Class Action Settlement for Illegal Kickbacks. Told Ya!

About time!

I called it in 2007 when I said that those $60-90 “processing fees” were illegal “kickbacks” that Realtors and Brokers got for pushing Home Warranty companies. (see 2007 post).

My exact words in 2007 in case you missed it: “I wouldn’t be surprised if soon there is a class action lawsuit that will come after these firms and the Realtors that are colluding to the detriment of their client.”

Well it finally happened. Of course the defendant doesn’t agree with or accept any responsibility. Here is the website announcing the class action settlement. It is against AHS, the #1 home warranty company. The period is from May 2007 to Dec 2010. AHS was selling home warranties for $400 and giving the recommending broker $60 to $90 in “admin fees.”

Why does this matter? Kickbacks are illegal under (more…)

  • 16
  • June
  • 2011
Posted in Shady Agent Tricks | 8 Comments »

Admin Fees, MSNBC & 515+ Comments.

In case you missed it, MSNBC’s front page linked to their RedTape blog which ran a little piece on bogus Admin fees. My 2007 admin fee post fueled part of the article. So far there are 515 comments over there, and 5,000 unique visitors over here.

I hate admin fees. Never charged them, never (more…)

  • 12
  • July
  • 2008
Posted in Press, Shady Agent Tricks | 11 Comments »

Excellence Comes Standard. Frankly Client Bill of Rights, From The Real Estate Gadfly

Gadfly,” 1) a person who upsets the status quo by stimulating innovation by proving an irritant. 2) any of various flies, like a horsefly, that bite or annoy livestock.


First JetBlue left customers on the runway for 10 hours. After this disaster they came out with a JetBlue Bill of Rights.

Then a class action lawsuit was brought against C0ldwell Banker (Article) for violating RESPA laws for steering clients to profit-sharing “partners.”

Before there is a further disastrous out lash from consumers against Realtors, we must adopt a new standard. All shadiness needs to be removed from the industry and excellence should come standard. will start in Virginia, DC, MD and I envision shortly other firms will subscribe to the “Frankly Client Bill of Rights” throughout the country. This is not trademarked, go ahead copy me. You’d be an idiot not to.

Who will join us? Who runs a real estate firm that is willing to follow our lead and offer a new elite level of service and disclosure?

While I’m honored to be the first to come out with this, I’m also embarrassed at the same time that this isn’t already the default. Consumers might read this and say “d’uh, seems obvious,” I agree! But why is it that not one real estate firm in America subscribe to this? YET!

Introducing the Frankly Client Bill of Rights:

#1 No ABA’s, Affiliated Business Arrangements

We make our money on the commission, we don’t need to make a few hundred bucks steering you. No “One Stop Shopping” filled with partners filling our pockets. (blog on ABAs)

#2 No Admin Fees

These $200-$400 junk fees were invented by large real estate firms for both the buy and sell side. No more having clients sign confusing disclosures unknowingly. We don’t charge them, never have. (blog on Admin Fees)

#3 No Dual Agency

Dual Agency is ILLEGAL in some states. I wonder why? Dual Agency is when there is only one Realtor between a buyer and seller. A Dual Agency Realtor can not help both sides. So legally they are not allowed to represent EITHER SIDE, and instead “represent the contract” only. That makes the agent a mere worthless paper pusher. We don’t do that. We will only represent our client, the buyer OR seller. In the case where a buyer comes without an agent, they will be an “unrepresented buyer” (like a FSBO) and will sign a disclosure saying who we w ork for. (new blog soon)

#4 No TELLING you what to pay

We won’t tell you what to pay for a place. Ever! We won’t even answer the “What if you were me” question, since… We aren’t you! It is your money, and your risk tolerance. Instead of telling you a price, we will go over a ton of data to consider and conclude with our “VEGAS ODDS SYSTEM” on what the other side MIGHT do and separate it into three categories: Accept, Counter or Walk. Ultimately you decide how aggressive you want to be. (No “selling” blog)

#5 No Home Warranty Insurance Kickbacks

Even though it is illegal to receive a commission for selling insurance (unless you are a licensed insurance dealer), the Home Warranty companies have figured out a way to give agents and firms an “admin fee” of $60 to sell their goods. Why bother? We won’t accept that commission as we feel that is illegal. Instead we will pass that “admin fee” to the buyer/seller. This might seem like a small amount, but the principle is what matters. Again we make our money on the commission, we don’t need to upsell you to make another $60.

#6 No Buyer Agent Bonuses/Bribes

We outline our compensation up front in our Exclusive Buyer Agency Agreement (Don’t Sign Them Yet blog). If there is a bonus to the buyer agent, the buyer gets that in a form of a rebate on the HUD1. We can’t be bribed to push you into a particular listing. (blog on 10% agent bribes)

#7 30 Photos & Custom Domain Name Website Per Listing

It boggles my mind when a $900,000 listing posts 3 photos taken with a camera phone (see Sucky Agents) and then wonders why it didn’t sell for 200 days. And this is from a “Top 3” large company, not a “discounter.” They even allow agents to check a default button to allow the MLS to dispatch a high school photographer to take a free exterior shot. I call this the free drive-by shooting option.

