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Caveats About VA Foreclosures

When the Veterans Administration is forced to foreclose on a real estate loan which it has guaranteed, it typically arranges with a local real estate broker to act as its “property manager” to get the property ready to re-sell. It then posts the property on its website for any licensed real estate broker to sell.

Selling VA-foreclosure properties can be rewarding, but agents should be aware that:

The VA will not list its property with any individual agent or company. Therefore,

You cannot give a “broker price opinion” (BPO) on the property, even if you are the “property manager.” Real estate brokers and salespersons can perform BPO’s only if they expect to obtain a listing on the property (which they cannot) or if they are licensed appraisers.

You cannot act as a seller’s agent or subagent. To act as agent for the seller, you must have a signed listing agreement (which you cannot have). You can only act as a buyer’s agent. And, if you act as both the buyer’s agent and the VA’s “property manager”, you should disclose to the VA and the buyer what your relationship is to each of them.

You must not imply in your advertisements that the VA foreclosure property is listed with your firm or that you have the exclusive right to market it. By including “this is not a company listing” or “inventory available on VA website” in your advertising, you can dispel this impression.

The VA sells its property “as is” and does not require an attorney to close the transaction. Therefore,

You should encourage your buyer-client to have the property inspected by a licensed home inspector, get a pest inspection, a survey, etc., and to retain an attorney to protect the buyer’s legal interests. [Document in your files that you made these recommendations to the buyer.]

This article came from the February 2002-Vol32-4 edition of the bulletin.