Jul102013

Las Vegas: a wretched hive of realtor scum and villainy

All characters appearing in this work are fictitious. Any resemblance to real persons, living or dead, is purely coincidental.

As many of you know, I went out to Las Vegas to purchase rental homes. Back in August of 2010, I wrote the post Buy Las Vegas real estate where I made the case for buying undervalued homes and holding them for cashflow and apprciation. Not long after that, Wall Street also came to believe this was a good idea, and the REO-to-rental business model took off. The activity of investors like me and the Wall Street giants helped form a bottom in the Las Vegas housing market and other markets across the country.

To buy a large number of homes, renovate them, and either flip them or hold them, I needed to form business relationships in Las Vegas. Jacki, My Lieutenant out there, has known my wife for over 20 years, and despite the occasional mishap, she has been reliable and trustworthy. We’ve had contractors come and go, but we’ve used one title company for four years, and most of the professionals we’ve needed to rely on have been adequate to the task. Unfortunately, I haven’t had the same success with the realtors out there.

If it was just one bad apple, I could ignore the problem as bad luck. But when three different realtors go to outrageous lengths to cheat and steal, it makes me jaded on the whole profession. Perhaps I am predisposed to judge realtors harshly. Everyone knows I think their association is horrendous, but when working with agents, its the character of the individual that matters. I have worked with Shevy for over four years now. I’ve consistently found him to be honest, moral, and deeply conscientious about ethics. I’ve met many other agents whom I admire and respect. The three you’re about to read about are not among them.

Geke Dramaqueen

Geke has known Jacki for 15 years, and he’s been an agent for over 20. When I asked Jacki for a reliable agent I could refer buyers to, she recommended Geke, a nice and personable man, but a bit emotional and overly dramatic.

I explained to him that I had many potentially interested buyers that read my blog, and I wanted to find a trustworthy agent who I could refer people to. Further, I expected to be paid a referral fee on any closed deals. He wrote me a nice email thanking me for the opportunity and promising to pay a referral fee at a stated amount.

Over the last few years, I’ve sent several potential buyers his way. As the inventory dried up, I stopped pushing the Las Vegas investment opportunity because it didn’t do any good to get everyone excited about a product nobody could find, so the lead flow dried up too. I didn’t hear from Geke for a long time, so I assumed the investor work was done.

As it turns out, one of the investors I referred to Geke did buy a house. The only reason I found out was because the investor asked Jacki to help him find a property manager. When Jacki asked Geke about the referral fee, Geke replied that he didn’t owe one because it was not one of my investors. I forwarded the email from this investor that I was copied on from two years ago with the subject line that said “Referral from Larry Roberts.” It was tough to deny.

Not willing to admit defeat, he then responded that he had no agreement with me to pay a referral. WTF? Why deny he was one of my investors if we didn’t have an agreement? (He knew we did.) I went back into my email archives and pulled out the email where he succinctly stated we had an agreement. When confronted with that, he finally relented, whined like a drama queen about how little he was going to make, and offered to send me a check.

For as ridiculous as that ordeal was, at least Geke has a conscience and a sense of ethical conduct. He may have tried to dodge his responsibilities, but when his nose was rubbed in it, he finally did the right thing. Not so with our next two realtors.

Shitforbrains Brazenthief

An intelligent thief will make some efforts to cover their tracks. Shitforbrains Brazenthief is both shockingly open and audacious about her theft.

On one of the houses my parents purchased in Las Vegas, at the last minute the buyer’s agent who we were going to use pulled out. We had arranged a $1,000 flat fee with the rest refunded to my parents out of escrow (this was better than the 1.5% they would have gotten back from a discount brokerage).

At the time, I couldn’t use my license to do this, so we had to find another agent. Jacki had known this agent for several months who wanted to be Jacki’s partner and handle property management and some agent work. This seemed like a good opportunity for her to get involved.

We explained the deal to her, and she readily agreed to make $1,000 for filling out a few papers. Shitforbrains was going to prepare the HUD with escrow instructions including the refund to my parents. A week later, my father is looking over the final HUD, and sees a 3% commission on the buy-side, so he asks me why he wasn’t refunded some money which would have reduced his down payment. I thought he had been.

