Since the topic of fraud received so many comments, I decided to stay on that topic for a series of blogs. This issue affects all of us and it is important to fully understand this issue. I recently had an investor with two deals under contract in Reno, Nevada. In each case (two different listing agents) the listing agent came back and stated that THEY (the agent) could not accept the offer. This threw a red flag to the investor so he inquired further.
It turns out that in each case, the listing agent contacted NVAR and their general counsel indicated that this type of transaction was fraud!!! The investor asked me to contact NVAR. WELL….I had a pleasant and professional conversation with Sue Saunders, general counsel for NVAR. Her “official” position is that whenever a property is purchased and then re-sold in less than 30 days, it is fraud!!! I asked her to justify her position with my long winded soliloquy about 29 days is fraud but 31 is not?? She replied that she cannot respond to the 60 + calls per day that she receives on this topic so she has a blanket policy. She does not even hear the facts of any particular case.
This is troublesome on many fronts. First, the listing agent should not be unilaterally deciding that this is fraud. It is arguably a breach of duty to the client. Not to mention a deal killer. Additionally, such behavior will result in investors disclosing less and that it legally permissible, but unfortunate. They simply will not state their intention. Also, this position is in NEVADA – the hardest hot state in the union. Killing deals in Nevada is not a good plan. In many, many cases, there are willing buyers and willing sellers but the deals are not being consummated because of the subjective opinions of a few -opinions that are not based on a thorough review of the facts.
Fraud is a legitimate concern for all of us. However, knee jerk, emotional reactions are rarely the best options either.