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Transparency in online auctions is missing, bids against their buyers and Nationstar Mortgage’s relationship has raised broker eyebrows and is finally capturing the attention of Realtor Associations.

transparency in real estate

According to their website, 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, is bound to continue to grow.

Unfortunately,’s growth over the last few years has not come without a price. 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,

Brand Name Misleads the Consumer

Don’t be misled by the name of the company. Nationstar does not own the property and 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 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 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

The short sale process with respect to 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 website, and the bidding on this property is now open to the public.

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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. Surcharge = Overpaying?

Another hot button issue for consumers is that 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.’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, will bid against buyers in its own auctions. 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.

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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 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.


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