- February 12, 2010
- Posted by: Christopher Hanson
- Category: REO
You are a broker/agent. You are desperate for listings. The only kinds of listings out there are bank REOs. The bank wants you – as part of the listing agreement – to do things like get the property professionally cleaned, arrange for repairs, watch over the repair professionals to make sure they get the job done right and on time, tell the repair people what to do that will maximize the re-sale value of the property, take care of the landscaping, stage the property, etc., etc. Oh, and front the money necessary to do these things, and submit expense reports on a monthly basis for reimbursement.
What do you get in return? A listing agreement. Mind you, it’s not that CAR form listing agreement you’re used to. Nope. It’s the bank’s listing agreement. Remember, banks are NOT your friend. Also remember, to get paid, you must have a written agreement signed by the bank.
A bank will use its leverage to force you to sign a listing agreement that calls for you to do all these extra things, and more. When you do, you have now begun acting as an unlicensed general contractor. All costs (including reimbursements) must now be given back to the bank; and – thank you for selling it – but you get no commission. Why not? Because that commission was compensation for general contractor services.
Banks are NOT your friend. Don’t think it can’t happen to you. Especially when the bank is later sued for non-disclosure of that material defect it didn’t disclose, that you knew about, because, after all, you had it ‘repaired (but the repair job was done poorly, and the problem persists).
So what do you do here?
If you’re going to undertake property management services, get a property management agreement with the bank. Get paid for it. Make sure the bank hires general contractors. Get the bank to insure you for claims made against you for property management related claims.
Whatever you do, please, be sure that the ‘asset management company’ you hire as the property manager is really an ‘asset management company’ and not your unlicensed brother or friend.
Paying someone who doesn’t actually perform any services is a fraud, a breach of contract, and, potentially, a RESPA violation. Is it really worth it for a few extra dollars?