Simple new requirement: Each listing must have at least 20 photos taken with a 22mm wide angle camera (like the v570) or from a professional photographer.

Each listing will also have their own domain name. No need to point prospects to “” just to get lost looking at another 10,000 homes. Instead prospects can go directly to the photos of the listing with their own domain like: 2001OdysseyUNIT

#8 Professional Staging

We won’t list a house unless we can make it look better than a model home. Why? It works. It gets you more money and the house sells faster. (See Bidding War blog). Just yesterday we got 3 offers in 3 days for $20k over what other Realtors said would be the seller’s top price (referrals available).

#9 You’re High Tech, We’re High Tech

How about 100% paperless transactions from start to close? No unnecessary “meeting to sign” papers or trips to Kinkos. We also use instant messaging, cell text messaging and of course email… from our phone. Prefer  paper? We can do that too.

Thank you for following as we recalibrate the real estate industry! Sign up via for updates or email this to a friend.

Are you a buyer or seller? Print this out, have your Realtor sign the Frankly Client Bill of Rights? (Tell me how it goes)

Are you a Realtor with another firm that can’t promise the above? Then switch or start your own, maybe I’ll even help you!

Thanks for all the comments, keep em coming. And if you like this blog, please pass it on! Oh and tell me if you find typos, I don’t like looking dumb.

Written by Frank Borges LLosa- The Real Estate Gadfly

Virginia Broker/ Owner Featured in BusinessWeek, CNBC, WSJ etc.

p.s. #10 As with JetBlue, we also promise not to leave you on the runway for 10 hours.

  • 6
  • March
  • 2007
Posted in Listing Advice., Shady Agent Tricks, Staging | 48 Comments »

$395 Realty Firm's "Admin Fee": Junk or Legit? (Update: Now called “Additional Commission”)

Update 3/2011: Admin fees are now being called “Additional Commissions” after a few lost class action suits against “admin fees.”

Somebody must be reading this (actually 60 people a day) since this GREAT question came in.

Q. My listing agent is taking commission plus a $395 administrative fee. What is the administrative fee all about?

Great question! Why didn’t I think of that?
First of all I don’t know what you mean by “taking.” If you are telling me that you signed a listing agreement for a certain percentage and the $395 was NOT mentioned in there, and suddenly you are expected to pay it at the closing, I think your exact words should be “over my dead body.”

Shameless plug: has never charged an Administrative fee. I just never understood what it was. It is a junk fee, but allowed if you agree to it.

What is an administrative fee?

It is a fee that is supposed to cover “the cost of paper and tools, etc.” Um, but don’t they also get a BIG chunk of the commission too? Yes, so it is a fluff fee to increase revenue. A fee that is easy to slip past the client that might not know better, so why not charge it?

  • Thank God you have this Blog to get the inside scoop.
    Shameless plug #2 If you are smart, you’ll sign up for future blogs to be emailed to you (at the bottom). I apologize for all these plugs on this particular blog, and I know blogs aren’t supposed to be self promotional, but when 70% of the competition does shady stuff like this, I just can’t contain myself.)

How do they get away with this fee 70% of the time?

While everyone knows there is competition for which agent you pick, there is another round of competition that you might not know about. It is the competition amongst brokerage firms to get the top producing agents to work for them. Different firms have different split structures. Some start with 50% going to the firm and 50% going to the agent (and they need an admin on top of that, give me a break!). And this 50/50 split is for deals that the agent finds on their own! It drops even more if the firm gave them the deals. And it cuts in HALF for the first couple of deals since a mentor gets a portion. Yes, a new agent can get as low as 20% of the commission, I saw it in real life. A friend/new Realtor walked out with a $2,100 check on a $10,000 commission that she brought to the firm. And you all thought we had it easy!!

So one way firms lure agents in is with more competitive splits. Some firms recruit newbies at 50% splits, and some take experienced agents and only charge 5%, plus “desk fees.” But wait. They have to make money somehow.

So many firms started with “admin” fees to subsidize the brokers (because the agents wanted higher splits) and now they also do it with ABA’s (see Blog: “Affiliated Business” or Illegal Kickbacks?) So one could say that the brokerages didn’t need to charge that if the agent split was lower and more profitable. So while the agent pitches it as “oh the broker charges that, I can’t do anything about it,” they in the meantime are charged less by the broker. So indirectly that admin fee goes to the agent, in the form of lower fees to them. Have I confused you yet?

    Here is how the conversation probably started:

  • Agent: Dear Broker, I need a better split.
  • Broker: But I’m not making enough money at this rate.
  • Agent: Do better or I will leave.
  • Broker: Hold on, I’ll give you a better split but you will have to pass on a $395 fee to your clients that would go directly to us.
  • Agent: Deal! Where do I sign?
  • Agent to Client: Oh, that Admin fee is for the broker to cover costs of doing business.
  • Client: Um, ok.
  • Client’s friend: You should have read

How common is the Admin Fee and where should I look for it?

I spoke to 2 closing companies. Both agreed that the range was from $195 to $395 and they were on 70% of closings, and they were on both the listing side AND the buying side. I had never seen them on the buying agent side, news to me. Heck, maybe I should start charging this!

