RISMedia sent out their newsletter today and the top story was Realtor Caught in Cash-Back-at-Closing’s Crosshairs.  The story is about a Realtor in St. Petersburg Florida who was caught in a transaction involving an inflated sales price to provide the buyer with cash back at closing.

Unfortunately, these deals are often overlooked and don’t seem to be such a bad thing to most people – even those that know that they are fraudulent.  The big issue in this case isn’t the fraud – it is the Realtor’s choice to argue ignorance as a defense.

The cardinal rule in almost every state’s Real Estate Commission and Association of Realtor defense tactics playbook is "Ignorance is no excuse".

This case begins innocently with our Realtor listing a property.  There were lower offers but nothing near the asking price.  Sounds Familiar, eh?

After receiving a contract and asking the seller for a lower price, the Realtor then received an offer of more than $90,000 above the new lower asking price.  The offer was obviously accepted and headed to closing. After closing, the Realtor received an anonymous letter informing her of what had transpired with the cash-back "outside of closing".

While her defense is that an attorney and title company signed off on it so how could it be a problem to her… that really does not say much for her ability to see through the mess that was created in this instance.

The truth is that with all the problems in the industry and the massive efforts at least by the State of Florida to stem fraudulent real estate transactions – aka Mortgage Fraud.

My questions are:

• how would she NOT know to look at a transaction as such?
• How could she in good faith ask for a price reduction which should be based on professionally prepared CMAs, and then figure it was no big deal that an offer came in way over price? 
• why would she think that an appraiser would sign off on numbers that much higher than her own?
• Whether she was truly innocent or not, is justice served in this case if she goes unpunished entirely?

If someone wants to present themselves as a professional in the Real Estate and Mortgage Industries, they have to be prepared for those that do not.  In this case, the defense of Ignorance just should not cut the mustard. 

I hope she has a nice penalty of:

• 14hrs of targeted and tedious continuing education
• extrication of the commission over asking price
• and a 5,000 word essay on the subject in her future.

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David A. Podgursky, MBA
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