Guide To REO Sales

By
Real Estate Agent with Your Family Realty llc

Dummies Guide to REO Sales

This week I began my intrepid adventure into REO sales by purchasing the contact information for over 130 financial institutions.  I paid about $200 dollars and after receiving the material began the process of filling out vendor registration forms 132 times. (about 5-10 a day).  Although I am still pretty new at this, I was excited when I got a BPO order from a brand new client on the very first day.  So after one day I've already got a 25% of my money back.  I don't know about you, but I like to invest in things that pay off :-)

If your interested in this type of work, here are some ideas for you to follow.

1) Buy the information - I spent two days putting every search term in that I could think of to come up with contact info. for companies that do BPO's and REO sales.  My grand total results - 5 companies.

When I bought the information i had instant access to all the companies.  Now granted some won't apply, (ie. There's one company that only services New York.), but the more you get your application out there, the more opportunity there is for side business.  Make sure your info has links to the exact web page where the application form is located.  I got my information at REO Renegades.  I made back the money I spent for the information in just 3 weeks and also get REO coaching to boot.

2) Fill in the Forms. Not all in one day, but 5 a day will get the job done.  For the forms you'll need a copy of your 1099 (to get paid), a copy of your real estate license, a copy of your E & O insurance (for REO companies), and for one I needed a signed authorization from my broker to receive payment direct from the company.  In addition, you will need all of your contact information and a defined area of service.

When determining an area of service, include an area from your office that you can get to within 30 minutes.  If you in the country this could be 30 miles, in the city 10 miles.  In that circle some companies will want to know the zip codes, some the names of cities, and some just the counties.  Have all this ready.

3) Do BPO's quickly and well.  Let's face it.  You can't live off BPO money, but BPOs are the way to REO listings.  An asset manager will actually test an agent he/she wants to give an REO to by giving them a BPO assignment to complete.  Think about, a $50 investment to see if an agent a) knows his/her stuff and b) is reliable. 

As you do BPO's provide a quality opinion and put lots of info. in the comments.  Follow up with the company to see if youcan be of additional help.  Such contact (by email or phone) can break the walls down for listings.

4) Keep a record.  BPO companies can pay out in a few as 14 days and as much as 2 months.  Put together a spread sheet that includes the date of the order, the completion date, the subject address, the company who ordered, and whether or not it's paid.  My minds not good enough to remember the details, but $50 to $125 is worth keeping a little track of.

5) Do it NOW!  REO sales are on the rise and will reamin steady for at least two years.  Don't let this niche market pass you by.  Besides, with few Realtors doing it, there is money to b e made if you can break in.

 

Comments (22)

Robert Johnson
Your Family Realty llc - Eau Claire, WI

April,

I bought the course in September and have averaged about $650-$850/month in additional BPO income.  I live in a smaller market (100,000 people) that has only 18 REO listings presently, so I have not been offered a listing yet. So I like the additional money and at least my name is out there among the asset managers.

Also, I'm doing about 20 market evaluations a month and locally people are starting to think of me as an expert in bank properties :-) Funny, a couple of investors have actually called me to help them find properties.

Feb 27, 2008 05:34 AM
April Hayden-Munson
Brookfield, WI
Brookfield Wisconsin Real Estate

Ron,

WOW - nice to get investor business!

How much time do you think you spend in creating the BPO?

Feb 27, 2008 05:38 AM
Robert Johnson
Your Family Realty llc - Eau Claire, WI

Each BPO takes me about 1 1/2 hours including drive time (that's 1/2 hour to drive to property and take pictures, usually I do this on my way to and from work) and 1 hour doing comp research on MLS and inputing data.  For an exterior the average pay is about $50 or about $30/hour, for interiors about $75 or about $50/hour.

Not bad extra pay in a slow market!!!

Feb 27, 2008 05:42 AM
Konnie Mac McCarthy
MacNificent Properties, LLC - Cobb Island, MD
Broker/Owner - VA & MD "Time To Get A Move On!"
Thanks for the information, so you found REO renegades to be worth is.....I was told the REO market is saturated with agent....not true?
Feb 27, 2008 11:46 AM
Robert Johnson
Your Family Realty llc - Eau Claire, WI

Response to email inquiry.

We're talking two different products.  The REO world starts with a product called a BPO=Broker Price Opinion, which is either an exterior or interior comparable market analysis.  The companies pay you $50 for the exterior pictures and a comparison with three sold comps and 3 active comps,. $75 if they want pictures of the inside of the house too.

When you are given a listing order, you are usually paid a 5% listing, 2.5% for the sellers side, 2.5% for the buyers side.

Konnie, in my area I compete with 3-4 other Realtors for REO business, in residential sales I compete with about 300.  You decide whom you want to compete against, but you still have to work it hard.