What can you do?

  • Net everything out. If your listing agent is charging x% plus $395, add it up. And question it to see their recorded pitch.
  • If you never signed anything allowing that fee, make the agent eat it. This is like a lender giving you a good faith estimate and suddenly adding an admin fee.
  • It is up to you if you wish to ask for the fee to be waived if it WAS disclosed. I go back and forth on the ethics behind this since you DID agree to it. But maybe you were tricked into it? One closing company told me that 10% of agents eat this fee since some are embarrassed by the fee and sometimes because a customer won’t pay it.
  • Pick a firm that doesn’t nickel and dime you. If they are pulling this fast one on you, what else are they pulling?

Again, they might say, “it is for the cost of paper and tools, etc.” Your response is, “Out of this $10,000 commission, don’t they already get a large portion? I won’t pay that fee.”

Good luck and let me know how it goes!

– Written by Frank Borges LL0SA- Broker/Owner
703-827-4OO6 Please report all typos, I don’t like looking stupid. If you like this post, sign up for new blogs daily.

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  • 5
  • February
  • 2007
Posted in Shady Agent Tricks | 43 Comments »

Beware: New Constructions Illegally Not Disclosing Seller Subsidies

(Thank you to MRIS for warning agents about illegal MLS fudging, perhaps due to BusinessWeek’s story that referred to my blog. More at the end)*

Now I have reported to MRIS another violation.
Lets see what they do about it.

New Construction Fudging the Reporting of Seller Subsidy… how conveeee….enient.

Before I get started on tricks that the builders are using to unload inventory, did you know that it doesn’t cost you anything to have a Realtor represent you? The cost is the same to the buyer, oftentimes the on-site sales agent gets the double commission. Sometimes a “free” buyer agent can save you even more, even if you think you already squeezed $100k out of them, who cares, if your buyer agent knows they recently dropped a place $200k around the corner. Price drops are relative, and a good Realtor can help protect you. See I Need A Buyer’s Agent! But For My Car.

So back to builder fudging. On the MLS, when a listing closes a Realtor must enter in the closed price. This can easily be verified by the tax records once it comes out. A Realtor is also required to post the seller subsidy amount. The “seller subsidy” is the “cash back to buyer” or “cash toward closing costs” and it is a marketing scheme to make a listing look more favorable, even though I tell my buyers to ignore them and just to net everything out. A $515k place with $15k back should be viewed as a $500k. Don’t let that marketing confuse you.

  • Damn side note: I once had a listing for $325,000 and an agent said “but the developer is offering an amazing $15,000 in incentives, will you match that?” The builder’s price was $350,000. I said “Sure. I’ll double it! I’ll give you $30,000 back with a price of $355,000, Deal?” So make sure you NET everything out!

Anyhow, the builders are in a bad situation right now. Especially Arlington County condos in Virignia. They have already sold a ton of units at a great price, but they need to sell the rest of their inventory without pissing off the current owners and people under contract.

So how do they do this?
Well one way is through fudging the “seller subsidy”. If a place is $600,000 and they want to drop the price to $580,000, they will instead give $20,000 worth of “seller subsidies” or “cash back.” Effectively the sale is $580,000, but it gets recorded in the tax records as $600,000 (which is fine). The part that is not fine is they are leaving off the subsidy information on the MLS. Insert Dr. Evil’s voice: How convenient!

How do I know they are fudging the MLS?

  • The graph to the left shows one builder’s last 40 sales. Not one included a seller subsidy. Meanwhile I have been in their sales office. As with EVERY builder, they give huge seller subsidies. Yet not one is posted here, as required by the MLS.
  • The box on the right side of the graph are 50 Arlington Condos sold in 2006. About 40% have seller subsidies.

Why does seller subsidy disclosure matter?
If you are considering buying a $500k condo in Arlington, you will look at the past sales as one of a dozen metrics to value a home (I wish I could show all my tricks on pricing and offering on homes, but the competition might be reading this, email me if you want a sample). If the builder just sold a nearly exact unit for $500,000 and recorded no subsidy, you might actually consider buying the unit near $500k. However, if you knew that there was $20,000 cash back, and the net price was actually $480,000, that is basically a Honda Civic value of information ($20k).

So in conclusion, make sure your buyer agent knows the market well and knows about tricks like those and other listing agent tricks that could cost you $20,000.

For all those super smart people that think like my Mom (read Mom Blog on not trusting Realtors) did “I don’t need no stinking buyer agent,” this stuff happens all the time. (shameless plug here: sign up to get emails of new blogs, the sign up box is at the bottom)

And you all think all we do is push paper and get you to buy quickly?

– Written by Frank Borges LL0SA- Broker/Owner
703-827-4OO6 Please report all typos, I don’t like looking stupid. If you like this post, sign up for new blogs daily, use the form on the right of the page.

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*Thank you to MRIS continued: I would like to thank MRIS for warning agents about MLS fudging.(the local MLS system) for posting a bulletin board on Matrix (the back end Realtor system) warning listing agents that Data MLS fudging is illegal and will not be tolerated. I believe my MLS Data fudging Blog (Part 1 and Part 2) and the resulting Business Week article probably lit a fire under them. While I wanted to copy and paste that notice, it wa
s gone after 24 hours. Oh well. Update: I found the link to the notice.

