With foreclosures running rampant, many agents are eager to learn how to establish relationships with lenders and asset management companies in hopes of obtaining REO listings. There seem to be many opportunities to pay for these contacts and even complete "programs" you can purchase designed to train you in how to get and then manage this business. I recently received an offer to buy one for $499 which was 1/2 off the "regular" $998. Realtor Magazine published an article last month which listed some contacts, most of which are now no longer accepting new agents as they have a large enough pool from which to choose already. I would expect that the same is true of the other companies whose contact information is available for purchase. Consider carefully before paying for information of this type.
The servicing of foreclosures requires an agent to act as an eviction contact, which means knocking on the door of occupied foreclosed homes to make contact and begin the process of arranging for vacancy. An occupant may be offered "cash for keys" of $500 or more, which the agent may need to pay out-of-pocket to be reimbursed later by the lender/owner. It requires the agent to arrange for clean-up, hauling, repair of the property, again paid out-of-pocket to be reimbursed later. It requires the agent to establish utilities in their or thier company's name and TAX ID number and pay for them, again to be reimbursed later. The utilities may sometimes include large arrearages that must be paid before the utility company will restore service, paid by the agent to be reimbursed later. You'll quickly see a pattern here; you pay now and get paid back later. In a nutshell, be ready to have some cash available to keep the ball rolling.
The passing of Senate Bill 1137/SB 1137 this week, will without a doubt, increase the responsibility placed on the agent for upkeep of foreclosed properties. Cities will now be able to impose fines of up to $1000 per day for failing to properly maintain a foreclosed home. Tenants in posession at the time of foreclosure are now entitled to 60-days notice prior to eviction.
I recently spent some time interviewing REO listing agents in various areas, comparing fees, quality of asset management staff, reliability and timeliness of reimbursements, inventory available, etc. Most agree that there are some companies just not worth working for. There are many banks/asset management companies that agents agree are truly professional and that we love to work for. All agree that it is necessary to exercise caution in making expenditures on behalf of the institutions, as all of us know of someone who was burned by a company who either went out of business or makes reimbursements months after the request is submitted. Most of us cannot bear the financial burdon for the banks in this market.
I don't know of any agents who "love foreclosures" like we "love first-time buyers" or "love relocation". This is the market we are faced with and as real estate professionals we do have some obligation to work through this glut of foreclosures and do our best to help bring along the revitalization of the market. The sooner these foreclosures find a new owner, the better off all parties concerned will be, including neighbors and the new homeowners.
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