Landsharks

Years ago neighbors decided to sell their house, garage and four acre lot. The day they closed, the buyer flipped it for twice the original price. Yes they used a RE broker and a lawyer. My question is how would you prevent this from happening to you?

I guess they sold it too cheap! They should of gotten more appraisals.

There was someone on here last week upset about having to spend money on an appraisal. This is an example of where that money would have paid off!

Too late. Get good realtors or help to set the price at market value .

A farm was sold the guy who bought it measured it found out it was five acres bigger sold it a couple days later made a nice profit

I don't think you can. Owner sold it. Then new owner sold it. Nothing illegal.

By having some clue as to what it was worth. I'm sure they didn't by God pay some coyote appraiser his outrageous fee, and they got what they deserved.

Get a RE broker and a lawyer. Nothing you can do legally to prevent it.

Had a older lady tell me she wanted to sell her place and move to town. Her husband had died about 5 years before. The place was 160 acres with a old white two story farm house on it about 4 miles from town. She had talked to a realtor about selling it and he said it would not bring very much that far from town (His dad and him owned quit a bit of land in the area). I told her don't get in a hurry, put a price higher than you think you can sell it for.

What do you think is the wrong doing here? If I sell something, anything, and I agree to the terms, I have no say in what happens to that sale item once it becomes someone else's. If you sell me corn, or cattle, or whatever your ag venture is, if I am not the end user, you know I am going to resell for more. Does it really matter what that more is? When they closed, it was the buyer's house to do with as they pleased. They could have bull dozed it. It is no longer the previous owner's property. They have no say and should have little care.

Sorry. My two cents.

To have sold that property so quickly the "Landshark" would have had to have a client looking for such a property. As an individual you just wouldn't have the ability or resources to have gotten that price. You never know if he hadn't snatched up the property it might have sat on the market a long time.

I'd find someone that knew what they were doing to price the place to start with.

LOL, " good realtor" that's like saying "Honest Realtor". I have friends in the biz, and wouldn't give them any work - ever.

Here's an example of that in this town. I'll refrain from comment for personal reasons. All legal, but there's more to it than that.
Local Farmer

I agree.

When our daughter was Office Manager of a real estate title company in Washington DC, first thing one morning she closed a client on a piece of property as the buyer. Just before noon, she closed again with him as the seller. The client put $230,000 in his pocket in the process.

Perfectly legal. Once the seller closes, it's the buyer's property to do with as he pleases, even resell within hours. Not much different than me walking into a parts store, special ordering a part, and the counterman ordering the part from a wholesaler.

Get a couple of appraisers

I don't proclaim to know much about buying or selling real estate. But from the little I do know, here's what I'd do.

First I'd do some online research - looking at local realtor's listing prices for similar properties in my area to get a ball-park idea of value.

Could also ask auction companies to give you a valuation.

Then I'd make sure I got my property appraised by more than one realtor to get an idea of values (seems many around here do not charge for that... in hopes that you will list your property for sale with their company). I'd say check with 2 or 3 realty companies.

PLUS I'd check with my bank - they should have a department that deals in real estate... if not, then check with an Ag-specific lender, even if you have to pay them to do an appraisal.

Purely for the sake of example:
I'd rather pay $3,000 for a legitimate appraisal... than lose $30,000 dollars because I didn't know what my property was worth and sold it far below its value - leaving the buyer to "flip it" and make a large profit. (I'd want that extra profit to land in MY pocket, NOT some else's pocket.)

Bob, I had a business that worked with Realtors for over 25 yrs. And I could write 2 or 3 books on real estate agents who were so crooked they couldn't walk strait. Only thing they cared about was the all mighty commission! It sounds to me like this "deal" was done by some "Inside" dealings.Maybe there never was an appraiser, and I'd bet the whole deal stunk from the beginning. Just my .02 cents worth. Sad. Jim in N.M. PS My email is open.....

My dad was sitting in a coffee shop and somebody mentioned land bringing $1,000/acre (SW Mo about 2005). He says "if it is I've got some for sale" and he subsequently agreed to sell 100 a for $100,000. When I found out a few days later he was laughing at how much the guy was going to pay. They had not made the deal yet, and I begged him to get an appraisal. He was too sure of himself and the buyer doubled his money within a couple of months. The folks have both died now and my brother and sister didn't think what what was left would bring much. We got an appraisal and it appraised for more than three times what they thought.

Realtors will tell you what they want to list it for, and it is usually high, but not if they have a buddy that wants it. Certified appraisals are more trustworthy and the few hundred dollars they cost are what you need to pay to avoid a mistake. Just the cost of doing business.

