I have worked as an administrative assistant for the past 6 years for a very prominent real estate team in Gainesville, GA. Before the market crashed, the agent I worked for already had her foot in the door with the foreclosure business. When we started to see the downward sloping of the market we hit that side of the business hard by applying to every company we could find to become one of their listing agents. This was the best move and is probably what saved me a job. As things progressed, foreclosures were primarily all we did and I don’t think that other agents out there truly understand what it takes to be a foreclosure listing agent. It is a lot of work and it is hard work. When I worked there I had so many agents get snippy with me and make rude comments about the agent I worked for and others in the industry and it always got me so upset. So I figure I would write about all the responsibilities of a foreclosure listing agent.
1. On the first Tuesday of every month is when the houses are foreclosed and sold at the court house. I have heard the term “sold on the court house steps”, and from what I have heard it really does happen. I have never gone so I don’t really know. So then on Wednesday and Thursday after the listing agents will get their assignments from the foreclosure company. Usually the agents deal with “Asset Managers”. The asset managers work for the foreclosure company and are usually assigned a certain area of the state. When the listing agent signs up with the foreclosure company they will apply to service certain areas of the state. This is how foreclosures are assigned.
2. Once you are assigned the asset, the first step is for the listing agent to preview the house to see if it is occupied or not. If it is occupied they have to try to contact the occupant to make them aware that the house has been foreclosed on and what their options are. If the occupant is not home at this time the agent must leave a brochure on the door with the occupant’s options and the agents contact information. Some foreclosure companies require the agent to take pictures of the brochure on the door or in the hand of the occupant as proof they have completed this task. the brochure with the occupant’s options usually includes what is called “cash for keys”. This is where they will pay the occupant money to move out by a certain date, leave all appliances and fixtures, and leave the house in broom swept condition. The amounts offered very from company to company and the amount of time it takes the tenant to get out. Fannie Mae used to make the agents pay the cash for keys and then the agent would submit a request for reimbursement. This can be a huge expencse for an agent. They have changed that now. If the house is vacant then the agent must contact a locksmith and have all the doors to the house re-keyed so the agent can gain access to the property. There is another scenario where things can get a little sticky. That is when the house appears to be vacant, but there are items in the house. The agent has to decide if the items in the house are worth $500 or more “Garage Sale” value. If they believe they are then they must report this to the foreclosure company and an eviction is put into place. If they decide it is not worth over $500 then they have the house re-keyed. You then have to report your findings back the foreclosure company. There are usually time limits to each task. For the “Occupancy” task, this usually has to be done in 24 hours.
3. After the house has been re-keyed they go back out to the house to look through the house, take pictures, and put a combination lock box on the house. The agents take pictures of everything to show the asset manager the state of the house. They have to remember to take pictures of all the damage and of some key shots required for the Broker Price Opinion (BPO). The key shots needed are a shot of the front of the house, back of the house and a picture of the street the house is on.
4. A BPO is similar to an appraisal, but real estate agents are not appraisers and cannot say what a house is valued at so this is just their opinion. It is done like an appraisal in that you have to pick 3 current listed houses similar to the foreclosure and 3 sold houses similar to the foreclosure. There are also restrictions as to how far away from the foreclosure those listings and sold houses can be and a time limit on how long ago the houses were sold. I could go more into a BPO, but that is a blog in and of itself. They take time to prepare if you don’t have appraisal software. They are given 3 to 7 days to complete these.
5. At this time, at least with Fannie Mae, the agent has to get the utilities turned on in their name. Some other companies have the agent put the utilities on in a third party company’s name. The agent is responsible for paying these bills each month and then submitting these bills to the foreclosure company for reimbursement. This can get very expensive for the agent depending on how many properties you are managing and how long they sit around being repaired and or listed on the market. The reimbursement process is also very tedious depending on the foreclosure company. Each one has different ways and rules for submission. Once submitted the agent will receive the reimbursement within 30 to 45 day. If the submission is done incorrectly or not in a timely manner it may mean more time the agent has to go without being reimbursed or no reimbursement at all. The agent is now out of pocket for that money.
6. In the meantime the house will have been “trashed out” by a company the foreclosure company has hired to trash it out and cleaned. This is done pretty quickly as those companies are given time limits to get it done or they are not paid. The agent has to go back out to the house to make sure the house has been trashed out and cleaned and it has been done well. If it hasn’t then the agent has to report that it wasn’t and why. At this time the agent usually takes a whole new set of pictures now that the place is clean. These pictures will be used for listing photos.
