Keys Homes
Sunday, May 20, 2012
Reverse staging

By REGINA E. CORCORAN Special to The Citizen

Many of us are familiar with the practice of staging a house for sale. The goal is to present the home in its best light to obtain the best price possible.

Realtors can often make recommendations to help even the most modest of home sellers. Remove all the tchotchkes.

What is a tchotchke? According to the Urban Dictionary, it "can be pretty, sentimental or even occasionally useful, though it usually breaks easily if useful. If you are having trouble identifying a tchotchke, just look around your house or someone else's and whatever you see that a burglar wouldn't steal is probably a tchotchke.

Of course, Realtors are known for being very tactful. So they probably would ask you to consider "packing up your miniature ceramic cow collection. You have to sooner or later, you know. Get ready to move!"

Staging can include simple activities. The aroma of freshly baked chocolate chip cookies when the prospective buyers arrive is hard to dismiss.

It can be very elaborate and complex, too. Those selling a seven-digit home may hire a professional to accomplish the staging. Every last item in the house receives a strategic placement. They may employ every method from feng shui to behavioral sciences to the study of the effects of wall colors.

Reverse staging, on the other hand, is a new term applied to a type of mortgage fraud used in short sales.

The sellers need their lender to approve the short sale. As part of the process, the lender orders a brokers' price opinion, or BPO.

Even the lenders and Fannie Mae and Freddie Mac agree the BPO can be a part of the problem. They pay the agent very little. The definition of "very little" is dinner for four at Burger King. Real estate agents may conduct as many as 10 BPO's per day. In many cases, the goal is to get the listing. So the brokers certainly suffer from bias.

In an effort to get a low BPO, sellers try to make the dwelling look bad. Some of it may just be neglect or lack of funds. That's not necessarily an attempt to defraud.

Yet, in some cases, they may hide their ceramic cow collection and spread cow manure throughout the house.

Some sellers have deliberately damaged the property by poking holes in the drywall, for example. Removing doors from cabinets is kid's stuff. Some even remove the doors to the rooms.

Especially in our warm Florida climates, merely turning off the air conditioning and opening the doors and windows can produce a lively mold and mildew bloom.

Instead of warm chocolate chip cookies, imagine the stench of a refrigerator that was turned off for days? Then open the door on the day of the BPO.

What appears in the BPO report? "It's a dump. It's trashed. It's a haz mat house." Consider the effect it has on the opinion of value.

An investigation manager with Freddie Mac, Kathleen Cooke, also reports the BPO agents are sometimes compromised. They sometimes receive bribes from the facilitator (short sale negotiator), Cooke stated. Sometimes, the BPO agent may get and use comparables from the facilitator that support a lower value. Or the facilitator may supply a long list of repairs needed in the house along with the associated costs.

Fannie Mae and Freddie Mac, now known as the "Enterprises," can't take a joke anymore. They will be scowling if they learn the Realtor photos for the MLS listing taken only weeks earlier showed an attractive dwelling that was safe, habitable and functional.

Though Fannie and Freddie conduct post closing reviews and hire attorneys to prosecute fraud, some of their best information is coming from their tip hotline, 800-7Fannie, and their email address, mortgagefraud_tips@fanniemae.com.

What do you think?

Regina E. Corcoran, SRA, is a Florida real estate broker, state-certified residential appraiser and residential contractor. She is president of AmeriRealty Corp. and vice president of AmeriMortgage Corp. She can be reached at ReginaECorcoran@cs.com. Corcoran writes her column exclusively for The Citizen. It appears every other Sunday.

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