Company Tackles Termites, Mold and Radon Gas in REO

Orange Beach, AL-Steve Smith, whose background is in both the insurance and pest control business, is bringing his company, ServiceAccess, to the REO industry. The company provides a service agreement through the real estate industry to individuals who are selling their homes. It covers termites, mold and radon gas.

"Those three things are not covered by insurance policies," Mr. Smith tells MSN. "And they are also not covered by home warranties. It's kind of a unique service agreement. It's not a warranty. It's a pledge to service the property should they become infested with any of those three things."

ServiceAccess here places the service agreement on all property listings at no charge to the seller during the listing period.

"Should an inspection determine an infestation we will provide the service after a $500 deductible. When the property sells, either the seller has agreed to pay the first-year fee or the buyer has the option to renew the coverage," Mr. Smith said.

"We do not provide the inspections. For the broker marketing our service agreement to their clients we pay a 15% commission both new agreements and renewal."

While his company is a small, the business provides national coverage for service and is able to issue the agreement in all states.

"We are not considered a settlement service, therefore we are in compliance with the RESPA regulations. We are not an insurance contract although we may be sold by insurance agents to their customers. All of our service providers are licensed and insured to provide the services required," he said.

Most of the people who have lost their homes to foreclosure did not keep contracts in place. They didn't renew their termite agreement while they were losing their house, according to Mr. Smith.

"Most of these houses that are REO or foreclosed homes, they don't have any type of coverage for termites, no matter where they are - in the North or South or wherever. I see a need for the service agreement in that regard."

His experience so far in dealing with REO banks is that they have very little interest in doing anything "that they don't have to do.

"They sell houses 'as is' and they don't want to pay a thing, even though I tell them, 'you don't have to put any money up.' I get directed a lot to asset management companies. They have a certain directive from the bank about what they can and can't do."

Most mortgage companies that he has talked to will accept my service agreement in lieu of an inspection.

"My goal is to talk with more people in the industry and with high level of decision makers that will OK the approval to buy the service agreement."

Standard termite inspections are only good for the day of the inspection and the inspector can only see 30% of the structure, according to Mr. Smith.

"The fact is termites and mold spores may develop after the sale and ServiceAccess coverage can minimize the costly upfront expense associated with protection against termites alone," he said.

"The liability exposure to the seller, agent and broker is reduced if not eliminated for termites and mold by offering the coverage provided by this agreement. Only ServiceAccess agreement provides both termite and mold coverage. Coverage for mold in addition to termites is an added value to clients."

In recent years, mold litigation has been on the rise and more and more lawyers are handling cases relating to mold exposure. Because of this landlords must ensure that reasonable means have been taken to avoid harmful mold growth.

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