When Jacki and I looked into it, we found that Shitforbrains Brazenthief paid herself a full 3% commission rather than $1,000. When confronted with this, Ms. Brazenthief replied that was never the deal. WTF? Never the deal? Does Shitforbrains frequently get full commissions from buyers she’s never worked with and doesn’t know?

I blame myself. If I had my paperwork processed then, I could have been the buyers agent and refunded the entire commission. I felt bad enough about them having to pay $1,000 extra, but a full 3%?

It gets worse.

Shitforbrains asks my dad for a meeting a few days later. We wonder if she has decided to do the right thing and fork over her ill-gotten gains. Nope. Shitforbrains had the temerity to ask my parents if they would sign on with her to manage all their properties. So after stealing my parents’s money, Shitforbrains Brazenthief asks if she can get more money from them by managing their properties.

Is she insane? I can’t believe she had the nerve to ask. I give my father Kudos for not hospitalizing her. I might have.

Shitforbrains never did hand over the money. She betrayed me, Jacki, and my parents. Since our instructions to her were verbal, and since my parents didn’t catch it when they reviewed the preliminary HUD, even if they wanted to bring a proceeding against her, Shitforbrains was going to get away with it. Knowing that is probably what made her so audacious and shameless.

I can’t find any redeeming qualities in Shitforbrains Brazenthief. She is without morals or conscience. Shitforbrains is a realtor.

No’ethics Docuforge

When I first began in Las Vegas, I was buying properties at auction, fixing them up, and flipping them. Since we were doing such high volume, Jacki needed help from an agent to process the offers and counteroffers on all our properties.

For the three or four years prior, Jacki had gotten to know No’ethics Docuforge through her church. This woman was active in Bible study, and had what appeared outwardly to be a vibrant real estate business. She had been an active agent for over 25 years. Based on those credentials, she seemed like a good candidate.

Jacki arranged for her to be our agent for $1,000 per transaction. Since we were doing such high volume, and since she didn’t have to do anything to get the work, the deal was appealing to her.

Unbeknown to us when we started, all was not well for No’ethics financially. The crash in Las Vegas real estate had nearly wiped her out financially, and she was on the edge of bankruptcy. When she started making demands on Jacki for more money, we explained to her that we could find other agents who would handle our listings for even less (we ultimately went to Geke Dramaqueen for $500 per listing for a while). No’ethics didn’t want to hear it. We decided to move our business elsewhere.

That’s when it got interesting.

When we informed No’ethics we were cancelling our listings and moving our business, at first she filled out the paperwork to comply with our wishes, but then she changed her mind. She wasn’t going to release our listings. WTF? Who does that? What agent would want to work with a client who wants to fire them?

It’s not like she spent any money on advertizing or promotion on our properties. Basically, she just wanted the money — no, she needed the money.

It gets worse.

No’ethics didn’t just want $1,000 per listing, she wanted a full 3% (where have I seen this drama before?). When Jacki pulled our contracts with her, they had all been changed to show a 3% commission rather than $1,000. So how did that happen? This realtor changed the terms and forged the signatures on the contracts.

Jacki had been using Docu-sign an online document signing program at No’ethics’s office. No’ethics hacked into Jacki’s account and created a number of contracts showing a 3% commission rather than $1,000. No’ethics Docuforge originally claimed Jacki filled out these contracts.

Fortunately, each of these is timestamped, so we knew exactly when this happened. Unfortunately for No’ethics Docuforge, just by chance she picked a time when I was in a meeting with Jacki in Las Vegas with another witness who happened to be an officer of the court (a Las Vegas police officer who runs a property management business part-time was soliciting our business). We could prove Jacki didn’t create those contracts.