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Keywords: Housing bubble? Arlington, Alexandria, mls, homes, Real estate, Virginia, Alexandria, 22201, 22314, Fairfax Va, DC Realty, Realtor

  • 3
  • February
  • 2007
Posted in Buying Risks., New construction tricks, Shady Agent Tricks | 7 Comments »

Beware: "Affiliated Business" or Illegal Kickbacks?

Walks like a Duck, talks like a Duck…
There is a booming new business that consumers deserve to fully understand. It is called an “Affiliated Business Arrangement” or ABA. A new stream of income for some Realtors. You deserve full disclosure and whether your Realtor is getting an indirect kickback from his “recommended partners”

“Affiliated” businesses. Are they a Godsend, barely legal, just plain illegal, or just unethical?

FIRST OF ALL LETS DEFINE RESPA? (The law designed to stop kickbacks)

  • RESPA is about closing costs and settlement procedures. RESPA requires that consumers receive disclosures at various times in the transaction and outlaws kickbacks that increase the cost of settlement services.” Respa website.

Could a Realtor that is in “partnership” with a Title company, please help me understand why it is ok to skirt around this law? More frequently I am finding large real estate companies (and the agents) “partnering” with settlement companies and doing so in a manner that technically gets them around the kickback laws.

One Real Estate company even uses the loophole as a recruiting technique:

  • Mortgage and Title Income . We share income with our agents under a RESPA compliant platform. As the leader in this field we have developed the only legal way to offer you this additional income.”

Yippee!!! Translation: “We are smart, cunning and sneaky enough to have figured out a loophole to get around the basic intent of the law… at least for now or until we get caught.”

Another website lists the following reason for agents to join their Real Estate company:

  • “Does the company own affiliated businesses? Do the agents share in this?”

But I thought the earlier company was the only one that knew how to do it legally?


So the law was designed to stop Real Estate Agents from getting a $100 or $300 incentive to drive business to a particular Title company. Yet that doesn’t stop the “brilliant” realty firms that found a loophole around this.

This is one of the loopholes as I barely understand it:

  • The agent becomes a tiny % part owner in the settlement company’s newly formed subsidiary LLC . I don’t have the exact details, but this part ownership is a legal way for them to get an indirect kickback, since revenue can’t go to agents unless they happen to own part of the company. So while they don’t get directly $300 per deal, they get a year end revenue share that is somehow tied to the # of closings with that company. One Realtor said it isn’t tied to that, but I would have to see details before I believed that an agent would be allowed to own a part of 1 title company, while sending ALL your business to another
  • And once the new year hits, a newly formed LLC is created to bring on new agents.

So please, agents that are part of these big companies, please help me understand how you rationalize this. While some of you might say that you have the client sign a disclosure form, how many of you with a straight face can tell me that your client “gets” that you are making $300 off them if they go with a particular company? As if we don’t make enough money on the deal, we need to bilk them for a couple hundred more bucks?

Most buyers sign that disclosure because:

  • They think it is normal and are already signing 20 documents
  • They feel pressured into it or confused
  • They can’t read between the lines that say: “Your Realtor makes $300 if you use XYZ”
  • They have no other alternatives.

Instead of the intent of the disclosure which is to let people understand that they have a choice and that their agent makes money if you sign that paper. Note that it used to be more common for the firm to make money, and not the agent. Now firms are sharing that money back with the agents as a recruiting technique.

What can you do? (I’m not one to bitch about something and not give suggested remedies)

  1. Avoid the companies that have these ABAs. If they do shady things like this, what else are they going to do that is shady? (see blog on Shady 10% Buyer Agent Bonuses or the blog “Don’t Trust Realtors that Sell You on Buying“)
  2. Demand that the Realtor put in writing exactly how much they are getting (once you get that in writing, send it to me to review)
  3. Ask the Realtor how he can justify this bonus/kickback/revenue share if he already agreed in another contract that a) he was making X% and b) working for you, the buyer.
  4. Demand that bonus in the form of a Rebate back to the buyer.
  5. If he won’t rebate his bonus, use another settlement company.

Aren’t you just jealous that you don’t have these partnerships?

No. I could easily get them and I have been offered them.

The conversation goes like this (but with a lender),

  • Lender: “Let us be your in house lender and you can get 35% of the revenue”,
  • I say: “Um, don’t you have to make a living and won’t that fee have to be passed on to the client?”
  • Lender: “No, I’ll give them a great rate and you make $500”
  • I say: “So why don’t I just pass on the kickback and you give the savings to the customer?”
  • Lender: “Ok, lets do it!”
  • I say: “No thanks, I don’t trust kickbacks, so how can I trust that you wouldn’t just charge $500 more (which is REALLY easy to do with loans as the fees can be hidden in a dozen places including a slightly higher rate)

Ok some Realtors getting revenue sharing might say “but the price is the same everywhere,” don’t believe your own BS. In the long term this is price fixing, limiting choices and a RESPA violation. When you limit competition through Realtor bribes, the consumer is hurt.