I'm not sure I understand what the problem is here. He sold the property and then the buyer sold it for a profit. When we sell our corn to the elevator, do they in turn sell it for the same price? NO, they sell it for a profit. That is called business. A fair market value is described as when a buyer and seller arrive at a price acceptable to both. Appears to me that that is what happened here.

This is what happens if you have only one bidder.

Now the real estate agent normally works for the seller, and should have advised the seller that their price was well below market. But ultimately if the seller agrees to sell at an agreed-to price, the agent can't stop the sale.

I suspect there's more to this story than you've let on. What motivated the neighbors to sell in the first place? People don't just wake up one morning and decide to sell their home.

Lots of times a property is bought up at an auction and brings highest bid. Then it is divided up and resold in smaller pieces allowing the new owner to make money on it. Many times these places were bought by realtors just to split up and resell. It takes money to make money !

Don't answer the door like Jane Curtain did!

(quoted from post at 04:58:19 12/30/16) I'm not sure I understand what the problem is here. He sold the property and then the buyer sold it for a profit. When we sell our corn to the elevator, do they in turn sell it for the same price? NO, they sell it for a profit. That is called business. A fair market value is described as when a buyer and seller arrive at a price acceptable to both. Appears to me that that is what happened here.

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Yes, you are right, it is fair market value for that parcel for that moment, in that spot. A few days later after the moment and in any different spot, the true market value is seen. You are perhaps the only person on the planet who would be willing to call it an enduring true market value.

> Lots of times a property is bought up at an auction and brings highest bid. Then it is divided up and resold in smaller pieces allowing the new owner to make money on it. Many times these places were bought by realtors just to split up and resell. It takes money to make money !

Sounds like the auctioneer wasn't doing his job.

When we sold a half section of farm ground, the auction company split it up into three parcels. Bidding started out for each individual piece. Once the auctioneer had a high bid for each parcel, that established the minimum bid for the entire half section, or any combination of the three individual parcels. Once the bidding was done, the entire half section was sold for about three times the total bids for the individual parcels.

This method has been fairly standard for the past twenty years; auctioneers are able to use a computer program to automate the calculations. If a property can be easily subdivided for auction, it's inexcusable for an auctioneer to sell it as a single parcel without getting bids on subdivided parcels. All that does is guarantee that only bidders who have enough money to bid for the entire parcel have a shot; bidders who can only afford a portion of the property are shut out of the bidding. The big loser is of course the seller, but the auctioneer is also cheating himself out of a bigger commission.

I have also known people who refuse to sell to a "developer". Their buyer, however has no qualms about that and may make a tidy profit from the broader market of buyers.

I bought a house out of foreclosure one time which had the stipulation from Fannie Mae (IIRC) that I could not resell it within six months. What? Were they trying to encourage only owner occupants to buy? And with their other terms it was going to be all but impossible to get a loan (funds on deposit before they made the decision to make the sale or not). So I put the money up, got the house, rented it, and sold the house to the renters in six months and one day. Hoo boy. Government programs.

So far this thread is mixing up some important terms. The rules do vary from state to state, because most laws governing land transactions are state laws rather than federal. Here is my take on it, based on Wisconsin law.

Before you sell, get informed about recent land sales. Ask neighbors, ask lenders, ask real estate agents, and verify any suspicious answers with the county's register of deeds office. Be an informed seller before you tell anyone you are interested in selling your holdings.

Get the property appraised by a licensed, experienced appraiser. Before you hire an appraiser, ask how many farms they appraised last year. If the answer is zero or one, keep looking for an appraiser. Ask what they charge, and how long they will take. When you get the appraiser's report, go over it with them until you understand what comparable farm sales were used in their report, and how they calculated the final number.

Next, I would consider hiring a Realtor. I know, not every real estate agent is honest. It's very much like hiring a lawyer. You have to find a good one. Start by asking how many farms they have sold in the last year. If the answer is zero or one, keep looking. Do not share the appraisal yet. Request the agent give you their estimate of list price. If they are too high above the appraisal, it won't sell, and if it does sell, the buyer may not be able to get financing. If the agent's list price is too low, the agent may be uninformed, or may be looking for an easy sale. Insist the agent show you the comparable property sales they used in developing they proposed list price. Compare their list of recently sold properties with the appraisers list. Ask what services they provide, what advertising they will do, and how long they think the property will be on the market. Ask how they plan to communicate with you, like how many call they have on the property each week, and the status of any interested buyers. Decide whether each agent is well informed, and possibly worth doing business with. Keep going until you get at least 2 qualified agents that you feel you could work with. Discard anyone that is just pushing you to list your property.

You can sell your property yourself, but its a lot more work. You will need to plan and arrange advertising, and will need a good lawyer who is experienced in farm tranactions. Incoming offers can be complicated, and counteroffers need to be precisely written to protect your interests. Some of those offers may be written by one of those real estate agents that you chose not to list with.

