Do you want to start selling foreclosed properties? Here's how!

By
Real Estate Agent with Ozarks' Independent Realty

I list and sell foreclosures. Not a glamorous job, by any means. All you have to do is read some of the posts and look at some of the photos in the REO groups here, and you will get an idea what I am talking about. When my "emergency kit" that travels everywhere I do includes such things as bug repellent to try to keep the fleas off, Vick's Vaporub to put under my nose so as not to smell my newest listing, disposable rubber gloves because I'd really rather not touch anything, and a complete change of clothes in case all of the above fail, it gives you an indication of how messy my job can get. Really. I am not making this up.  Yet nearly everyday I get emails or private contacts from agents on AR and other forums I belong to asking the same questions.

1)"How do I get started selling foreclosures?"

2)"Can you give me a list of contacts at banks so I can start selling their properties?"

3) "Can you pass on my name to your clients and put a good word in for me?" and, one of my favorites,

4) "How much money do you make selling foreclosures?"

Now I know there are a lot of agents out there afraid of the slowing market, afraid they won't be making many (if any) sales soon, not knowing how they will manage to pay their bills if they don't make a sale. I understand. I know that the news is full of all the doom and gloom of the rising foreclosure rates so any agent who is looking ahead sees the vast potential earnings of selling bank-owned homes. Again, I understand. So, I decided to answer these questions publicly to save you the time of having to contact me and the other REO agents directly. So please, pay attention, learn something, then follow the instructions...

1) To get started, you need to do BPOs. Don't ask what they are; if you don't know, you aren't ready to sell foreclosures. And you need to be able to do them well and accurately. Again, if you can't, you are looking in the wrong direction. To get started doing BPOs, you need: a)experience, b)common-sense, c)clients willing to hire you to provide BPOs to them (notice I said "hire," not "pay," as some companies will hire you but you do the work for free), d) organizational skills, e) a good digital camera, good running vehicle, computer, ability to complete reports and upload photos online, f) experience. I know, I already said "experience," but that is one thing you truly need to have in order to do good BPOs. How do you get clients? By doing research. That doesn't mean emailing every agent who says they do this work and asking for their contact list, it means spending hours online reading everything you can find about the process, educating yourself on good and bad companies, and registering with some to get started. Don't ask how to find this information, because if you cannot figure it out, you're not ready...  Everything else in REO work hinges on being able to do a good BPO. Some agents I know did 20+ a month for YEARS before ever getting a listing, others had a listing after 2-3 BPOs, but they are the exception, not the rule.

2) No. I mean, I CAN give you a list, but why would I? Will you give me a list of all your sellers who may need an agent to sell some more properties for them? Would you give me a list of all your well-qualified buyers who are ready to buy right now so I can get their business? Just send me your whole SOI? Of course you wouldn't. Nor will I post a list publicly because there are/will be agents in my area on here, and why would I give such information to my direct competition? Again, if you do your research, you will find plenty of companies to register with. If you aren't willing to spend the time doing that, you aren't able to properly handle REO work.

3) No, I will not pass your name and info on to my clients. I don't know you. All I know is it appears that you are too lazy to do the research, register with companies on your own, and earn your business. To refer you to my clients, I have to really think you know what you are doing, are honest, and won't reflect badly on me. If I don't know you, except through emails asking for information, how can I, in good conscience, put in a good word for you? Now, if you contact me to discuss real estate and REO work in general, and I see that you know what you are doing, have some experience, and can do the job, I have no problem putting in a good word for you...

4) Not enough, and none of your business. Look at it this way, when you sell foreclosures, the banks expect you to pay, up-front, for such things as lock changes, cleaning, utilities, trash-outs, etc. On each property I am usually out at least $1000 for these expenses. Sometimes it takes over 6 months to get the money back. Seriously. So, on a lower priced, nasty property, I may have $3000 out in expenses. The commission is a flat $2000. If another office sells it, they get half, so my office gets $1000. there is probably a referral fee of anywhere from $250-$350 that gets paid to the company who assigned the listing to me. So my office gets, say $650, which is split with my broker. If you then factor in the free BPO I had to do when it got listed, the weekly property inspections, monthly marketing reports, advertising, gas for inspections and showings, etc, I may have cleared $100 on some properties. Yeah, I make more on some properties, or I wouldn't be doing this, but the fact remains that may be all you get on some REO sales. If you're not willing to work for that, you don't need to get all excited about starting to list foreclosures.  And because all the agents who are starting to look into doing foreclosure work are going to be competing with me and you, the pie gets sliced even thinner as far as how many listings you get assigned to you. My belief is, if you have not been an established REO broker for at least 2 years, you probably aren't going to get enough business from this point to keep yourself afloat before the market shifts again and foreclosure rates drop. Is it worth it? Sometimes yes, sometimes no. If I weren't already an REO broker would I be trying to get into this niche? Hell no! Not now when the market is full of agents trying to get started...

