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April 27, 2005

Insiders' Game on 10th Street

78th StOne of our eagle-eyed readers happened to be browsing Corcoran when he noticed an unusual caveat in the description of a 3-story house listed in the South Slope for $999,000 by Nick Arnold: "Listing broker is a co-owner." His interest piqued, he hopped over Property Shark to dig a little deeper. Imagine his surprise when he discovered that the seller, 330 10th Street LLC, had just closed on the property in early March for $749,000. A 25% 33% price hike in less than two months? Maybe it's not quite as egregious as it sounds, since the $749,000 price was probably locked in several months before the close. But still, a look at the title history suggests that the LLC partners had to put down $172,270 in equity, so if they get their asking price, they would make a return of almost 150% on their cash over six months or so. Nice work if you can get it.
330 10th Street [Corcoran]




Posted by Brownstoner at 9:37 AM | Comments (9)
Categories: Properties

Comments

Does anyone know what the rules are for brokers at the major firms also engaging in principal activities? In the world of stocks, for example, a broker trading for his own account is highly monitored and subject to extensive restrictions...

Posted by: Brownstoner at April 27, 2005 11:30 AM

Wow. What a gem of a story. Great find!

Posted by: Bk Squeeze at April 27, 2005 12:39 PM

No such restrictions in real estate as far as I can tell. Another Corcoran broker, recently flipped her brownstone on 9th St, Park Slope, for around $2MM and she rep'd her own listing too.

Posted by: Sloper at April 27, 2005 1:31 PM

Actually, it's worse; it's a THIRTY-THREE percent hike.

Posted by: Erik Kennedy at April 27, 2005 1:41 PM

Sloper: Corcoran broker Zurek bought 464 9th St. in 6/2002 according to Propshark. Selling almost 3 years later I don't think falls under 'flipping'.
I believe a broker is obligated to disclose any relationship to seller... and of course a broker is going to be listing agent for own house.
As far as Mr. Arnold on 12th St. - on surface does sound fishy - But only if Corcoran were listing brokerage to begin with....anyone know if this the case?

Posted by: Pete at April 27, 2005 2:31 PM

It is clearly unethical (and illegal) for a licensed real estate broker to take advantage of an unknowing seller and buy a property for themselves below market. However, there are exceptions. For example, the broker discloses that the property is worth more but the owner is willing to sell it to the broker for an "all cash" no hassle quick closing. Or if the broker makes an honest good faith effort to sell the parcel at market price and then buys it for the best offer received less his/her commission. There are many examples of how a broker can honestly buy their clients listed property, however, the devil is always in the details. Basically, you need to know all the facts of each transaction in order to ascertain whether or not the broker is being ethical.
Anthony Orrichio
Lic. Real Estate Broker
Orrichio Anderson Realty, Inc

Posted by: anthony orrichio at April 27, 2005 11:34 PM

Thanks for posting, Anthony. As somebody who's in the biz, do you know if there's any way of determining who was the broker on the previous sale? Picking up an undervalued property in a hot market has got to be a tremendous temptation to brokers, and if there's no means of checking other than self-policing, how can you curb the practice?

Posted by: Anonymous at April 28, 2005 11:27 AM

I remember that 10th st. place - I thought it was really underpriced, it wasn't corcoran selling, it was a small real estate place, forget who. I wanted it but we don't habe 700K+!

Posted by: Anonymous at April 28, 2005 3:49 PM

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Posted by: rolling at August 2, 2005 11:01 AM

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