A complaint I often hear since the housing downturn is how difficult some REO brokers are to deal with. They are unresponsive, unhelpful, uncommunicative and difficult to transact business with.
I’ll be the first to agree that some REO agents do suck, but I’d like to shed some light on another serious problem in the “real estate owned” and distressed property world. If this issue were properly addressed, it would would dramatically cut down on the headaches and overall angst that go with brokering REOs, short sales, HUD and other distressed properties.
Ready? Here goes:
Many buyer’s agents suck worse.
They stink. They excel at suckitude. They soar to great heights at exploring the depths of crappiness. They really, really suck.
Here is what I mean: REO and distressed property brokerage is a different universe from the world of scented-candle, lovingly staged, happy moves that encompass most (thankfully) of the current market.
In nondistressed sales, the process and procedure is known, predictable, and has principals and decision-makers from whom you can sit across a table.
In distressed sales, every lender has their own system, their own way of doing business, and their own process. Each lender has an asset manager or short-sale negotiator half a continent away, dependent on local sources for facts on the ground.
Listing brokers dealing with these asset managers have a laundry list of duties and responsibilities they have to fulfill to get their deals completed within various red tape-laden, serpentine systems seemingly designed by Satan and run by middle management staff who have all the empathy of a parakeet repeating orders from On High.
There is no flexibility. There is no exception. The Golden Rule applies: “He who has the gold (in this case, the bank) rules.”
My firm has two REO agents, and I have lost count of how many dozens of short sales I have listed and successfully closed. They aren’t exactly like an REO, but do have the same rigid process and out-of-state institutional decision-maker in common. I have a first-row seat to this problem.
Unfortunately, in more cases than I can count, the agent representing the buyer of distressed property hasn’t a clue about how the process works. But instead of recusing themselves and referring the buyer to an expert, or enlisting the help of an educated and experienced collaborator, these agents cut their teeth in the distressed world on the backs of unknowing clients.
Their clients mistakenly assume that, because their agent holds a license, he’s qualified to expertly advise them. If they are lucky, they end up locking their rate too early or having an appraisal expire and require an update. Or the whole deal goes to hell because one of the agents in the transaction (guess which one) has no idea what is going on.
Article 11 of the Realtor Code of Ethics states in part:
“Realtors shall not undertake to provide specialized professional services concerning a type of property or service that is outside their field of competence unless they engage the assistance of one who is competent on such types of property or service, or unless the facts are fully disclosed to the client.”
When you have an agent who knows only the nondistressed process dealing with an REO or short sale, you inevitably get the same problem they had at the Tower of Babel. They are speaking a different language, with proper advocacy lost in the translation. Sadly, some agents that don’t know what they are doing often double down when the fecal matter hits the fan and then blame the listing agent for the problem. The consumer is none the wiser.
When I took the Certified Distressed Property Expert (CDPE) class, the instructor told us that the material would be of value even if we never listed a property because it would help us represent our buyers better. He was right.
I will be the first to agree that the REO and distressed system currently practiced by lenders is awful. Worse, we cannot fix it.
But two wrongs don’t make a right. Because the system is broken, an inexperienced licensee should not subject their clients to the risk of that agent’s lack of knowledge.
Buyer’s agents dealing with distressed property need to get educated, get assistance or get out.
J. Philip Faranda (@JPhilipFaranda) is broker and owner of J. Philip Real Estate with offices in Briarcliff Manor and Pelham, New York. The author of the Westchester Real Estate Blog, he is 2014 president of the Hudson Gateway MLS, technology chair for the New York Association of Realtors, and a member of Zillow’s Agent Advisory Board. In 2013 he was a finalist for Inman’s Innovator of the Year.