I don't mean to upset, anger, or otherwise dash anyone's hopes of becoming wealthy selling foreclosures. I am just calling it as I see it, so take it or leave it.

And to all the other established REO agents out there, please add anything I have missed...

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Tags:
real estate
foreclosures
reo
bpo
listing
foreclosure
bankowned

Spam prevention
Show All Comments
Rainmaker
571,868
Bill Gillhespy
16 Sunview Blvd - Fort Myers Beach, FL
Fort Myers Beach Realtor, Fort Myers Beach Agent - Homes & Condos
So, Amber, why keep doing these ?
Nov 30, 2007 06:58 AM #1
Rainer
72,273
Matt Ratcliffe, REALTOR
Keller Williams Realty Brazos Valley - College Station, TX
I knew there is a lot of work involved, thanks for the post.
Nov 30, 2007 07:05 AM #2
Rainer
103,309
Armando Rodriguez
QUEST REALTY SERVICES - Orlando, FL
Orlando Homes 4 Sale, Real Estate Broker-GRI

WOW! I guess if you do enough of them it's worthwhile?? Volume based?

In any case good luck!

Nov 30, 2007 07:42 AM #3
Rainer
86,640
Ron Parise
LocateHomes.com - Cape Coral, FL

The grass always seems greener on the other side of the fence. Thanks for the education.

My suggestion if you want to profit from all the foreclosure action is to find some buyers.  I have a list tacked up over my desk,  of the big players in my market. When I get a buyer that wants to see foreclosures I search their listings to find property to show.

Nov 30, 2007 07:59 AM #4
Rainmaker
24,999
Shari Posey
Berkshire Hathaway HSCP - Long Beach, CA

In my opinion, REO sales are easier than regular sales primarily because you take the personality of the seller and trauma of the market out of the process. I happen to market my REO listings the same as my regular listings but very few REO agents seem to do this. My regular sellers call me every other day worried, nervous, angry, pissed off, etc. because nobody is buying their home.

I have always fronted money to sellers to make repairs, etc. About 50% of the time, I don't get reimbursed; it's just want needs to be done to make the sale.

Relcoation listings require at least as much paperwork as REO, PLUS you have a real seller on the other end with real emotions.

My biggest challenge with REO is getting more REO business. Since you can't get it the traditional way of door knocking, warm calling and other face-to-face methods, I'm trying to figure out ways to make my online applications more appealing.

 

Nov 30, 2007 08:10 AM #5
Rainmaker
24,999
Shari Posey
Berkshire Hathaway HSCP - Long Beach, CA

In my opinion, REO sales are easier than regular sales primarily because you take the personality of the seller and trauma of the market out of the process. I happen to market my REO listings the same as my regular listings but very few REO agents seem to do this. My regular sellers call me every other day worried, nervous, angry, pissed off, etc. because nobody is buying their home.

I have always fronted money to sellers to make repairs, etc. About 50% of the time, I don't get reimbursed; it's just want needs to be done to make the sale.

Relcoation listings require at least as much paperwork as REO, PLUS you have a real seller on the other end with real emotions.

My biggest challenge with REO is getting more REO business. Since you can't get it the traditional way of door knocking, warm calling and other face-to-face methods, I'm trying to figure out ways to make my online applications more appealing.

 

Nov 30, 2007 08:10 AM #6
Rainer
20,998
Amber Bourland
Ozarks' Independent Realty - West Plains, MO

Bill- I don't know- maybe I'm a masochist? Actually, most sales make me more money than the example cited, however, andy agent wanting to get into REO needs to be prepared for deals like this. I personally like dealing with most banks better than most typical sellers, as they reduce prices regularly if called for, understand changes in the market, and know well that listings don't always get an offer the first week on the market. However, they also tend to list for 60-90 days, then often the listing gets sent on to another agent and all the original agent's work is for nothing. But I love the challenge and like working with investors...

Ron- For the average agent who doesn't want to go through all the crap of being the listing agent, it is best to handle REOs from the buyer's side. Actually, if you think about it, working with buyers is the best way to make money in real estate anyway. If you work with investors or those looking for foreclosures, keep an up-to-date list of all REO in your area, and update as sold/reduced/etc.

 Shari- In some ways, the actual marketing and sale of REO is easier. It's the preparing for market, expenses, and paperwork that hurt most agents. I don't do relo so I have no idea how that all works. With banks you generally have a more knowledgable seller, but sometimes even they are unrealistic. I would never front money to sellers if there wasn't something written regarding getting paid back. What if the property doesn't sell? And there are probably VERY few instances of having an owner-occupant want to list where the house has several inches of animal feces on the floor or used meth syringes laying around the house. Just for those reasons, REO is inherently more difficult to deal with!

Nov 30, 2007 08:58 AM #7
Rainmaker
24,999
Shari Posey
Berkshire Hathaway HSCP - Long Beach, CA

Hi Amber,

Oh, if you saw some of my sold listings! I have sold houses with mold all over the walls (no feces though), the roof caved in, roaches everywhere, dog poop covering every single spot in the backyard (I thought they were rotting plums!), and I did sell an old meth lab last year...I always have a few of these each year--it's kind of a joke at the office. Thankfully, my REOs haven't been bad.