When confronted with fraud and forgery, how did No’ethics respond? A wise person would have quietly settled for what we offered and hope we didn’t sue her, report her to the Department of Real Estate and the local district attorney. That’s not what she did. No’ethics Docuforge claimed Jacki had stepped out of our meeting, called her, and authorized her to make the contract changes. Apparently, she put this phone conversation on a speaker phone and even had a witness to the call (a friend willing to commit perjury). Really? Does she often put private phone conversations with clients about financial matters on speaker phone for others to hear? And what about the fact we were witnessed being in a meeting with an officer of the court? (Her transparent lie prompted the DRE and DA not to pursue proceedings against her due to “reasonable doubt”.)

Despite the overwhelming evidence my attorney recommended we settle. The cost of taking No’ethics Docuforge to court would exceed what I could reasonable hope to recover, particularly since she was on the brink of bankruptcy and had no unencumbered assets. We settled with her and ended up paying about $2,000 per property, plus my attorney’s costs. I came out under 3%, but not by much. Further, No’ethics Docuforge was rewarded for committing fraud and forgery.

It still pisses me off when I think about it.

Truth or Fiction

I started this piece with the fiction disclaimer. Obviously, I have changed the names, not to protect the innocent, but to protect myself from lawsuits from the guilty for potentially defaming their “good character”. I know who they are, and I know what their character is all about. I can’t tell you who they are, but now you know what a Motley Crew of realtors operates in the Las Vegas real estate market.

So how much of this post is truth, and how much is fiction? I’ll never tell. I’ll let you ponder how creative a fiction writer you think I am.

Countrywide was awful to the end

Countrywide Home Loans was one of the largest and most aggressive subprime lenders. Toward the end, when Mozilo was trying to drive up his stock price to cash out, they made loans to just about anyone. B of A finally bought them out and ended up with a bigger pile to toxic crap than they were counting on.

The former owner of today’s featured property purchased on 6/11/2008. I didn’t realize Countrywide was still around then, but they were listed as the originating lender. The credit crunch of August of 2007 prompted lenders to tighten up their standards, severely and abruptly. Countrywide still managed to make bad loans after the credit crunch. It’s probably one of the reasons they imploded.

The former owner put a large amount down, and the bank only paid $329,630 at auction back on 8/20/2012. If they get their asking price, they stand to make a hefty sum on the auction flip. A few more of those, and people will start to question whether the banks are foreclosing for profits and benefiting from their borrower’s misery.

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[idx-listing mlsnumber=”OC13129206″ showpricehistory=”true”]

7436 EL CENTRO Way Buena Park, CA 90620

$439,900    ……..    Asking Price
$390,000    ……….    Purchase Price
5/11/2008    ……….    Purchase Date

$49,900    ……….    Gross Gain (Loss)
($35,192)    …………    Commissions and Costs at 8%
============================================
$14,708    ……….    Net Gain (Loss)
============================================
12.8%    ……….    Gross Percent Change
3.8%    ……….    Net Percent Change
2.3%    …………    Annual Appreciation

Cost of Home Ownership
——————————————————————————
$439,900    ……..    Asking Price
$15,397    …………    3.5% Down FHA Financing
4.40%    ………….    Mortgage Interest Rate
30    ………………    Number of Years
$424,504    ……..    Mortgage
$119,079    ……….    Income Requirement

$2,126    …………    Monthly Mortgage Payment
$381    …………    Property Tax at 1.04%
$0    …………    Mello Roos & Special Taxes
$92    …………    Homeowners Insurance at 0.25%
$478    …………    Private Mortgage Insurance
$0    …………    Homeowners Association Fees
============================================
$3,076    ……….    Monthly Cash Outlays

($515)    ……….    Tax Savings
($569)    ……….    Principal Amortization
$25    …………..    Opportunity Cost of Down Payment
$130    …………..    Maintenance and Replacement Reserves
============================================
$2,147    ……….    Monthly Cost of Ownership

Cash Acquisition Demands
——————————————————————————
$5,899    …………    Furnishing and Move-In Costs at 1% + $1,500
$5,899    …………    Closing Costs at 1% + $1,500
$4,245    …………    Interest Points at 1%
$15,397    …………    Down Payment
============================================
$31,440    ……….    Total Cash Costs
$32,900    ……….    Emergency Cash Reserves
============================================
$64,340    ……….    Total Savings Needed
[raw_html_snippet id=”property”]