Fraud, a common practice?

Here is an every more common situation in the real estate industry as a whole. It has become almost "normal" in the Memphis area, but should be targeted as unethical at best and could be considered illegal. Don't get caught in this trap, as a buyer a seller or agent/broker.

QUESTION:

We had a listing for $319,900. It was reduced to $279,900 in the MLS. We received an offer for $279,900 which called for the seller to pay many of the closing costs. It was not accepted, and the buyers then raised the offer to $297,335 and asked the seller to pay $16,794 in closing. The transaction should have closed yesterday, but the lender wants me to go back into the MLS and put the list price as $297,335. Can I legally do that?

  ANSWER:

You are permitted to change the price in the MLS only under certain circumstances. The price in the MLS is set by the seller. There are only two instances in which the price should be changed in the MLS. One is where there is an obvious mistake, and the
second involves a change in market prices. For example, the home has been on the market for months and the seller decides to lower the asking price in order to possibly speed the sales process. The seller may also decide that he wishes to increase the cost of the home. The
key here is that the seller wants to increase the cost, and he does so BEFORE there is a contract on the home.

       If an entity (usually either a mortgage broker or an appraiser) requests that the seller's agent increase the asking price on the MLS in order to attempt to get financing for their client, and the agent does so, this may place the agent in a situation involving FRAUD against a lender. Therefore, you should only make changes to the pricing in the MLS in cases of obvious mistake or in cases in which the owner requests an increase or decrease in the price PRIOR
to a contract being in place. 

       [SOURCE: TAR's Legal & Ethics Hot Line Attorneys]

• Tennessee Association of Realtors

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