I try not to front too much money nowadays but if I have to do it I caulk it up to cost of doing business...like marketing--and take it off as a business expense on taxes.

So far I haven't experienced anything mysterious or especially hard with REO sales, other than getting my foot in more doors.

Nov 30, 2007 09:13 AM #8
Rainmaker
316,251
James Downing - Metro DC Houses Team REALTORS®, CRS, GRI, ABR,MRP, MilRes
Real Living | At Home - Washington, DC
When Looking to Buy or Sell - Make the Right Move

Thank god for the REO Agents - we need them -  I have no need to do this.  I cringe when I have to show one of these places in a week to a buyer.  If I had several of the to list - I would probably leave the business and work for Starbucks.  At least I'd get free coffee!

 

Nov 30, 2007 02:07 PM #9
Rainer
33,219
Brian Corwell
RE/MAX Sauk Valley - Sterling, IL
Sterling, Illinois Real Estate

Amber,

 As an agent that also does many REO properties I salute your quick witted responses to those who also want the REO information handed to them. I spent many hours both in research as well as doing many bpo's to get to the point that I am now. I never share much of the information expecially since it may one day be used against me... By the way, who is your contact at XYZ bank...lol

 Like you I too have many stories of reo properties and the condition that people have left them in, the stuff left behind and all that...thankfully no dogs or cats left behind, but the occasional squirrell in the attic or racoon dead in the basement.

Happy Hunting!

Brian Corwell

 

 

Dec 02, 2007 11:06 AM #10
Rainer
20,998
Amber Bourland
Ozarks' Independent Realty - West Plains, MO

Shari-  I have seen some things I would rather not get into in a public forum, but I understand totally what you're saying about the condition of some of these homes. What's really sad is that most don't get that way after the foreclosure, but people actually live like that. A lot of times you see signs that there were young children in the homes, too, and it's hard to imagine anyone raising kids in some of this filth.

James- I could only wish we had a Starbucks around here!

Brian- For all the crap (literal and otherwise) that I have had at some of my listings, I have shown some other REO brokers' listings that were far worse. My husband also does property preservation, and I get to help at times. Dogs, cats, racoons, squirrels? How about goats? In a mobile home with run of the house (maybe had something to do with all the hypos stuck in the walls)... I have problems with others asking for me to just give them information, such as bank contacts, etc. I cannot even guess the number of hours I spent doing my own research, learning basics of appraisals so I can do accurate valuations, and weeding out the bad companies and wrong information I have come across. The REO end is not the same as conventional sales, so I feel if an agent isn't willing to put forth the time and effort required to do theirown research, they may well be getting in over their heads. But, I have no problem sharing and networking with established REO agents in different areas....

Dec 03, 2007 02:58 AM #11
Rainmaker
89,332
Paul Moye
Benchmark Realty - Franklin, TN
Broker, GRI, SRES
can I forward this BLOG to all of the people who keep calling and asking for my lists????
Dec 03, 2007 04:09 AM #12
Rainer
20,998
Amber Bourland
Ozarks' Independent Realty - West Plains, MO

Sure! Just add in some of your more memorable experiences first...

Like how your clean-up crew may end up suing you for getting poked with a used hypo in one house, then finding out the person lost the house because he was in the hospital dying of Hepatitis C... Oh, sorry, that's another of mine... 

Dec 03, 2007 04:59 AM #13
Rainer
20,998
Amber Bourland
Ozarks' Independent Realty - West Plains, MO

Okay, I have to add to this, as I had an interesting call this past week from an agent nearby who also does REO work. This agent was assigned to do a "second opinion" BPO on one of my up-and-coming REO listings. She called, of course, for the lockbox code and to ask if there were any warnings about the property. This is a great idea- all second opinion agents should do that before they go to the house. I gave her the information about where there was a bad spot in the floor, to bring her nose-plugs or gas mask, and to bring a flashlight since the home was stripped and no wiring means no lights. These are all things we need to know when going into a new REO...

Then, she asks the million dollar question: "What do you want me to bring the value in at?"

WTF? I told her "Whatever your comps and adjustments bring you to believe it will sell for."

People, when you are doing BPOs, and the bank hires you to give them a "second opinion" BPO, it is because they want 2 or more opinions, not just the listing agent's opinion, restated by someone else! If you don't realize how important it is for a bank to have different opinions and to use them to derive a listing price, then you do NOT need to be providing BPOs at all!  Do your own work and come up with your own, justifiable, well-thought-out opinion. That is what you are being paid to provide, and doing anything less is flat-out fraud, in my opinion.

This subject gets me so riled-up, I may have to write more about it!

Feb 21, 2008 01:27 AM #14
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainer
20,998

Amber Bourland

Ask me a question
*
*
*
*