REO Advisory (Listing)

🔹 General Understanding of REO Advisory (Listing)

  1. What is the REO Advisory (Listing) form used for?

Explanation:
It discloses key considerations when listing a Real Estate Owned (REO) property—typically bank-owned properties. It warns sellers and brokers about unique REO risks such as no standard disclosures, as-is condition, eviction issues, and title complications.

  1. Is the REO Advisory required for every bank-owned listing?

Explanation:
Not mandated by law, but strongly recommended when the seller is a lender, mortgage company, or financial institution. It provides legal protection for the listing broker by disclosing risks to all parties.

  1. What’s the difference between this form and a regular Seller Property Questionnaire (SPQ)?

Explanation:
SPQ is filled out by typical homeowners. REO Advisory acknowledges that REO sellers don’t have personal knowledge of the property’s condition and will not provide typical disclosures.

🔹 Practical ZipForms Usage

  1. Where do I find the REO Advisory in ZipForms?

Explanation:
Go to Add Form > Search ‘REO’ or ‘REO Advisory’. It may be listed as CAR form REO (California Association of REALTORS®). Ensure you’re using the latest version.

  1. Can I pre-fill certain sections of the REO Advisory in ZipForms?

Explanation:
Yes, using templates or transaction templates within ZipForms, you can pre-fill sections like the broker’s information, standard disclaimers, or office policies.

  1. Should the seller sign this form, or is it just for the agent?

Explanation:
The seller must sign the REO Advisory to acknowledge understanding of limitations and risks. The broker or agent also signs to confirm delivery and explanation.

🔹 Legal & Compliance Questions

  1. What disclosures are waived in REO listings?

Explanation:
REO sellers often exempt themselves from:

  • TDS (Transfer Disclosure Statement)
  • SPQ (Seller Property Questionnaire)
  • MHTDS (Manufactured Home TDS)
    However, Natural Hazard Disclosure (NHD) is still required by law.
  1. What if the REO seller refuses to sign the REO Advisory form?

Explanation:
You should document that the advisory was provided and the seller declined to sign. This protects the brokerage in case of future disputes or lawsuits.

  1. How does this form protect the listing agent legally?

Explanation:
It limits liability by stating the broker and agent:

  • Did not inspect the property beyond visual walkthrough
  • Have no knowledge of repairs, permits, or issues unless otherwise disclosed

🔹 Risk, Liability, and Transaction Challenges

  1. What are the biggest risks in REO listings that this form highlights?

Explanation:

  • Property is sold as-is
  • Unknown repairs, violations, or tenants
  • Seller may not provide keys, utilities, or access
  • Delays in communication with corporate sellers
  1. How do I explain this form to a first-time seller or buyer’s agent?

Explanation:
Use plain language:

“This is a bank-owned property. The bank doesn’t know anything about the house. They sell it as-is, and we won’t get the usual disclosures. This form makes sure everyone understands that.”

  1. Do I need to provide the REO Advisory to the buyer?

Explanation:
It’s a listing-side form, but highly advisable to share it with the buyer’s agent. Many brokerages attach it to the MLS or disclosure package to inform all parties of the unique REO process.

🔹 Listing and MLS Concerns

  1. Should I attach the REO Advisory in the MLS listing?

Explanation:
Yes, it helps pre-screen buyers who are not comfortable with as-is conditions. This can reduce wasted time and confusion.

  1. How do I disclose REO status in the MLS?

Explanation:
Check your local MLS rules, but typically:

  • Mark property as “REO” or “Bank Owned”
  • Include disclosure about no standard warranties or repairs

🔹 Transaction Coordination & ZipForms Workflow

  1. Can my TC send this form automatically in listing packets?

Explanation:
Yes. You can include REO Advisory in transaction templates within ZipForms so that it’s always included when an REO property is listed.

  1. What if the seller is a corporation? Who signs the REO form?

Explanation:
The authorized signatory of the seller entity (bank/asset manager) must sign. Their name and role should be printed clearly to confirm authority.

🔹 Brokerage Policy & Internal Best Practices

  1. Does our brokerage require the REO Advisory on every REO listing?

Explanation:
Some brokers mandate it for legal protection, even if the seller declines to sign. It’s best to follow brokerage policy and document delivery of the form.

  1. Can we get sued if we don’t use this form and a defect is discovered later?

Explanation:
Yes, lack of disclosure or advisory forms increases exposure to liability, especially if the buyer claims misrepresentation or non-disclosure.

🔹 Technical Issues with ZipForms

  1. The REO form isn’t loading or saving in ZipForms. What should I do?

Explanation:

  • Try logging out and clearing browser cache
  • Make sure you’re not using Safari (Chrome or Edge work better)
  • Contact ZipForms support or check if form library is up to date
  1. How do I add the REO Advisory to a signature package via DigiSign?

Explanation:
When sending for signature:

  • Add REO Advisory as a document
  • Drag signature fields for both seller and agent
  • Use templates to automate this in future

 

Disclaimer:
The questions and answers provided are for general guidance only and may not cover all details or apply to every situation. If anything is unclear or you need further clarification, please visit car.org for official resources and the most up-to-date information from the California Association of REALTORS®.

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