By Ann Londrigan, Senior Editor
While efforts on many fronts are working to help homeowners at-risk of foreclosure, job losses and a wave of option ARM resets in 2011 are expected to exacerbate the foreclosure trend. With this market reality, it’s clear more Illinois REALTORS® who perhaps never worked with foreclosures, short sales and real estate-owned (REO) properties may become involved in these complex and challenging transactions.
According to legal counsel for the Illinois Association of REALTORS®: “A short sale is a situation in which the real estate seller owes more money on the loan(s) secured by the real estate than the sale of the property will likely produce on the market. The seller is in a distressed situation, but the bank/lender has not yet taken title from the seller through the foreclosure process. At this point, there might be a window of opportunity for the seller to put the real estate on the market and try to sell it in order to at least partially satisfy the lender who holds the mortgage.”
There are many intricacies and legal issues related to short sales and IAR attorneys recommend REALTORS® who work in this area to not use the title “short sale expert” since in Illinois the short sale is still a process with no defined standards of practice. Instead, a better term to use is “short sale real estate brokerage specialist.”
A real-estate owned (or REO) property is a foreclosed property owned by the lien holder, typically a bank. The bank secures an asset management company to oversee the management and disposal of the property. Most REO work is gained by REALTOR® analysis of the property in the form of a fee-based broker price opinion (BPO) for the asset manager assigned the property.
Chicago REALTOR® Marki Lemons, ABR, ADPR, CRB, CRS broker-associate with Prudential Rubloff, prepared this at-a-glance comparison:
REALTORS® who work in the listing and selling of bank-owned properties know the job is not for the faint of heart. While safety is a concern for all real estate professionals, for the REO agent the properties are foreclosed or abandoned in varying states of disrepair. Some still have tenants who need to be evicted.
“One thing I always do is take someone with me,” says REALTOR® Mary Ann Pospeshil, broker-associate with Coldwell Banker Brown in Belleville, whose business has been 99 percent REO for the last 10 years. Pospeshil says it’s her job to assess the situation within 48 hours after getting notice from the asset management company that is servicing the bank-owned property. She finds out if the property is still occupied, who is there and gets the property re-keyed. If eviction is required, the local sheriff gets involved.
Her best safety tool is a big flashlight. “I usually feel safe,” she says.
REALTOR® Sally Crachy of Applebrook Realty in Chicago visits 10 properties a week to conduct broker price opinions on foreclosed or vacant homes in the city. In business for 36 years, the last 10 have been more focused on REOs.
“I put my purse in my trunk,” says Crachy. “Wherever I pull up in my car, I look all around before I get out. Before entering the house I walk around the back of the building and make sure no one is inside.”
She adds: “Never talk on a cell phone approaching the house or in the house and always have pepper spray on your key ring. I used it on a dog once and it worked!”
REALTOR® Roger Roddy’s business is brisk this year. On one day in 2009 he reviewed 15 properties for broker price opinions. Affiliated with Re/Max Preferred in Swansea, in his 15 years in real estate REOs have been the focus since 2008.
“I am finding environmental issues, heavy infestations of mold, are a major concern particularly this year with the heavy rains,” says Roddy. “I keep readily available in my truck a HEPA filter mask just in case.”
He has come across snakes in crawlspaces and water near electrical outlets or split wires from removed appliances that could still be live.
“I take a big flashlight. I’ll look at the situation before I enter the property and if I don’t feel comfortable I’ll ask someone else to go with me. I only work daylight hours, no evenings.”
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