make sense that the bank won't begin to do anything until the first offer is received?
What else can a bank do but deal with what is wanted at the time. You can't do anything unless there is some indication of interest, right? An offer to purchase, right?
How does this lower the value? I'm not understanding you here.
Also, why are mitigators unethical in trying to get a deal and do a flip? It's all business and we are all trying to make a buck. I sense some sort of hostility here. If what a mitigator is doing is legal, then what's the problem? Sure, it's something that's not been done a lot if any in the past and it's new. I guess there isn't any regulations for it like in real estate and that can make an agent angry I guess. But, doesn't it all come down to how well you can sell?
I like your profile. You are a top seller it shows. Hmmm. I don't get it maybe?

Here is the Good, the Bad and the Ugly.

I have had short sales that have taken 3 months from start to finish. It has been a very good experience and a great working relationship between the bank, seller and myself. (This is the Good) This is not the norm.

I have been working on a short sale since 6-08. Submitted the offer in June 2008, got the BPO(Broker Price Opinion) on September 2008. Had a cash offer on the table and it took the bank until April 2009 to respond. By that time the buyer had walked away. Have a full price offer on the same property since April 2009 and still have not heard back from the bank. (This is the Bad and the Ugly combined into one huge nightmare).

There is a lot of misunderstanding about short sales and how they are process. The public needs to understand that there are numerous properties to choose from, so they should never "fall in love" with a short sale. Every Realtor should explain fully the consequences of waiting until eternity for a short sale to come to closing. It should never be the timeline of the Realtor, it should always be the necessity of the clients.

Unfortunately Paul the answer is no. You would think the process would be streamlined by now, but we have to remember we're dealing with people who are pushing paper and have no emotional ties to either the buyer or the seller, and frankly don't really care. In most cases Nothing is started by the banks until an offer is presented, which to me lowers the values more because agents are trying to get offers in, and in many cases misrepresenting prices. There are companies claiming to be mitigators, who actually work on behalf on investors in the hopes of getting the property for less and flipping it at closing. It's not illegal, but it certainly isn't ethical.
Mark Zabilowicz
Tampa Realtor