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Real Estate Associations

Transparency in online auctions is missing, Auction.com bids against their buyers

Auction.com and Nationstar Mortgage’s relationship has raised broker eyebrows and is finally capturing the attention of Realtor Associations.

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transparency in real estate

According to their website, Auction.com is the “nation’s leading real estate marketplace” and has sold “$26 billion of property since inception.” With a recent cash investment by Google Capital of $50 Million and the continued increase in buyers who begin the home search online, Auction.com is bound to continue to grow.

Unfortunately, Auction.com’s growth over the last few years has not come without a price. Auction.com gained prominence in the marketplace a few years back when they started working with Nationstar Mortgage on short sale processing. In 2012, Nationstar acquired billions of dollars in servicing rights from both Aurora Bank and Bank of America. Many of these acquired loans were underwater and needed to be processed as short sales using the website, auction.com

Brand Name Misleads the Consumer

Don’t be misled by the name of the company. Nationstar does not own the property and auction.com is not auctioning off a property that went through the foreclosure process. This misnomer has been and continues to be the biggest hurdle when working on any transaction processed through Auction.com. For most consumers, the term “auction” implies a foreclosure sale or a sheriff sale—something that may occur on the courthouse steps.

Buyers and even short sale sellers with their properties listed on Auction.com are often confused about what happens when a property is listed on the site, because it is not a traditional auction. The highest bidder doesn’t necessarily win the property. In the case of the short sales on the site, the seller and Nationstar Mortgage have ultimate decision power with respect to the winning bid.

Nationstar Mortgage Short Sales with Auction.com

The short sale process with respect to Auction.com is very unique and even little bit disjointed. A real estate agent lists a property, obtains an offer, and submits the paperwork (including the fully executed purchase contract) to Nationstar. Nationstar then requires the property to be listed on the Auction.com website, and the bidding on this property is now open to the public.

Many agents complain that this process completely ignores the existing purchase contract between buyer and seller. Given the fact that the seller (not the bank) is the rightful owner until the property, it is the seller who should determine the best purchase offer on the property. The existing contract that has already been submitted directly to Nationstar Mortgage should not be ignored.

Auction.com Surcharge = Overpaying?

Another hot button issue for consumers is that Auction.com requires a surcharge when you purchase a property through their site. For some properties, the surcharge is $2,500. But, for those short sale properties that came via Nationstar bank, the surcharge is five percent. So, if you bid $250,000 for a property listed on the site, your total purchase (excluding settlement fees) could be $262,500. In effect, homebuyers may end up overpaying for a property when accounting for the five percent surcharge.

Possible Price Inflation

Most consumers have the impression that an “auction” begets a deal. In some instances, that may be the case. However, in an auction, people bid against one another and that raises the price, often even causing a buying frenzy, which clearly works to the benefit of the seller.

Auction.com’s properties listed for sale have unpublished reserves that allow the seller to decline the transaction, even if you are the winning bidder. In order to encourage bidding up to the unpublished reserve, Auction.com will bid against buyers in its own auctions. Auction.com does not publish the reserve amounts on their site, unlike other auction sites (such as ebay) where the reserve is posted.

The Reserve Auction Terms and Conditions state, “The starting bid is not the Reserve Price. Except where prohibited by law, during a live bidding event (online or otherwise) the Auctioneer may open bidding on any Property by placing a bid on behalf of the Seller and may further bid on behalf of the Seller up to the amount of the Reserve Price by placing successive or consecutive bids for a Property, or by placing bids in response to other bidders.”

Homebuyers need to understand that the Auctioneer may be bidding against them and, as a result, inflating the price paid to the property to their own benefit and the benefit of the seller.

California Association of Realtors® Takes a Stand

Agents across the nation have complained about this process, and despite their complaints, not much has changed. In fact, the California Association of Realtors® contacted Nationstar and Auction.com and states in an announcement on the California Association of Realtors® website that if agents are going to take these listings, they need to accept the process.

However, it’s possible that the tables are about to turn. The California Association of Realtors® has been very concerned about accusations of “shill” bidding by real estate auction sites, and met recently to discuss the matter further. Specifically, according to Kevin Birmingham, Transaction Issues Chairman for the California Association of Realtors®, the Board of Directors voted to amend AB 2039 (Muratsuchi) to prohibit the use of so-called “shill” bidders working for an auction company, so stay tuned.

Melissa is an in-demand business success speaker and author, as well as a real estate broker with thousands of short sale transactions under her belt. She leverages her experience as a short sale insider to motivate thousands of business professionals to plan their careers better, execute more effectively on their plan, and earn more because of it.

Real Estate Associations

NAR ad campaign aims to show importance of Realtors amid COVID-19

(REAL ESTATE ASSOCIATIONS) The NAR have run ad campaigns in the past about the importance of Realtors, and things are no different even in the midst of COVID-19.

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Gillespie realtors

Last year, the NAR launched its new ad campaign titled “That’s Who We R” with the goal of promoting Realtor values in local communities both in residential and commercial properties. In light of the coronavirus pandemic, the real estate market has experienced changes along with the rest of the economy. We followed up with NAR Chief Marketing and Communications Officer, Victoria Gillespie on the state of the campaign since the COVID-19 outbreak.

“We have been working diligently with our agency partner Havas to ensure that the Consumer Ad Campaign (CAC) is responsive to the current environment and directly addressing the concerns of both Consumers and Members,” said Gillespie. “When it comes to our mass advertising (TV), we are currently fast tracking a new message that will speak to how REALTORS® are continuing to actively help Americans achieve their dreams of property ownership, even in uncertain times, with an optimistic look toward the future.”

