You worked long and hard to prepare the proper resume and the materials to submit to the 100's of REO Asset Managers out there and then it comes....YOU JUST LANDED AN REO ACCOUNT. Sounds like easy money doesn't it? Not so fast my friend. Some of these folks are paid a whopping $10.00 an hour and have never spent two minutes in the Real Estate business and are now in control of your destiny. Here are some of the challenges to working REO portfolios in today's market.
- Asset Managers that will not list at your recommended price due to some crazy formula the investor derives from what was previously owed on the property or what they paid at their own auction. Now you have an overpriced turkey that will require countless hours of paperwork and visits to the property and will be given to someone else when it does not sell.
- Free property management. You will do all the coordination of contractors from rekey to rehab at your own expense and wait 30 to 60 days to get reimbursed only to find out that they LOSTthe invoice and you must wait until the next billing cycle to get paid. I know REO agents that have THOUSANDS of DOLLARS of their money on the street right now and what happens if that company goes belly up just like the sub-prime lenders.
- Many companies will give you listings only to take them away and give them to an Auction Company with the threat that if you do not participate they will not give you anymore listings.
- Several municipalities are now fining the listing agent if the property is not maintained to some standard that they set for us but not for open market transactions. In Bakersfield California today they announced a $1000.00 per day fine for foreclosure property that they will decide the care level on and when they do not fine the seller/owner they fine the LISTING AGENT. Lancaster California now requires all listing agents to register their vacant REO properties with the city for a fee of $105 each which they keep as a revenue stream and then they can send their code enforcement folks over weekly to fine you if they don't like what they see and start a fine schedule until you are in compliance with their standards of cared.
- Often it is more important for them to have their Monthly Report on unsold inventory than it is to actually close an escrow that has been delayed for one more piece of paper that they lost in the system and you are still waiting for a paycheck 90 days later.
- There are way too many cooks in the kitchen. On average there is at least 8 people between myself and the lender/investor who manager to loose paperwork on a regular basis and if they use their electronic delivery systems look out you have no paper trail to show what you did and you will not do it all over again, and again, and again.
- You will do much redundant work because they change their systems on a daily basis and their tedious reporting systems will ask you for reports and updates that are duplicates, and beyond.
- There is no rhyme or reason to their proceedures and they change from file to file.
- It may take an extraordinary long time to get an offer through and the buyer will not wait it out in many cases.
- Most REO agents are handling 100's of listings and are so overwhelmed that they can't or won't return a buyers agents phone calls let alone respond to the low ball offer the buyer wants an answer on TODAY!
- You may be making enemy's of your fellow professionals on the other side of your deals when your Asset Professionals can't or won't cooperate with mandated disclosures and paperwork that they need for their file to get paid or stay in compliance with the law.
- Asset companies in different time zones will have you working a 14 hour day M-F and then you need the weekend to show property to potential buyers so when and where is your day off?
So what's an REO Agent To Do? Well perhaps we should stand shoulder to shoulder with other cooperating REO agents and make some noise in OUR industry instead of competing for these so called magic accounts. We have turned into a bunch of frightened rabbits just to get listings that cost us time, money, exposure, and all for what? A chance at that big REO account that will save our business. Do the math guys and gals you are probably making about $5.00 an hour working for these guys and the stress level is enormous. Most of these properties are not in Beverly Hills and the commission is quite low in comparison to the work you perform. If you want to put this into your business module you need to consider the consequences and your work vs reward. It can be a windfall for some but most agents I know do not have the systems or tools in place to do it properly and they burn out quickly. Remember that it is still on average only 30-40% of most pending sale business so maybe it is time to concentrate on the other 60-70% in the open market.
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