Feb 27, 2008 11:52 PM
Andrew Carroll
Special Asset Management - Saratoga Springs, NY

Interesting.  I am hearing that  the BPO is going to fall off.  I hear that the Banks are going to get their ears pinned back soon by the lawmakers in Washington.  Unfortunately the perception is that a lot of BPO's are just drive by photos and not an accurate valuation of the asset. I have a friend that is an MAI and the Appraisal Institute is pushing the ABA to reccomend an APO vs a BPO.

The Banks need to show  the lawmakers that they are out front on corrcting the subprime crisis. 

Any thoughts? 

 

 

Feb 28, 2008 06:44 AM
Kent Dills
Broker, Dills Real Estate - Bellingham, WA
Real Estate 817-495-8028, Bellingham, Washington

Gee, no wonder appraisers are pushing for APOs vs. BPOs.  Isn't that just basic human instinct to do what is self-serving.

Don't know what the difference is between an APO and a full-out appraisel but I do know this.  Banks use BPOs as the result of a basic business decision.  BPOs compare very favorably with appraisels in terms of estimated value, only they cost about 20% (e.g. $50 vs $250).  It will take quite a sales job on behalf of appraisers to overcome this fact.  Don't know and hope that they can't.

Feb 28, 2008 07:47 AM
Robert Johnson
Your Family Realty llc - Eau Claire, WI

It seems funny to me that someone would question the accuracy and quality of a BPO (Broker Price Opinion).  One could just as easily question the quality and accuracy of some Appraisal. (For Example, how come they are always just a little bit above the offer price :)

In terms of a BPO, the Comps must be within 20% of the subject in terms of age, SF, BR, BA and preferably the same in terms of style and garage.  They must be within 1 mile of subject in city, 3-5 miles in suburbs, and 10 miles rural.  The sold comps must have sold within the past six months.

When you submit the BPO there is a quality control teams that checks it for compliance before they mail it to there client (usually the bank).  If it doesn't meet quality control, they ask you to switch out a comp for another.

How many assessors have people looking over their shoulders to confirm there accuracy?

Feb 28, 2008 12:52 PM
Jeffrey Dolfinger
24/7 Realty Inc. - Poughkeepsie, NY
NRBA Member

Ron, you make it seem easy.  I have been in the debt servicing world, the capital markets, wall street, side of the business for 15 years.  Bpo's may get you into REO but slowly as everyone is doing them.  Most of the major lenders are not taking any more agents.  Cit, Wells, Countywide, B/A, Deutsche etc.  The small lenders I do not know about but who cares anyway 90% of the mortgages are serviced by these majors anyway.

Okay no the expenses.  I got a listing a few weeks back.  My total out of pocket for the 80 yards of trash packed into this 2100 sq ft home $4700.00.  Oh and the clean out guy got attacked by someone stealing the copper, 3k in damage to the home.  The reo I'm doing now, the guy was a contractor and instead of getting dumpsters he used his backyard.  the cleanout will again be around 4k. 

So in the last 60 days I have almost 8k of my own money out their.  Reimbusrments have taken from 30 days at best to 6 MONTHS!.  I did a job for Fidelity who also is not taking new agents last June 07.  I received my reimbursement in January 08!

So if you want to sell reo and become knowledgeable okay, if you plan on listing them I hope you have plenty of cash!

Oh thanks to the onslaught of new bpo agents, the fees have gone from $125.00 per bpo to as low as $35.00.  Here's a business lesson  you cant make money at $35.00 -$50.00 per bpo so the banks are getting the work done for free.  They will burn you out before most people even get a chance at a listing.  How do I know, I used to be the banker in charge of all of the reo. 

Now are you ready for the offers?  Your listing price is based on your bpo in part.  Get offers too low your rating goes down.  I wonder how many investors are offering anywhere near asking in this market?  Answer , a big fat zero!

I write this not to discourage anyone but to make people realize that REO is hard money!

Feb 28, 2008 03:52 PM
Robert Johnson
Your Family Realty llc - Eau Claire, WI

Jeff,

I don't dispute anything you say, but simply add this.  A Realtor needs to decide whether he wants to serve consumers or intitutions.

For consumers, there are lots of advertising dollars to be spent that you don't need if you become an REO broker.  Consumers can be fickle, you can spend weeks with them only to have them go elsewhere.  With banks you have unemotional decision makers that will only drop you for failure to serve.

So simply put, some Realtors are people persons and love the consumer side, but if a Realtor doesn't like that part and wants to still stay on the realty line of work, than maybe REO if for them.

Instead of spending your time and money chasing listing, you spend your time and money servicing listings.

Ron

Feb 29, 2008 01:08 AM
Anonymous
Ron and Jeff,

Ron andJeff,

 I think you both have very valid  points.  Lets be honest the BPO is done to get the listing.

