Industry News

Lenders stick listing agents with REO liabilities

Future-Proof: Navigate Threats, Seize Opportunities at ICNY 2018 | Jan 22-26 at the Marriott Marquis, Times Square, New York

SAN FRANCISCO -- With distressed and bank-owned properties now capturing a double-digit share of home sales in many markets, some agents and brokers are depending on listings from lenders to keep them afloat. But some lenders are crafting listing agreements that attempt to shift the risk that comes with sales of bank-owned homes -- including property defects and personal injury claims -- onto real estate brokers. A listing agreement that leaves a broker vulnerable to a lawsuit can consume the commissions from dozens of sales, real estate attorney Harold Justman warned during a panel discussion Wednesday at Inman Real Estate Connect San Francisco. "Some of these listing agreements are lethal, or have lethal provisions in them," Justman said. "You may have a knee-jerk reaction, and say, 'Oh boy, now I have 100 listings.' But a year from now, one lawsuit might wipe out all your profits." When a broker is sued, "legal fees are always bigger than (re...