Sorry to rattle on, but as some of the other posts show, there's big money changing hands, and you only get one chance to do it right.

Yes they do that too. Does not mean that you get top dollar at an auction that day. Still get bought up by speculators. Some places though get sold as one partial because the owner thinks it won't get split up.

If you sell your house for half what it is worth you screwed up. If the buyer knows of one person who is willing to pay twice the market rate then he's getting paid for what he knows - you can't fault him for that.


There's not enough to the story to know what happened. I know if a neighbors place was for sale for half what it was worth I'd buy it in a second.

When you get an appraisal LOOK AT IT! They should have comparibles with addresses and dates of sale. Compare what you have to what they have listed. If your appraisal was written by Suzy housewife who knows how insert pictures on a Word document but no real experience in real estate you should know enough about what you have to correct or discard the value. For farmland you are selling it shouldn't take much.


The guy that owned the land across the road from me was a real moron. He had been asked by several neighbors over the years if he would sell it (I know I asked him two years ago) or if he ever decided to sell it give them a call. He lived in town and had inherited from his wife's family - rarely even looked at it. It was in CRP and the neighbors burned it every year for him along with theirs. He repeated the same line to everyone - I'm giving it to my kids. Last spring he walked into a real estate office to list it. He never even made it out the door. The realtor and her husband bought the land for about 1/3 the value. No neighbor even knew it was sold until the legal notice came out in the paper. He got $1500 an acre for land and he had to pay back the CRP payments. The land next to it sold for $1750 an acre in 2002 - land a half mile away from it sold for $4000 an acre earlier that year. The "licensed" realtor screwed him - but he allowed it.

I'm just saying if you contact one they will be one appraisal and give you some idea. You don't have to use them.

My question is how would you prevent this from happening to you?

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This was the question the OP was asking. He wasn't accusing anyone of any wrongdoing like most of you assume.

How would you prevent this from happening to you? YOU DON'T LET IT. Simple as that.

Sale prices for property are PUBLIC KNOWLEDGE. There are online resources like Zillow that will show you for free what a property is valued at or has sold for or is for sale for. You can get the information from your county courthouse.

The only thing I can figure happened in this case is the people either needed to get out in a hurry, or they were elderly and taken advantage of.

Folks, if you've got older parents and you have any doubt of their decision-making abilities, make sure you are there standing over their shoulder to ensure that they're not getting a royal screwing from some shyster. If you can't, find someone who can.

As for anyone with the wherewithal to make their own conscious decisions, a fool and their money are soon parted. Have no sympathy for them.

Thanks. Lots of great answers. I purposely kept you naive of the details because the sellers were naive. You also had the luxury of knowing the outcome. My intent of the post was a "what would you do"?

That is correct. Well said.

Backroom deal with the realtor

Oops! "What would you do to prevent this"?

I'd be embarrassed enough to shut my mouth and hide my face for being made a fool.


As for anything else - not much you can do unless you can prove the realtor - as a paid agent of the seller - failed to act in the seller's best interest. If the buyer just knew a person that was willing to pay double that's his business and no business of the original seller. If the realtor misled the seller for their own financial gain a person COULD make a case against the realtor but I have a feeling that would be hard to do. There is nothing to be done with the buyer.


Not enough information.

A few years ago I was selling one of my parents properties. While talking with the realtor, as she did the walk-thru and suggested asking price, she turned to me and said "I want you to know that I will be representing the buyer in any transaction." I told her "okay, so the buyer can pay your comission when the house sells." She could not understand. I had to just ask her to leave.

"I'm not sure I understand what the problem is here."

The problem is that the agent has a legal (fiduciary) duty to act in the seller's interest. If the agent had done his/her job the seller would have gotten the fair market value for the property.

The same thing happened to a neighbor where I lived several years ago. Elderly woman listed her house with an agent, agent quickly found a nice young couple who loved the house and offered the price suggested by the agent; turned out the young couple was the agent's daughter and son-in-law and the price suggested by the agent was less than half what the house was worth.

There are honest real estate agents, but too much money is changing hands to trust them.

What makes everyone this someone was dishonest? The farmland I own has been appraised as farmland, prime recreation land and development land. 3 different values. If I choose to sell it as farmland I will get the least amount. Also you get people like my neighbor. When her husband died she wanted to move back home. She went for a short sales. Now I talked to her before she sold and she knew she was looking a 1/2 value for a quick sale which is what she wanted.

So just because the buyer flipped it the same day for a profit doesn't mean that anything shady took place. It may have but then again not.

Rick

I don't understand that any real estate agent will tell you they ultimately represent the seller not the buyer as the seller is paying them.

I agree. That's why I showed her the door.