If an agent isn’t sharing reve
nue, but the firm has an ABA? Still watch out!

Ok some real estate companies won’t pay the agents a cut (they claim it is not legal, how convenient), but instead of rewards, they punish. They shun the Realtor if they don’t use their ABA partner. One large NoVa company stripped a top agent of her “#1 in office” title for not using the Affiliated Partners on her deals. How is that in the best interest of the client? So even if a Realtor doesn’t get paid, you have to wonder what it in it for them to push the ABA.

I wouldn’t be surprised if soon there is a class action lawsuit that will come after these firms and the Realtors that are colluding to the detriment of their client.

Are you ok with the “one stop shop”, even if the price is the same to you and your Realtor gets a bonus?

Oh and don’t get me started about $400 Home Warranties that frequently result in a $70 bonus to the company, and oftentimes passed back to an agent. Note that insurance can only be sold through licensed insurance dealers. Yet these 15% bribes are called “admin fees.” If an agent is selling you on a warranty, ask if he or the firm makes a cut on your sale, and ask for that bonus back.

If you have questions about something that seems shady, ask me, I’ll give you the inside scoop.

– Frank Borges LL0SA – Broker

If you like these topics, subscribe to get a spam-free digest of new postings: spam free Preview Please email me any typos!

  • 30
  • January
  • 2007
Posted in Shady Agent Tricks | 28 Comments »

Tip #1 From Mom: Don't Trust Realtors That "Sell" You On Buying.

I learned my approach to Real Estate from my mother growing up buying homes (insert “awe” here).

A Realtor’s job shouldn’t be to talk people into buying. However too frequently you’ll hear Realtors saying “Now is the time to buy” or “We have reached bottom.” Maybe they believe it, maybe they are brainwashed, or maybe they are lying. Irregardlessly* in reality Realtors don’t know where the market will be in 1 month, 1 year, 5 years or 10, and don’t believe somebody whose pitch is always the same… UP! (*yes that is a made up word to see if you were paying attention)

What many Realtor know is if they can convince you to buy, they might make another sale! More Sales = More $ for the Realtor

One lesson stood out most from my mother…

On a sunny spring day in 1995, my mother was working with her Buyer Agent Realtor, about to put in an offer. The Realtor kept looking over my mother’s shoulder as she was deciding on a price to offer on a house. The Realtor was not the Listing Agent, but her Buyer Agent (supposedly looking after her best interest). The Buyer Agent Realtor kept saying in a “salesy” fashion: “$XYZ would be a great price!”, or “You will make a ton in 2-3 years!” and “You should put $XYZ!”

My mother stopped her and said, “Let me ask you some questions,

  1. “You will make money if I buy this house right?”
    The agent replied “Yes”
  2. “Will you be sharing in my risk if this property goes down?”
    The agent replied “Sorry, No”
  3. “Will you be making more money, the higher this offer is?”
    The agent replied “Yes”
  4. “Is the % likelihood of this deal being accepted go up with every $5,000 higher that you recommend we put in here? And thus the more likelihood of you getting paid?” The agent replied “Yes”

    “Then please be quiet and let me think.”
    (she probably wasn’t as nice as that).

Warning, blatant subliminal sales pitch approaching: When it comes to price, a Realtor’s job should be to delivery information, not suggestions.
The Realtor might use their experience and compare the bidding process to a trip to Vegas and say “at this price you might have a 25% chance of getting it, at this price an 80%”, but when asked “What should I pay?” a Realtor shouldn’t answer that since they have a bias and it isn’t their money. Only the buyer knows their risk levels, how the monthly payments will feel, and how much they love the place.

Don’t get me wrong, a good Realtor can help you get a lower price (ask for some testimonials) and come up with a strategy to do such, but they should not say “If I were you I would bid $XYZ.” Trust me (never trust anybody that says “Trust me”), the higher the price, the easier the job. Fighting to get that last $5k or $10k is the toughest part*, but important especially if the market goes down more, you’ll be glad you fought for that last $10k.
(*Note that some people would rather just buy at full price and have an easy transaction, we can do those too, whatever is important to the buyer.)

I can’t really list all the insider buyer agent techniques on a public Blog being read by my competition, but one example would be to not stop at finding one great home, but finding 2 or 3 houses and taking a “round robin” approach. Offering a price on one, and if that doesn’t work, bid on the next one, then the next and then back to the first with a slightly higher price and repeat as necessary (are you really supposed to “shampoo and repeat?”) until somebody bites.

And lastly, don’t trust any data from NAR, The National Association of Realtors. Just don’t do it. Ignore it. As Peter Coy wrote in Jan 8th’s BusinessWeek, NAR said on 12-12-05 Prediction: “The national median home price will rise about 6.1% in 2006. Over a full year, it has never declined since good record keeping began in 1968”- NAR. This was followed up by “The Reality: Through October (06), the median price of residential properties was down 3.5% from a year earlier.” (Actually probably more like 5% when you include seller subsidies, see earlier Blog on MRIS data.)

Yes they can make one mistake, but the NAR president repeatedly says we are at or near the bottom.” My earlier Blog exposes a NAR advertisement that says now is the time to “Buy Or Sell”, while only listing reasons to buy. How can one time happen to be perfect for both sides? I’ll tell you, when money is involved and it flows to the recommending party, that is how. Also the data is manipulated (see MRIS data report Blog).

