Lack of full disclosure?

This evening, I was once again browsing the local real estate listings when I came across a number of short sale listings (more on that and how it relates to IndyMac at a later time) as well as this lake access lot listing. What I find interesting here is that the property owner's last name is listed as the same last name of the listing agent, yet the listing fails to disclose that this property is owned by a licensed real estate agent as is generally done in such cases. A further search of the Maryland Land Records database reveals that agent and owner are the same. Unless the database is out of date, something appears to be amiss. I'm no expert here but to me this looks like it could be a violation of Article 4 of the REALTORS Code of Ethics unless the seller was waiting to spring this news on the buyer at the last minute. I dunno, maybe given that the same agent has at least one other agent-owned property for sale at the current time maybe he feels like he has something to hide? Or maybe he's seen what I've previously written about how the number of agent-owned properties for sale should raise some red flags for potential buyers? The lack of upfront disclosure does raise some questions though.

We all know times are tough and agents are liquidating some of their real estate holdings to stay afloat but I certainly hope everyone is playing by the rules. I should also add that comparing the purchase price from the deed to the listing price also shows that this speculative foray didn't turn out to be a very good investment either. Even if the seller receives a full price offer in this case the difference between that price and the purchase price will not cover the collective sum of property taxes, over a year of interest payments, community association fees, loan origination fees, transfer taxes and any commissions due to the broker. Buyer beware when real estate agents tell you what a great investment lakefront/access property is while they are selling at a loss themselves.

Can someone please explain to me why the agents are telling us it's a good time to buy while they are trying to dump their own properties? I can find literally dozens of agent-owned properties for sale right now, but if these are such good investments shouldn't they want to hold onto them? I have investments too and I certainly don't want to sell the good ones that are earning good returns and paying solid dividends over time -- unless of course something is very wrong and I feel like I'm not going to earn a good return -- then I might want to sell.

Update, 8/21/08: Listing has been updated to add disclosure that property is owned by MD licensed real estate agent and this blog continues to inform and protect potential buyers from undisclosed or bad information.

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I guess there is no time to teach financial responsibility in that "two to three weeks it takes to get your real estate license" ..

after watching the video of Stacey, the real estate professional from California, on the Suze Orman show I was really shocked (well not really because I've met a number of "Staceys" myself) that someone who had been working in the real estate business for 10 years was absolutely clueless when it came to her personal finances (and we can only assume her clients' as well since her poor decisions regarding the financing of her own home as well as an investment property left her essentially bankrupt). So I was curious what kind of training these professionals really get before they are licensed to sell properties and after a quick search found the following video from a "real estate expert" in Texas.

There are a series of these videos which are set-up to coach someone through the process of getting a real estate license, but pay attention near the end of this one as she tells you how you can have your license in no time. Anyone think it might be time to raise the bar just a little bit?!? Given the crisis we currently find ourselves in it might even help give these folks some credibility and help restore some confidence in the market. Just a thought I had when I realized in less time than I've spent writing this blog I could have gotten my license to go out there and tell people to get loan with the cheapest possible monthly payment and buy, buy, buy! Based on what I've seen I'm pretty sure that would have been Stacey's advice as she raked in $136,000 in fees during 2006 before the California bubble burst.

Real Estate School Benefits -- powered by ExpertVillage.com

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Who has more training, the person cutting your hair or your local real estate agent?

Well in California and Arizona, the answer to that question is the person cutting your hair. Maryland requirements are slightly different than either of these two states but needless to say becoming licensed to sell real estate does not exactly measure up to becoming an expert economist, statistician or investment advisor as they might have you believe.

A few quotes from the links above:

“The current system is pretty much, 'Can you fog a mirror and are you out of prison?' ” he said. “If you can pass those two tests, come get your license.”

“We are not looking to raise the drawbridge,” Malta stressed. “What we are trying to do is raise the level of professionalism for incoming agents.”

And since I have been pretty hard on the shortcomings of the real estate agents, tomorrow I promise to tell you about the valuable services real estate agents can provide. Stay tuned.

Don't forget to check back to Dan's Deep Creek Blog for future updates.