Dealing with Distressed Property Sales
Wednesday, September 17th 2014 9:23 am

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.

A complaint often heard since the housing downturn is how hard some REO brokers are to deal with. They are unresponsive, unhelpful, and difficult to do business with.

While I think we'd all agree that some REO agents are better than others, Id 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 pain that go with brokering REOs, short sales, HUD and other distressed properties.

Ready? Here goes:

Many buyers agents are worse.

They stink. They excel at badness. 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 moves that encompass most 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 statue repeating orders from On High.

There is no flexibility. There are no exceptions. The Golden Rule applies: He who has the gold (in this case, the bank) rules.

Unfortunately, in more cases than I can count, the agent representing the buyer of distressed property hasnt 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, hes qualified toadvise them properly. 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 pot because one of the agents in the transaction (guess which one) has no idea what is going on.

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 dont 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.

TAKE the Certified Distressed Property Expert (CDPE) class! The instructors say that the material would be of value even if you never listed a property because it would help you represent your buyers better. They are 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.

Two wrongs dont make a right. Because the system is broken, an inexperienced licensee should not subject their clients to the risk of that agents lack of knowledge.

Buyers agents dealing with distressed property need to get trained, get help or get out.

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