I noticed one agency in my local market seems to get all the listings for REOs. How do I get in a position to get some of these listing?

If you ever find out be sure to let me know!

Working REO property is kind of like working with Relocation Companies.

First, you have to get on their list --- or you get zilch (or close to it!).

Second, to get on their list, you have to have a proven track record.

Third, the only way to get a track record is to get the work in the first place.


I've had a chance to debrief a couple brokers who have had the HUD contract for their state and do an enormous amount of foreclosure properties.

What they suggest is:

* Plan on working for several years systematically before you get substantial business.

* Create an REO division. Have a small group of agents in it and provide staff support.

* Begin by applying to do BPOs. As you get more and more business, begin approaching the people you do BPOs and ask who you can talk to about doing listings for them.

* Be prepared with a group of folks who can do the clean-outs, lawn care, fix-ups, etc. And, be prepared to float the cost of their work until you get paid back by the REO company.

* Provide these folks with a complete packet on your firm, showing the committment you are providing to REOs, your stablity in the business, etc.

* Once you get your first account and do a good job, you'll get more systematically.

* Consider participating in industry groups that do REO properties (I'm blanking on names right now).

The bottom line is that it takes a comprhensive, systematic approach to break-in to the REO business. Most people are not willing to spend the resources and time to do so --- but it can be well-worth it.

^question! What is REO? is these real estate organization? please correct me if am wrong. am just new at this kind of field..

Real Estate Owned (by institutions) = foreclosures

Real Estate Owned (by institutions) = foreclosures

you shouldnt worry about getting involved with reo's if you dont even know what it is! not trying to sound like a b****, but there is a LOT of work that goes into being a REO broker, and not only do you really need to know what your doing, but there is a lot more work involved. i have people ask me that very question all the time ("how do you get these bank's reo listings"). its not like general real estate. it takes a lot of time invested in working with banks and asset managers to be on top of the food chain. people just dont give that info away. this part of the real estate buz is not for everyone. it is not as easy as many would like to think.

If you want to learn more about REO's go to the BPO, REO, Foreclosure forum you will learn so much it will make your head spin. Read all the posts and sticky's so when you do have a question the group doesn't get crazy on you. People who think they want to get into the REO/BPO area don't realize how much work really does go on.
Unlike conventional real estate where you mainly have to suck up to the seller and hound them for Price Reductions every couple weeks. The banks will ask for your opinion and adjust accordingly to the market. There is a lot of up front costs associated with the properties. If your struggling with money now, I really suggest you stick to normal buyers and sellers. With REO's we pay for utilies, lawn maintenance and whatever the house needs intially and have to wait 2-3 months for reimbursement.
That is just a peak of what REO Brokers deal with. It is fun but mostly lots of work. But the flip side is once you do a good job they will continue to send more and more listings unlike most sellers.

Hope it helps

Hey -

You can search the REO/BPO forum for a ton of information on this topic.

But I warn you NOT to post this same question there. They will abuse on your for days. Instead read through the most recent threads and do a search for REOBPO.

As an REO broker, I can add a few more thoughts...To get listings, you also need E&O insurance that specifically covers BPO/REO work, and not all polocies and companies do that.
Right now, with the increased foreclosures, every other agent wants in on the REO end, and even long-established agents are suffering for it. be prepared to start doing well, then suddenly your business drops off because 4 more agents in your area are now competing.
BPOs. You generally get 2-3 days to do an inspection (often a drive-by, with a few photos from the road. the report is similar to an appraisal, and is a huge part of how banks price properties. for all this work, you can make $30-$75 on average.
paperwork. get organized! besides the listing agreements which will probably be on the bank's own forms, and any offers you write, you will have monthly marketing reports, new BPOs regularly, addenda that need to be signed by buyers, and whatever other paperwork your client needs. It gets tedious, just keeping up with 7-8 properties!
And money. yeah, it's been mentioned, but sometimes you may have to pay several thousand$$ up front to prepare a house for market. I have had it take as long as 6 months to get paid back, which requires lots more paperwork. And if the paperwork is not done right, you just gave away your money.
no, REO is NOT for every agent. Most cannot handle it. but if you still want to and think you can, pop in at the REO/BPO forum and ask them how to break into the biz. if you can't handle the heat, there's no way to handle an upset asset manager!

Before you get too jealous of REO agents, there's one huge factor you should consider: the REO agent/brokerage makes less money on the sale of their own listing than the buyer's agent/brokerage. Referral fees of 25% to 35% come off the top of the listing side commission for many REO transactions.