Ron, Kudos to you for staying proactive in this market.  There ia pleanty of work out there whether it is with BPO or the listing.  Staying in top of mind with the decision maker is always the right choice. (The foreclosures rate in Florida was up 150% in Florida January 07 vs january 06.  Scary!)

Jeff,  as you know you take the good with the bad in this arena.  You win some you lose some.  The point is you take care of the institution and he/she will pass out your portfolio to the originators as well and the listing will come.

 When I stirred up this banter it wasn't to knock BPO. at all or to champion APO.  My Gut feeling is Lawmakers are going to really clamp down on the bank practices.  washington may consider discussing makin the banker  get some sort of credentialing/licensing that says they know the properties are valued correctly and loans are approved properly.  That is no simple task.  I think, that the banks are going to have to get out front on this issue and show the lawmakers that they are taking measures to right the ship.  It may be a combination of sructural inspection by a cerifified pro and a BPO or APO.  My point is an MAI has  a masters degree, 4,000 hours in the field before they are certified and their advocates are working on their behalf.  It doesn't make it better,  it just looks better to DC.  Is NAR doing anything in terms of working with the banks to promote Realtors education and credentialing?

 Stay in front of those bankers Ron

Feb 29, 2008 02:19 AM
#13
Andrew Carroll
Special Asset Management - Saratoga Springs, NY

For those doing BPO's I thougt this information would be helpful.

http://www.oag.state.ny.us/press/2008/mar/mar3a_08.html 

 

Andy

Mar 04, 2008 01:20 AM
Cathryn Jones
Assistants For Agents, LLC - Houston, TX

Ron -

Having once been "on the other side" as a Senior Asset Manager, I have a little different perspective.  Many of the BPOs that are being done are not going to lead to listings.  They are being done for other reasons. If and when the asset comes to the open market as a listing, you may or may not get the listing.  Many times listings go to agents that already have an existing relationship with the asset management company/financial institution.  Many assets will have more than 1 BPO received.  It is important to note that many of the "BPO companies" will keep statistics on how accurate your BPOs are. 

I applaud you for taking the steps to begin building the relationships.  Just be patient as many agents have had relationships for years and years with these asset management companies/financial instituions.  As a next step to becoming a desired REO agent, I would encourage you to familiarize yourself with your state's foreclosure laws/foreclosure process.

Best wishes to your success! 

 

 

 

Mar 04, 2008 06:56 AM
Vicente A. Martinez
Prudential Douglas Elliman Licensed Real Estate Salesperson - Woodhaven, NY
Realtor, Brooklyn - Long Island - Queens Homes
Hi Ron. Thanks for sharing this valuable information. Best of luck!
Mar 04, 2008 05:45 PM
Robert Johnson
Your Family Realty llc - Eau Claire, WI

Cathryn and Vincent,

Thanks for your recent comments and thanks for making this a unique blog discussion.  Cathhryn, I hear being an asset manager is just thankless work where there is a lot of pressure and little acclaim.  Is this true?

Mar 05, 2008 12:00 AM
Cathryn Jones
Assistants For Agents, LLC - Houston, TX

Ron,

Hardest part about being an AM is the VOLUME of files they carry!  AMs are great at multi-tasking!  The "best friend" of an Asset Manger is an agent that sends emails that are concise, effective and efficient plus paperwork that is well organized and complete.

 

 

 

Mar 05, 2008 12:32 AM
Eric Egeland
RE/MAX SUBURBAN - Libertyville, IL
SFR, e-PRO, CDPE

Thanks for the post Ron,

Best of luck to you...how is business by the way?

Oct 15, 2008 06:02 PM
Anonymous
Doug

Does the REO Renegades home study really answer the below 4 questions....

- How to get more BPOs (I already have signed up for about 50 companies)

-  What to say when contacted by an asset manager inquiring about your experience selling REOs (or lack of)

- The real reasons asset managers choose an agent -- the secret truth long known by master REO Agents finally revealed

- 21 simple steps for creating BPO�s that get you the listing

Nov 07, 2008 09:14 AM
#20
Anonymous
Eveine

Hi Ron,

Thank you for sharing this information.  I have been thinking of buying this and/or one other system.  There are quite a few out there.  Did you find that it delivered on many of the promises, in terms of how to get investors interested in buying your listings?  I went to the website and saw that it promises alot of things, like where to pay to advertise for REO listings. 

I've been doing bpo's off and on for awhile and wondered if this system could help me break into the REO business. 

 

Nov 07, 2008 09:17 AM
#21
Eric Auger
prudential Americana Group, Realtors - Las Vegas, NV

Hi there:

I just recently purchased a list of over 1,000 REO assets managers.

This is list is what got me started in the REO business. I thought I would share the info with you:

http://tinyurl.com/dj7gbk

Mar 26, 2009 09:30 AM