Behind the Sarasota Herald-Tribune's prize-winning flipping series

Michael Braga has been a reporter at the Herald-Tribune since 2001, and has covered real estate since 2004. He is also an assistant business editor. Matthew Doig has been a reporter at the Herald- Tribune since 2001 and has been on the newspaper’s investigative team since 2004. And Chris Davis is investigations editor at the Herald-Tribune, where he has worked as a reporter or editor since 1997.

Doig talked Monday to Talking Biz News about the series. What follows is an edited transcript.

1. How did the idea of looking into real estate flipping come about?

Michael Braga had been doing a series of flipping stories on one group of local people in 2006 and 2007. Chris and I saw his stories and there seemed like there was something more there, and Michael knew there was something more there, but he didn’t know how to tell it bigger. He kept pressuring us to sit down and figure out a way to tell it statewide.

Braga wouldn’t quit. He kept scheduling meetings. He was relentless. We agreed there was more going on, but we couldn’t figure out how to do it. So one day at lunch, we decided to ask the property appraisers if we could get the sales data.

2. What were the first steps?

Each county keeps sales data in a different format. We had to pair the sales. We were trying to find a way to show when one property was sold more than once, and there was no central repository for that information.  But Braga was relentless, and we knew it was a big story.

We got all of the sales, 18 million-plus, and started whittling that down into a manageable data set. We got that down to about 55,000 sales, which was any type of property sold more than once in 90 days or less and that went up by at least 35 percent in value. So then we had something we could look at.

3. How hard was it to sift through the real estate transactions to find good examples?

It wasn’t that hard. We had examples of houses sold for $100,000 and then sold eight months later for $300,000 and then foreclosed on later. The good examples weren’t that hard to find. But it’s boring to read that Property A sold for this amount on this day. So we tried to find good examples to highlight the trend.

4. When did you and the other two reporters realize that you had a good story?

Before we even figured out a way to do it. Once we started unraveling the local transactions we knew it was really good. When you start telling the story of individual people, the top real estate broker, these were people in the community that people recognized. That was eye popping.

5. How hard was it to get some of the people involved in these
transactions to talk about what they were doing?

That always surprises me, the people willing to talk. If you do your homework beforehand and then go to people, it’s a lot harder for them to hang up on you and ignore you. We had done so much research and we knew the market and the story before we did the interviews. You’re calling these people up and talking to them about their world, so it’s easier for them to talk.

6. How much of the story did you share with regulators before
publishing to get their response?

We didn’t really share much of anything. We had made some attempts to get the FBI’s interest, and they seemed interested. We didn’t know at the time that they were working on their own case. But nobody was really interested in sitting down and horse trading, which would have been helpful.

We were out on a limb. We were calling these guys bad guys before the cops were calling them bad guys. Regulators and law enforcement were not jumping on board.

7. The concept of flipping in real estate is well known. Why not report this story three or four years earlier when it was in full bloom in Florida?

That was the biggest criticism we got in the comments section after it ran. But it would have been impossible. It wasn’t until the foreclosures started coming that we could connect the dots. In 2005, nothing was being foreclosed. Michael did some stories that there were deals that were not arms’ lengths transactions.

8. What’s been the effect of the stories after publication?

The market was crap when the story ran. It’s a little better, but I don’t think it’s changed. The overhwlemening response from the readers was positive, that we were exposing this practice and naming names. But any change will depend on the banks.

9. Have you or the other reporters gotten more tips about speculative strategies in real estate since its publication?

Real estate is king in Sarasota and pretty big in Florida. Chris and Michael followed up a couple of months later on short sales fraud. At the time, that was under the radar.

10. What’s your advice for a business reporter looking into whether speculative flipping was occurring in their state?

One thing that helped us is that we had somebody who had an uncanny knowledge of the market, and that’s Braga. His beat is real estate, and he knew all of the local players. Basically, get ready to do a lot of data work if you want to the statewide story.

But if you want to do it locally, you want to take a look a closer look at the big players.

11. Is there anything you and the team would have done differently in hindsight?

I wish we had come up with a way to do it earlier, although the timing worked out well. There have been times with big data projects where we could have cut a month. But once we figured out a way to do it, it all came together pretty fast.

Chris just said we were learning on the go, so there were some things that we thought were important, but they really weren’t. This one, I don’t know if I would change anything.