Just as Zephyr and others said, maintaining REO listings always costs money--money which comes right out of your pocket (or that of the brokerage). That money amounts to an interest-free loan to the REO owner. After what seems like tons of paperwork, you get the money back. Sometimes, you miss deadlines or fail to use the appropriate forms (every REO owner has different requirements) and you do not get the reimbursement. I've missed deadlines because the utility company took too long to get the final bill to me.

Be prepared, also, for the fact that the REO owner will set the commission structure, and that is usually non-negotiable. More and more REO listings now are coming with 5.5% or 5% commissions.

I recently turned down a 5% listing which required me to pay 3% to buyer's side and a referral fee from my 2%. On the listing side, that would have left 1.4% commission to be split between the agency and the listing agent. And this property was one that needed trash-out, some initial repair to make it safe to show, rekey, lawn care, and winterization.

I felt like I had to take a stand somewhere, so I decided that 1.4% is just not enough to pay for my efforts. Many of the low dollar properties do have a minimum commission of $1,000 per side, but those are the ones that are the most difficult to market. How excited would you be to get a listing that will net a total $1,400 listing side commission, only if you first pay $1,000 for trashout, $125 for rekey, $100 for winterization, and assorted deposits for utilities? Then of course, you get to pay on-going lawn care and utilites every month.

After you've paid the upfront money, marketed an over-priced property for five months, filled out monthly reports, completed an initial BPO and an updated BPO, you lose the listing because the company has a policy that all properties must be moved after five months. Obviously, it does not always go that way, but all REO agents have had it happen.

I represented a buyer recently on a $110,000 REO. It was a 5% listing with 2.7 buyer side. The property had been listed for almost two years. The listing broker did everything including rekeying, lawn mowing, and maintenance.

[quote=Forsalebyweb]

$110,000 X 2.3% = $2,530 BUT WAIT!

$2,530 -30% referral = $1,771 total listing side commission

Rekeying, lawn care, maintenance, 2 years worth of marketing nets $1,771 to pay both the brokerage and the listing agent! If the listing company is a franchise, you also get to deduct franchise fees from that amount. Everybody has overhead and E&O.

At $100 per interior BPO, the listing agent did around $700 worth of BPO work on that property. Of course, he/she did not actually get paid anything for the original BPO or the BPOs every 90 days.

These agents inquiring about reo are nothing more than people looking for "get rich quick crap" or "jump on the millionares bandwagon".

Folks if your looking for an easy field to make tons of money in real estate you need to leave the field now.

There is no easy street where things are handed to you.You have to work harder,smarter,and more passionately than your competition in whatever chosen field you want to do if you want to truly succed above the rest.

The people looking to get rich quick will be doing the same thing 20 years from-being broke and still thinking of getting rich quick.

There is nothing sexy about getting wealthy and successful.All people see is the end product and think I can have that today!
You have to go through steps you might find boring for years and years to get where you want to be.

Everybody wants reo because regular listings aren't selling.What it will do for the next year is drive down reo commissions as more people enter the market.Most won't have the knack for it and the others will leave once forecloures start receding in 2009 and there is less inventory for too many agents.For a small minority REO will be a good fit.

Personally for me I checked into it and decided against it.I didn't like the corporate structure,the property management,the reimbursement issue,and the paperwork and reduced commissions.

i have an agent with 63 REO listings, he works his absolute tail off for peanuts. I have his vendors calling me all the time wondering where payments are. These guys owe tens of thousands to vendors to fix the property to prepare it for sale. Then, the commissions are reduced to save the banks money and then the contracts and disclosures start, thats a mess too. its a tough market

It'd be interesting to compare E&O claims between REOs and non-REOs.

Clifton?

Kath, I talked to Clif today and his business is doing just fine. -Meredith

My ear was itching for some reason... any questions just give me a call or send an email.

Take Care

Cliff

lol, no questions.

Just asking if you were who he was talking about.