7. After the agent turns in the BPO to the foreclosure company the asset manager will look over the damages that the agent notes and request the agent get “bids” from contractors to repair the damage. Sometimes they will ask for bids for all the repairs or they will pick a certain few they are willing to consider. The agent then has to type up a request for these bids and send them to venders for their bids. This part depends on the foreclosure company. I am more familiar with Fannie Mae’s policy and procedures. Fannie Mae has pre-qualified contractors that they want the agent to use and we have a certain bid request form that is filled out and sent to the contractor in our area. That contractor then sends it back with their bid. There is a time limit of 3 to 5 days. Once you get the bids back these are then sent to the asset manager and they decided which damages they are willing to repair. With Fannie Mae we are not notified which repairs are going to be done because they notify the contractors directly at this point. Once the repairs are complete the contractor is supposed to let the agent know and the agent has 3 days to go out check the repairs and report back to Fannie Mae. They are to check if the damages are repaired, repaired well, and if the house was cleaned up after the repairs were complete.
8. Once this is reported to the asset manager and repairs are complete, usually the asset manager will list the property. The property is put on the market like any other listing. Some foreclosure companies like Fannie Mae are very strict about the pictures used for the listing and the number of pictures used. I know that with Fannie Mae you had to have at least 5 pictures and the lights have to be on in each picture. They want the best pictures of the house and sometimes this is hard to do when there isn’t anything good about the property.
9. Now another agent like you wants to show the property and put in an offer. If you haven’t dealt with a foreclosure company before you would not know that a majority of them have an addendum of their own that has to be filled out and signed along with the State’s Purchase and Sales Contract. These addendums will overrule the State’s Contract where there are discrepancies between the two so I can’t stress this enough… READ THE ADDENDUM!!! I know you are familiar with your State’s Contract, but in these cases they are just used for formality. I have seen some agents try marking out sentences or paragraphs on the addendums, but the foreclosure company’s won’t accept that. The addendums are their guidelines and unfortunately there is no away around them.
10. If the foreclosing company decides to select your offer and make it binding you usually 10 day for due diligence. On Fannie Mae addendums this time starts from the day the contract is “verbally accepted.” That means the date you are called up or emailed that your offer was accepted you time starts, with or without a signed contract. Now is the time to get the house inspected. It is highly recommended that you get the house inspected because your buyer’s need to know what they are buying. Don’t be surprised when the inspector comes back with issues, most of these houses have issues. The inspection period is for your clients to do these inspections, but it in no way says that the foreclosure company will fix any of the issues found. I know that Fannie Mae will fix items that are lender required, make the house inhabitable, or unsafe. Let me ask you this, are you getting a good deal on the house? Well this is why. The foreclosure companies want to sell the houses, but the only way to do so is to sell cheap because of all the damages. They do change these standards from time to time. I have seen it where they will repair to get the house sold and I have also seen where they would repair, but at the buyer’s expense. If they decide they will fix something don’t expect to happen quickly. The process of bidding for the repair has to be done and bids have to be approved before repairs are started and completed.
11. The process of getting the repairs approved and complete is sometimes lengthy and this means you’re going to probably need an extension on the closing date. Don’t wait until the last possible moment to do this. The same goes if you are having problems with your financing and it is taking longer than planned. Get an extension at the first site of trouble instead of asking the very last day. Fannie Mae had put out a policy of not signing extensions if they were turned in after the closing date. It just puts a lot of un-due stress on people to wait until the last minute.
12. Once we are confident the closing is going to take place we have to send a lock smith out to the house to have them re-key the house again to a new key for the new home owner. The new home owner is charged a fee for this on their HUD statement. This is an area that always causes problems due to agents and clients not reading the Fannie Mae Addendum. We would also have people come in wanting to use their own choice of lock smith and Fannie Mae won’t allow this. I believe the reason is so they know for sure that the house will be re-keyed. They don’t want to be held liable for anything that may happen because the house wasn’t re-keyed. There are so many people that have access to the Fannie Mae key and if the house was not re-keyed those same people would have access to your clients new home.
13. Another problem we dealt with a lot was people moving in earlier than the closing. We have even had cases of people starting to paint bedrooms. First of all the buyer shouldn’t have a key to the house. They don’t own the house yet. Also what if something happens to the contract and it falls through? The buyer will be charged for the damages made. We have had some instances when the home owner gets mad when we re-key the house because they think they already have the house key.
Well anyway, I am trying to provide a little information from a different perspective. I hope it may come in handy for someone someday.