Everyone knows the market has been flooded by Real Estate Owned (“REO”) Properties. The challenge for real estate professionals today is not just to get the REO business but also to provide a level of service to their clients that ensure the property will close on or before the close of escrow date. One of the biggest issues we see from an escrow perspective that can delay a closing are city and county violations that are assessed against the property in the post-foreclosure or listing stages that do not show up on a preliminary title report. These violations often turn into liens right before closing or even after the buyer takes possession.
The following tips can help real estate professionals ensure this issue does not arise, the REO closes on time and their clients remain happy.
1. Become an Expert in Your City and County REO Ordinances
With the growing number of foreclosures, many cities and counties have adopted ordinances specifically addressing a lender’s responsibilities regarding the registration, maintenance and inspection of REO properties. Agents who are familiar with these ordinances can ensure their clients are in compliance and not subject to any fines or sanctions. We recommend researching your local city and county websites regarding this matter. For example, Riverside County has adopted Ordinance Number 881 which specifically relates to the above-mentioned lender responsibilities for properties located in the unincorporated area of Riverside County (90% of the County). This ordinance can be found on Riverside County’s Distressed and Abandoned Properties website. (http://www.clerkoftheboard.co.riverside.ca.us/ords/800/881.pdf).
2. Become An Expert in Your City and County REO Inspection Procedures
Every city has its own specific inspection and enforcement procedures regarding issuing violations. Some cities will issue multiple opportunities to remedy a violation before assessing a fine while others will immediately fine or even record a lien as a result of a violation. Contacting your local Code Enforcement Department (“CED”) inquiring about its specific procedure will prepare you for any necessary response to a potential violation. It will also impress your client as it shows a proactive approach to addressing an issue that could delay a closing.
3. Be in Constant Contact with CED’S Regarding Your Property
Every 10-14 days, contact CED’S to ensure no new code violations have been assessed against the property. Helpful questions to ask include:
· When was the last inspection performed (if any) and what were the results?
· Are there any specific city requirements necessary for a proper closing (Ex: property registration)
· Are there any other municipality departments to contact regarding potential violations?
4. Become Friends with Local CED Officials
CEDS are overwhelmed with REO property inspection requests and often understaffed (due to budget constraints) to provide immediate service. If your property does have a violation, CED will likely require a re-inspection to ensure the condition has been remedied. Depending on the CED’S backlog, this could take up to two weeks. For that reason, an agent should become acquainted with CED inspectors through semi-monthly follow up calls regarding the property. A CED inspector will be more likely to schedule an inspection on a property where they know the agent has made consistent efforts to check on the property’s condition. Providing your client with a list of your CED contacts should also set you apart as a proactive REO agent.
5. Never rely on photographs to determine the Condition of Your REO Property Personal inspection of an REO property is a must. Our experience has shown that even recent photographs may not show (1) city violation notices that have fallen off the front of the house or (2) squatters that may be living on the property.
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Ryan P. Spitalnick, Esq. is the Vice-President and General Counsel of Prominent Escrow Services, Inc. (“Prominent”), an independently owned DOC licensed escrow company, located at 1201 Dove Street, Suite 650, Newport Beach, California 92660. Phone (949) 825-5130; ryan@prominentescrow.com. Company website: www.prominentescrow.com. Mr. Spitalnick was a civil litigation attorney prior to forming Prominent in 2008 with associates from Pepperdine University School of Law. Currently, he runs Prominent’s day to day operations and has conducted REO trainings for major lending institutions throughout the country. Please contact Mr. Spitalnick with any questions regarding this or any other issues related to the escrow process.
HELPFUL TIPS FOR REO AGENTS TO ENSURE A SMOOTH CLOSING
November 5th, 2009 · 1 Comment
Tags: Home Buyers · Ryan P Spitalnick · Escrow · Buying A Home · REO's · Foreclosures
1 response so far ↓
1 Lourdes Diones // Nov 10, 2009 at 7:08 am
This is great information for us on real estate business. Please post more. I would like to hear more about how to become an REO agent?
Thank-you,
Lourdes Diones
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