Here was the T-Shirt that I was giving my clients at their closing. Even when buying a $3M house. This proves that I warned them about a potential bubble:

The 2004 version was featured in a Article (near end).
– – – – –

Written by Frank Borges LL0SA- Broker/Owner

  • 6
  • January
  • 2007
Posted in Buying Risks., Shady Agent Tricks | 16 Comments »

MLS Data Fudged By Realtors. Watch out!

If you are putting in an offer to buy a house, and you aren’t using a agent (God knows why you wouldn’t but lets just say you are stuck with your agent), make sure you have your agent look out for MLS fudging.

There are 2 levels of MLS fudging. One is a NVAR (Local Realtor association) violation and the other is borderline ethical. And there are 2 reasons agents fudge the MLS.

  • BORDERLINE MLS FUDGING (like sugar-free fudge, is it really fudge?):
    This is what happens when a listing agent wants to re-list a property they are already listing for sale. Maybe the house has sat for a few months or there is a big price change. Instead of a 2 minute change, they will withdraw one listing and spend 30-45 minutes reentering all the data.

  • This low-fat fudge will:

    • a) Restart the Days On the Market “M” ticker, DOMM (The other ticker is DOMP which is ALL days for this Property regardless of normal relisting)
    • b) Reset the “Original List Price”.

    So if a house drops from $600k to $550k after 100 days, and the plan is to drop again, but to $500k, the “borderline fudger” will do a normal delist (expire or withdraw) and relist.

    • a) The new DOMM will be 1 (but the DOMP will be remain “101”)

    • b) “Current List Price” will become $500k
    • c) “Original List Price” will be $500k (the $600k is hidden and stays with the old listing)

    80% of Realtors will see the DOMP at 101 and look back at the old listing to get more information before making an offer. I found one agent did this 17 times!

  • ILLEGAL MLS FUDGING (very fattening fudge):
  • This fudge is harder to do. After delisting the property, the agent goes back to relist. The system by default will recognize the property by the address and ask you if you wish to pre-fill the Tax-ID and some other data from the tax records. And agent doing illegal fudging has to go out of their way to press NO and override the system by entering gibberish into a tax ID of 000000 and then another 40 minutes reentering data. (The MRIS claim that they have a system to protect against this, however I have seen it over a few dozen times.)

    • This fattening fudge will:
    • a) Restart BOTH the DOMM AND the DOMP
    • b) Reset the “Original List Price”.
    • c) Leave NO indication that this property ever was listed.
    • It looks like a 100% brand new listing. This is a NVAR violation.

Maybe only 25% of Realtors will find this fudging. They know that when submitting an offer they should search for expires and withdrawn listings for that address (and variations like St vs Street and N vs North).

What a shame that we can’t trust our fellow Realtors to be honest.

In the graph above, that is not the default of what a Realtor sees after a search. I had to create a special search to put it in that form. It is much harder to find. Also note that in this case the first 4 light fudgings were from one agent and then a new agent took it on and did the Tax ID=0000 to reset everything. This is NOT as bad (still illegal) as one agent relisting multiple times using the 0000 trick.

NEW: Part 2:
Illegal MLS Fudging. 20% Chance You’ll See One

– Written by Frank Borges LL0SA- Broker/Owner

Videos at
Keywords: Housing bubble? Arlington, Alexandria, mls, homes, Real estate, Virginia, DC Realty, Realtor

  • 4
  • January
  • 2007
Posted in data manipulation, Shady Agent Tricks | 19 Comments »

Part 2: Illegal MLS Fudging. 20% Chance You'll See 1.

This blog is an extension on the blog “MLS Data Fudged By Realtors. Watch out!” This new post might not make sense without reading it first.

One blog reader asked me, “How frequently does MLS fudging really occurred. Are we talking once in a blue moon, is it commonplace or even the default?”

Great question!

They wanted a breakdown of the frequency of both the Fat-Free MLS Fudge (technically allowed which is the same agent relisting a property to reset some data like the DOMM not DOMP and Starting Price), and the Full-o-Fat MLS Fudging that is a MRIS violation, which resets the DOMM and DOMP and makes the listing look brand new, with no trace of the old listing.

Quick DOMM vs DOMP recap.

  • DOMM= Days on the Market- MLS (days for that MLS listing only)
  • DOMP= Days on the Market for the property (regardless of relistings, unless fudged)

Quick Full-o-Fudge MLS recap.

An agent can pull their listing and when given a 1 click option to restart it, bypass the default and put “00000” in the tax id box. This is an MRIS violation but done so that buyers and many agents won’t see how long it has been on the market, in hopes of getting a higher price.

My estimations:
I can’t get exact figures. There are probably over 10,000 active listings right now in this area. The system only allows us to pull up 500 at a time. While I was able to search for Tax ID 00* (* meaning anything after two zeros), and 999*, XX* and 123* I then had to manually look up EACH result to make sure it wasn’t a new construction or condo conversion (which don’t have Tax ID’s yet and putting in “000” is and acceptable and legit practice). Some of you might think I have too much time on my hand (maybe since I sometimes talk people OUT of buying), but I don’t have THAT much time.

