Industry News

Represent REOs with caution

Dirty little secrets lurk in lender listing agreements

Learn the New Luxury Playbook at Luxury Connect | October 18-19 at the Beverly Hills Hotel

Up to 50 percent of all transactions in many markets are foreclosures, short sales and REOs. Like it not, these types of transactions are part of the landscape. While you're busy protecting everyone's interest, are you taking the necessary measures to protect yourself and your brokerage? Back in the early 1990s, I specialized in representing REOs (properties that the banks had taken back in foreclosure). At that time, my role was to do essentially the same thing that I did with every other seller. The banks sent their representatives to regularly inspect the property; they were in charge of making any repairs; and they paid for the utilities. In 2008, this is no longer the case. In their enthusiasm to list multiple properties from a single lender, agents often agree to pay for the utilities and repairs out of their own pockets. When the property doesn't sell or the lender goes out of business, the agents are stuck footing the bill. Many agents who represent REOs are als...