LIVE BLOGGING: Foreclosures: Can you take the risk out of "Lethal Listings"?

LIVE NOTES FROM FORECLOSURE WORKSHOP:
No Good Deed Goes Unpunished: Where’s the Risk?

Panelist: Harold Justman, Attorney-at-Law, Fimmel, Justman & Rible

Beware lethal listings agreements! The risk associated with selling REO properties is the product itself, and whether it is defective. 50% of REOs have defects. When you have a buyer who is unable to afford a mortgage, you have a property with substantial defects.

Risk of sale of a defective property is that a buyer sues. In recognition of property defects, lenders are requiring listing agents to be property managers.

Many Errors & Omissions policies does NOT cover risks associated with being a property manager, particularly defective proeprties.

Possible solutions: One large brokerage created a subsidiary to insulate their parent company from financial risks.

Another risk: Lenders wants to sell distressed properties "as is" and do not have to give a property condition report but listing broker does! Lenders putting all of the risk of disclosure on the broker! The listing agreement imposes a dury of disclosure.

Finally: Last paragraphs of Lethal Listing Agreements indemnify the lender.

If one of your foreclosure transactions ends up in a legal dispute, your attorney fees alone will wipe out any profit.

One way you can minimize your risk is by requiring the buyers and sellers to agree to binding arbitration.

What else are / can listing agents do to make sure foreclosure listings don't become lethal?