63 REO listings is quite a burden to be carrying. Lots of good points being made here. I'm the REO manager for my office, and it's tough to get a foot in the door with the various banks. What I think is an even bigger disadvantage is when you're not affiliated with a well-known RE Office National chain, like RE/MAX, etc. Big banks and the Fed Gov't "identify" better with big or Nationally known RE offices that can actually claim to have an "REO Department" with a group of full-time staff already gainfully employed. Being a one-man show like me, or even a partnership doesn't always come across very well as a potential professional match. I have also turned down offers from banks that want to take away some of your commission as a "favor" for considering you. No thanks, let someone else put those homes on the market, and I'll try to sell them and recieve the better SOC. I don't mind the spirit of competition so much in regards to commission costs, but I just don't budge for banks, not worth the trouble to me unless they pay top dollar. Owner-occupieds however, I'm all over it-and will always have the best deal! LOL

I second everyone above! I too am an REO BRoker and it is very hard work. PLus be prepared to shell out a lot (and I mean a lot!) of your own cash to prepare a property for sale. Also, be prepared to employ and adequetaly pay staff to help. Its a high pressure position, and to be honest, very cut throat. There is always someone on your heels ready to jump on your business should you miss a deadline. Its not a get rich quick business and should only be pursued with a lot of thought and preparation to work for very little and hope for more.

True story. Several weeks ago I sold an REO to a first time buyer. Immediately after closing, my anxious buyer and I took out the yard sign and called the REO agent to pickup. No problem there.

The following morning a local sheriff came to post a vacant building notice. Apparently someone forgot to call. Problem solved with a fone call.

A day later my buyer began moving in and noticed that somebody came to re-install another RE/MAX for sale sign. She called and screamed why and who is putting her house back on the market? I thought she was kidding ... she wasn't.
It looks like the REO agent forgot to notify their maintenance people of a sale. Buyer became outraged so I called the listing agent and forwarded some concerns.

Three days later after coming home from work my buyer noticed somebody was mowing her lawn. She called the cops. Cops came and everything settled. Again, apparently nobody notified maintenance of a sale.

All this after having contracts lost/missing through faxes and mail several times. Listing agent didn't know if the property had missing keys or who yanked all the wires out of the power outlets.

I have to credit all the REO agents I've worked with over the years. They do a great job giving the impression that they know their stuff. Or, do they?

Without reasonable compensation I don't recommend REOs.

I market REOs almost exclusively. I like the emotionless seller response and being able to control the showings/marketing/closing aspects without hysterics. [WHY aren't you having my house open every weekend? WHY isn't my house in the newspaper twice a week? WHY can't we close on Friday so I can move out on the weekend?] Timewasting and exhausting when you hear it enough.

pain in the rear questioning sellers are just another objection in the sales process
if i get a seller like that i will offer to let them run their own newspaper adds and take an exclusive agency listing instead of exclusive right to sell, but as the risk goes up for me and the reward goes up for them the commission is going to go up as well. i have had a few take me up on that offer only to have me sell their home and get a higher commission. not to mention the fact that they found the newspaper is worthless for buyers who will actually purchase their home. they normally stop advertising in the paper after an add or 2.

Hey Cliff, when you come up for air tell us how easy it is

I did REO work for a number of years. It helps that I worked almost exclusively with investors and am an investor myself. I started a small side company to do all the prep work for my REO properties and that of other agents I know. The company does all the trash outs, rekeys lawn maintainence and any repairs as well. Doing this increased my profit from those REO properties.

Anything you do not have a crew for or do not have the expertise you sub out. I always got authorization in writing via e-mail for any repairs or onging lawn or landscape work and since doing that I always got paid because as a contractor doing work on the property I could and did on several occasions file a mechanics lien on the title so I was always paid for any maintainence plus associated fees at closing even if I lost the listing.

You are exactly right, everyone wants to be an REO Agent. You have to have a good procedure in place for property preservation, cash for keys, inspect properties weekly, approach occupants and handle evictions, work long hours, meet deadlines, lots and lots of paperwork. AND it seems that always just when you think you might get a Saturday off an AM sends you 3 or 4 new listings at 4:55 pm on a Friday wanting occupancy verified in 24 hrs, BPO completed in 3 days...

It is no use. All of the non REO agents who want to be a REO agent, think we are telling them horrible stories to keep the gold to ourselves.

I received three listings at 6:54pm on July 3rd... those were tough occupancy checks, since we had plans starting at 10:00am on the 4th

I got a new listing on 7-3 also at 4:30; luckily it was one of my local bank clients and I called AM she said don't worry you can go on Monday. But on the 4th I got assigned 10 new BPO assignments from FISERV at 5:45 pm. Do they really think I'm gonna do them on a holiday weekend. I haven't done paid for BPO's except for my clients I'm listing REO for and an occasional one when I begged to help out in the last 6 months. No time.... Need to hire an agent just to do BPO's and develop a cost center for them....