So I pulled up one county and price range and did a sample analysis. 2400 active homes analyzed.

My search criteria:
Homes and condos in Fairfax County priced from $300,000 to $600,000 built before 2004.
The result was 2400. (Since the max search is 500 I had to do smaller $50k range searches and add them.)

Then I searched for tax ID of 00*,XX*, 999* and came up with about 40 results. Again, sometimes not having the Tax ID (which attaches a property to prior MLS listings) can be legit in cases of new construction, condo conversion and a couple other reasons.

So I took those 40 and opened another browser. I searched for that street address and included all Withdrawns, Temp off, and Expired to see if that property was previously listed and whether the Tax ID of 000 was used to reset the data.

I found 21 Full-o-Fat MLS Fudgings and 17 of those were from the same agent (vs a new agent taking on a listing and wanting to reset everything, which is also not allowed but not AS bad in my opinion).

So out of the sample of 2400 homes, I found 21. Which is just under 1%. This doesn’t seem like a lot and I do remember seeing it fairly frequently, so I started looking at that 1% another way.

Lets say an average buyer might go into about 7-10 homes, they probably have the agent look into about 20 homes online. That means there is a 20% (20, 1% chances) chance that you will come across a listing that has been fudged by the Realtor to deceive the public in order to get their listing sold faster.

Fat-Free MLS Fudge frequency?

So then I wanted to see how frequently a listing undergoes Fat-Free MLS Fudging, the act of relisting the property but not removing the Tax ID. This practice is allowed. Heck, one agent did it 17 times.

I couldn’t look at all 2400 homes, so I focused on 90. , the results from a price range search of $499,900 to $500,000 in Fairfax built before 2004.

25 of the 90 were relisted and had a different DOMM vs DOMP (defined above). This 25 is legit, and tells you that there is a ton of turnover of listings to a different agent. Sucks to be those that lose the listing agents losing those deals.

    Of the 25 active listings with a DOMM and DOMP discrepancy

  • 15 were new listings from one agent taking over for another agent. This is 100% legit.
  • 10 were the same agent (Fat-Free Fudge, allowed but questionable)
  • 3 (of the 10) were relisted and withdrawn 3 times for a total of 4 MLS #s each
  • 1 (of the 10) was Full-o-Fat Fudged

About 12% of listings get relisted by the same agent
About 3% of the time they relist it multiple times, sometimes 4 times.
About 1% of the listings (in the example of 90 and 2400) are fudged.

So if you look at 20 properties, there is a almost certain chance that a few were using the Fat-Free Fudge technique and probably a 20% chance that you will encounter the illegal fudging technique.

Why does this matter?
When bidding on a property, you should have ALL the available information. If a place appears to have just hit the market 5 days ago, there might be a little rush to winsecure it. If you bought it to then find out that it was really on the market for 300 days, you wouldn’t be happy that you were duped. Also the amount you offer might be lower if it sat for the same price for 200 days.


  • MRIS (our local MLS system), do a better job at catching these manipulations. A simple review of all 00* would be a start. Secondly impose fines and get serious about cracking down on this. (Email me if you want an address to complain to MRIS)
  • Buyer Agent Realtors, report these violations to compliance, they can reset the listings.
  • Listing Agent Realtors, stop fudging the MLS or risk losing your l
  • Buyers, don’t be scared, just be aware and make sure your agent double checks into this before putting in an offer. Also ask your agent if their emailed reports use the DOMM or the DOMP (most use the DOMM).

Disclaimer: The data that I collected might not be statistically perfect, but it was the best that I could do. I would be happy to work with a research person to get more exact figures. Also the Fat-Free Fudge, which is allowed, is my opinion not kosher, many agents might debate this or say it is company policy. To each his own. I just wanted to bring up the debate.

Now talk amongst yourselves…

– Written by Frank Borges LL0SA- Broker/Owner

  • 4
  • January
  • 2007
Posted in data manipulation, Shady Agent Tricks | 25 Comments »

"America's Most Admired Professions=Real Estate Agents"… NOT!

For those that didn’t see Borat: Cultural Learnings of America for Make Benefit Glorious Nation of Kazakhstan, that was a “NOT joke.”

Forbes came out with an article reviewing America’s Most Admired Professions and Real Estate Agents were… amongst the bottom 3 in the Harris poll.

Watch this:
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As a Real Estate Agent and Realtor, this is embarrassing. As you will see throughout this blog, we will try to give you an insider perspective. Also we pledge to never talk you into buying. But if you are ready to buy, we’ll help and make sure you are protected (as much as possible) from a further downturn with an aggressive price drop.

This is where my fully disclosed shameless plug will end, welcome to

– Written by Frank Borges LL0SA
– Broker/Owner

Videos at

Keywords: Housing bubble? Arlington, Alexandria, MLS, Homes, Real estate, Virginia, Alexandria, 22201, 22314, Fairfax Va, DC

  • 20
  • December
  • 2006
Posted in Shady Agent Tricks | No Comments »

Shady Realtor Bonuses? 10%!! Free Cruise? Be Aware.

