What’s Wrong with REO Agents?

Let’s call the first couple Dave and Tanya.  They are a young, savvy working couple buying their first place.  D&T went with me on the first weekend the property was available, and immediately saw the home.  They understand our market, and wrote the offer without delay, so that it could be submitted to the bank for consideration on Monday.  I spoke with the listing agent on Sunday, to ask a few routine but pertinant questions, and his reply was, “I don’t know, I never visited the property.  I guess youll find out in escrow.”  I told him an offer was forthcoming that same day.  I was told that there were no other offers in play; that we were the first.

That was Sunday afternoon.  Cut to FRIDAY of that week. Numerous emails and phone calls had not been returned.  The offer, which had expired, had not been replied to in any way. I was finally able to reach him on the phone, where I was informed that an all-cash offer had been accepted.  I asked why that had not been communicated, to which he replied,”I thought you’d figure it out”.  I told him that the buyers would have appreciated some response and feedback.  He said, “I’m busy.”  I reminded him that there had been no other offers, and he said, “No, this offer came in before yours.”  (Lying then or lying now?)

The experiences in both other situations refected Dave and Tanya’s situation: offers not presented in a timely fashion, if at all; no feedback; unresponsive or unreachable agents; lack of knowledge about the facts of the property or homeowner’s association and dues, and the list goes on.  As equity or short sale listing agent, our clients would fire us for such unprofessional behavior.  As a representative of the bank, is this behavior condoned?

As a listing agent for over 35 years, I have developed a set of standards that I follow when negotiating an offer.  Communication is key.  Every stellar equity listing agent in my area believes as I do, that respect is due to both the Buyer’s agent, and the buyer.  A response to an offer is due in atimely manner.  If a rejection occurs, what are the issues, and can they be bridged?

Not so with REO agents.  While I am sure that there are some highly responsive, highly professional REO agents out there, my experience is that in general REO agents behave as if it’s the Wild West, ignoring MLS rules and ethical standards and practices.  No rules, no consequences, no standards.  Knowing the facts of the property is not a concern.  Phone calls are not returned.  Emails are not returned.  Offers are responded to willy nilly.  If you can grab your own buyer to make the sale, all the better.

This is solely my opinion, this is reinforced by the findings of Stella Ling, managing Senior Counsel of CAR.  

“Questions about REO transactions on CAR’s legal hotline have picked up of late”, Ling said. She advises agents to read the REO addendum that lenders often add to purchase contracts on REOs. The addendum often erodes the rights of buyers, Ling said.

A common complaint on the hotline is that listing agents will sometimes not submit buyers’ offers to lenders. Listing agents sometimes do this in the hope that one of their own buyers will submit an offer and they’ll be able to collect a commission on both sides of the deal, Ling said.

Multiple listing service rules require listing brokers to present offers as soon as possible or give the cooperating broker a satisfactory reason for not doing so. MLS rules also allow buyer’s agents to participate in the presentation of any offer, unless the seller objects and submits a letter to the buyer’s agent to that effect.

Buyer’s agents should quote those rules and demand that letter if the listing agent objects to the buyer’s agent being present when the listing agent presents the offer, Ling said.

And, “if the listing agents aren’t following the rules, you have to file a complaint about it. If there’s enough complaints that are filed, maybe some of these practices will go away,” she added.

It’s time for all agents to demand higher standards from our REO agents, on behalf of our buyers.  REO agents have been handed a great opportunity to serve and to improve the economic outlook in the neighborhoods in which they work.  They are squandering that at every turn by their poor business practices, and when the REO’s are gone, they will be left with only their reputation to fall back on.