We all know that the market isn't doing so well. A lot of Realtors are trying to get into the REO market and, like it or not, many are involved in Short Sales. According to a friend who is a CH7 Trustee, bankruptcies are increasing and cases that have assets to sell is increasing.
For the past 12 years I have specialized in distressed sales. Much of this work has been in the United States Bankruptcy Court. There are different types of bankruptcy or "bk" as many call it. There is CH7, CH11, CH12, CH13. All of them pertain to different situations.
In bankruptcy there are a lot of different players. One of those players is the CH7 Panel Trustee.
If you are being hired to sell property in a CH7 case, it is the CH7 Trustee who will probably be hiring you.
There are a couple of things to know. First of all, if you do not get formally approved under a court order to sell the property, your contract is not worth much. If your client goes into bankruptcy and you want to keep the listing there is more paperwork to do. For instance, the Trustee is now the client, not the home owner. Additionally, any offer that is acceptable to the Trustee must also be presented to the court for approval. Approval can take 20 days, so offers that close in a week are not going to work. Broker fees are also not set in stone. It is possible that fees may be knocked down even if you have a contract. It is also possible that you will not get paid at closing. You may need to apply to the court to receive your payment as retained professionals, per the bankruptcy code, must submit applications for fee.
The way to minimize the risk on all of this is to make sure you read through not just the contracts, but also the Motions and Applications to make sure that the details are spelled out. When the trustee seeks approval of the sale, make sure that the court docs allow you to receive your compensation at the closing table.
This could be a novel and I need to go, so good luck and happy prospecting in the bankruptcy arena. Be careful and learn the rules. You'll be fine.
Do you have questions about distressed assets, receivership or bankruptcy sales, auctions? Email me at rfk@gryphonusa.com and I'll try to answer it in an upcoming post.
Richard F. Kruse is the President of Columbus, Ohio based Gryphon USA, Ltd. (www.gryphonusa.com). The Gryphon Organization includes Gryphon Asset Management providing receivership and consulting services in the distressed marketplace, United Country Gryphon Realty & Auction Group (www.ucohiorealty.com & www.ucohioauctions.com) providing real estate brokerage and auction services throughout Ohio and OnlineAuctionUSA.com (www.onlineauctionusa.com) providing commercial asset liquidations from the Midwest to East Coast.
United Country Gryphon Realty & Auction Career Opportunities Available. Call 614-885-0020 x 17
Thanks for passing along some of your experience. Any other thoughts in the future would be appreciated. It's alays hard to get the true story on these...