CNBC STREET SIGNS: Homebuyer Beware

YouTube Preview Image

Do you know what your Realtor is making? You should.

Now that the market is slowing down, the incentives offered Buyer agents has
increased. Not across the board, but occasionally. I have recently seen incentives as high as 10% in Miami! And I saw one ad where they are offering a vacation to the Realtor. But the WORST I have seen is “$5,000 bonus for a full price offer.” This should be banned (it might be). The Buyer agent (even though paid by the seller) is supposed to be working for the buyer, not the seller. An agent that takes a $5,000 bribe instead of working to get their client, $5k or $10k is an embarrassment.

Buyers should know exactly what their Realtor is making?

How do you do this? You can start with an “Exclusive Buyer Agency Agreement.” I know what some of you are thinking “Oh, I don’t sign those, I would rather work 4 agents to help me find a home.” Ok, I can see how that initially would sound reasonable. But put yourself in the shoes of the agents. How likely is that agent going to be to help you try and fight for an extra $5,000 or $10,000 off? Human nature would kick in and say “why should I be aggressive on this offer if they might just go elsewhere if this deal doesn’t happen.”

Watch CNBC interview Frank Borges LLosa from on the issue of extra bonuses. This interview pulled from the article “Do Real-Estate Agents Have a Secret Agenda?” in the And in article: “Home Buyer, Beware”.

At we don’t believe in bribes and kickbacks. We agree up front for what we will be paid and anything extra is given back to you at closing. That way you know we aren’t showing you something just because of a bonus.

– Written by Frank Borges LL0SA- Broker/Owner

Videos at
Keywords: Housing bubble? Arlington, Alexandria,
Homes, Real estate, Virginia, Alexandria, 22201, 22314, Fairfax Va, DC Realty, Realtor

  • 14
  • December
  • 2006
Posted in Press, Shady Agent Tricks | 3 Comments »

MRIS data, Average Sold/List Ratio: 98.6% or 92.2%?

Update: a Part 2 link is at the bottom.

MRIS stands for Metropolitan Regional Information Systems. They are the company that provides the Washington DC area MLS system for all Realtors. They also provide data to consumers and the press to reveal how the market is doing. The only problem is that the data is limited and can easily be misinterpreted without giving proper clarification.

When I first saw these numbers, I was shocked that the zip code 22204 was able to get 98.6% of the list price. Only a drop of 1.4%? How is that possible in such a slow market?

So I set out to recreate the numbers and I finally think that I understand how they came up with their data. I don’t question whether the data is correct, I just question how it is presented.

I believe now that the “% of Asking Price” means the “% of the last and lowest asking list price to the sold price, excluding seller subsidies.” So if a house was initially listed at:

Hypothetical example:
$600,000 Starting Price
$500,000 Lowered List Price
$495,000 Contract price
$10,000 Seller subsidy (about average for 22204)
$485,000 Net (counting the $10,000)

= a 1% drop using MRIS’s data
= a 20% drop from the top number.

So if you were to include the subsidy and the starting price, the price drop would be almost 20% lower, yet this hypothetical numbers would be reported by the MRIS as a 1% drop ($500k to $495k).

So back to recreating the actual numbers from MRIS. (My Excel document is available upon request.)

I took all homes for the period of 7/01/06 to 9/30/06. I found 72. This number is off from their their 128, I’m not sure why.

From this data I was able to come very close to recreating their numbers (option 1 below).

1) % of Final list price was 98.4% (vs their 98.6%, no big deal).
2) % of Final list price MINUS seller subsidy= 96.8%
3) % of Original list price MINUS seller subsidy= 94.25%
4) % of Highest price (prior Realtor or listing#) MINUS seller subsidy= 92.2%

Using the $600k example from earlier, #3 takes the starting price of $600k and counts the $10,000 seller to make a final closed price of $485,000. However #4 above takes into account if the listing had a prior agent with an even higher price. So with #4 I took the starting price of a house regardless of how many Realtors had tried to sell it, or how many times one Realtor relisted it to reset the Days on the Market.

So while the MRIS data is not necessarily incorrect, the public should know that it does NOT mean that the average house in that zip code only dropped 1.4% from what the seller started with. That number is probably closer to an 8% drop once you count the seller subsidy (which was near 0 a couple years ago) and the initial starting price.

Recalculated drop for 22204: 8% (92.2% of the starting list price, including subsidies)

Conclusion: Don’t assume information that is given to you is correct, question how the numbers are compiled.

Update: I have a Part 2 on this posting: Part 2: Illegal MLS Fudging. 20% Chance You’ll See 1.

And make sure you see the 22 other blogs on shady agent tricks and things that buyers should be aware of.

– Written by Frank Borges LL0SA- Broker/Owner

Videos at
Keywords: DOM DOMM DOMP CDOM Days on the Market, Housing bubble? Arlington, Alexandria, MLS MRIS, search, Homes, Real estate, Virginia, Alexandria, 22201, 22314, Fairfax Va, DC Realty, Realtor

  • 12
  • December
  • 2006
Posted in Buying Advice, data manipulation, Shady Agent Tricks | 3 Comments »