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The Rise and Fall of the BLS (Bakersfield Listing Service)

For a while we had 2 Multiple Listing Services in Bakersfield. The BLS, which was the new one, owned and operated by 5 Real Estate companies, has ceased operations. What happened?

The Pros and Cons of using a Real Estate Agent to buy New Construction

During the recent boom, most new construction wouldn’t cooperate with Real Estate Agents. Now that homes are taking longer to sell, they are much more open.

The Caravan

Once a week Real Estate agents meet and view up to 15 homes in a Caravan. The areas covered rotate every six weeks, so it gives agents an opportunity to see what is available all over Bakersfield.

The GEAR logo branding fiasco

The Bakersfield Association of Realtors spent a lot of time and money developing a brand and logo that would reflect the emergance of outlying cities, but when it was put to a vote, it was voted down. What happened to the Golden Empire Association of Realtors GEAR, and what are they going to do with all the hats, websites, and other paraphenalia already made with the logo on it?

What is Happening with all the Sub Prime loans?

The Sub Prime Loan, as it existed in the recent past, is no more. Tighter loan restrictions are now in place. What went wrong, and why are there so many foreclosures now? What about ARMs? What about Pre Payment Penalties? Who will help these people now?

How about these new web sites that will give you a value for your home?

There is quite a bit of information available on the web these days. You can even get a value for your home. How accurate are their results, and how do these companies make money? Where can I try them out?

At my Real Estate office we have a weekly meeting where we get together and discuss business. At a recent meeting, we had a heated discussion about some questionable practices, and we considered publishing a letter denouncing such practices, and we wrote several drafts. In the end, the letter was not published. There was some talk of the subject on the Money Wise Guys radio program, but I haven't heard the tape of that program yet, so I won't comment.

I don't want to bad mouth other agents, but I will just say in general that one of the practices that I have noticed was where agents would offer to buy a property at a greatly inflated price. Say current market value was $290,000. They would buy it for $350,000, but the seller would kick back $50,000 to the agents. The appraiser probably got some kind of kick back also, because the appraisal would come in for $350,000. The agent might get an additional 6%, double ending the deal on the listing and buying side. This would be about $21,000, or 6% of the sale price of $350,000. The 6% commission is usually split between the agent representing the buyer, and the agent representing the seller, but sometimes one agent can represent both sides. In this case the agent is the buyer. There is nothing unusual or unethical about a standard sales commission like this, but just factor it in. The seller got $300,000, which was more than market value, and the agent has already pulled $71,000 out of the deal. He splits some with the appraiser; perhaps the escrow officer gets a cut. Let's say that the loan was close to 100%, with little or no down payment. Now, if the market continues to go up, the agent can try to sell it, and the previous sale is used as a measure of the worth of the property. But if the market stops going up, and goes down or stays the same, the buyer, in this case the agent, might just let it go into foreclosure, walk away, but will still have a lot of cash left over. He has made little or no down payment, and very few monthly payments. If he is lucky, he can get a short sale, and thus avoid having the foreclosure on his record. The bank is stuck with the loss.

In a short sale, the bank accepts less for a property than the loan on that property. This does happen, and is not really anyone's fault. As we enter a downward trend, short sales are inevitable. But inflating the price, and skimming the extra money off the top, is fraudulent, especially when the loan goes bad.

Since I became aware of this, I have noticed a lot of deals that look this way. I think a lot of these deals will be coming to light soon. If there are any investigations of this sort of thing, it is very easy to find examples. Proving it might be another matter, but I think a lot of these deals will be coming to light soon.

Finally, in my previous BLOG I said I would be at an open house, and was accused of using the BLOG for the purpose of getting a free ad. I only began writing this BLOG this morning, and I was in a hurry to get to the open house, so I wrote about it. The purpose of my BLOG is not to get free advertising, but rather to discuss the fascinating subject of Bakersfield Real Estate, in all its myriad manifestations.

So I am sorry, and I will refrain from writing anything that might be construed as an ad.