Gillespie also explained how the campaign is producing new national radio spots and working with other content partners to share the ways in which Realtors are addressing recent housing issues such as advocating to Congress, to fighting for homeowners, and advising consumers directly. The NAR hosted an interactive online Q&A featuring President Vince Malta to answer questions largely catered towards first time homebuyers (the main target of the campaign).

NAR is also focusing on social media messaging by highlighting the value of Realtor expertise during uncertain times.

“Real estate has changed, however the dream has not and REALTORS® are still trusted advisors. We have transformed the way we do buying/selling with the same commitment to consumers; however, our lane and our voice is broader than that,” explained Gillespie.

“REALTORS® fight for mortgage relief, emergency loans, e-notaries and more. REALTORS® are good neighbors helping in communities across the country. Consumers will remember those brands and businesses that are doing something during and after this pandemic and will reward them with loyalty and future business.”

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Real Estate Associations

NAR and MBA urge Congress to help troubled homeowners hit by COVID

(REAL ESTATE ASSOCIATIONS) NAR and MBA wrote a letter to Congress seeking more emergency mortgage and rental assistance for homeowners because of the ongoing COVID-19 pandemic.

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Emergency mortgage

The National Association of Realtors (NAR) and the Mortgage Bankers Association (MBA) sent a letter to Rhode Island Senator Jack Reed and California Representative Maxine Waters on May 7. The letter supports legislation that funds emergency mortgage and rental assistance to Americans facing financial hardships due to the Coronavirus pandemic.

Waters is the Chairwoman of the House Financial Services Committee, which oversees banking, public and assisted housing, and insurance. Reed is a ranking member of the Armed Services Committee and a minority member of the Banking, Housing, and Urban Affairs committee.

Mortgage lenders and REALTORS® are working through unusual and adverse circumstances to provide vital housing security,” the letter states. “Across every state and local community, we have seen the need for Congress to help homeowners and renters faced with the sudden loss of income…A comprehensive response by Congress to these needs would include direct emergency mortgage and rental assistance to advance housing stability.”

According to the letter, 3.8 million homeowners have requested mortgage forbearance since the beginning of the pandemic. Payment forbearance and lowered interest rates are crucial to the housing sector’s ability to survive the economic downturn caused by the pandemic. As of April 29, 2020, the Federal Reserve has announced it would maintain a mortgage rate of 0 to 0.25% until the economy returns to a trajectory towards maximum employment.

The letter lauds the Housing Assistance Fund created to support homeowners ability to make mortgage payments and lenders ability to create flexibility for payments.

The NAR has been engaged in a series of legislative activism to protect Americans’ homes and keep people housed in a time when income has been significantly impacted. In just the last two weeks, NAR wrote two letters to Congress including this one and also supported two coalition letters. The coalition letters also supported emergency rental assistance for Americans with lost or reduced income. They also advocate for creating a comprehensive portal for consumers to access that emergency mortgage and rental relief. The fourth letter was to the Federal Housing Administration about increased premiums.

Though it is unclear the extent to which lawmakers have been economically impacted by the pandemic, they like everyone else have been impacted by the coronavirus. Waters’ sister died of COVID-19 in Saint Louis, Missouri last week.

It is never quite certain what it will take for Washington to stay connected to the needs of the average American and respond accordingly. Sweeping legislation has been passed in record time in response to the economic shutdown, but the government has a long way to go to prove to the American people that it is trustworthy enough to protect both lives and livelihood all together.

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Real Estate Associations

NAR pushes politicians for more PPP, EIDL funding

(REAL ESTATE ASSOCIATIONS) While COVID-19 is hanging around, you may need some help. The NAR has your back with the CARES act to ensure you can keep what’s yours up and running.

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CARES act

Congress approved the Coronavirus Aid, Relief and Economic Security (CARES) Act at the end of March, giving the American public and businesses much needed aid. Two weeks later, as this is being written, many people have already received their $1,200/person stimulus. Forbes estimates that over 70% of small businesses have applied for an emergency loan under the CARES Act’s Paycheck Protection Program (PPP).

Although payouts are lagging, there is concern that the money will run out. Congress appropriated $349 billion for PPP loans, and another $10 billion for the SBA Economic Injury Disaster Loan (EDIL). High demand is straining the resources of the SBA, which is the agency responsible for administrating the loan programs.

Will the CARES Act be enough?

Given the demand, the National Association of REALTORS® (NAR) is urging Congress to “to provide additional funding for the PPP and EIDL programs in future COVID-19 response legislation, ensuring the need for these loans is met as this crisis continues.” According to a letter sent by Vince Malta, 2020 President of NAR, there are “legitimate concerns that necessary funding will quickly become depleted.”

In addition to the high demand for loans, SBA lenders don’t have clarity from the Treasury Department and the SBA on how to process the loans. Given that many banks are operating without full staffing teams, the system is being taxed. The NAR is also asking Congress to “clarify implementation to resolve issues with added limits and requirements that are not in accord with legislative intent.”

For more information about PPP, EDIL and other coronavirus funding options for small businesses, the SBA offers Coronavirus Relief Options here. The SBA is offering loan relief for some SBA loans and additional relief for disaster loans. There are added resources for small businesses on this page.

We have also covered many resources as well.

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