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REO Properties

By Harry DaBroker

Real Estate Broker/Owner with Silver Hill Realty

September 01, 2008 07:03 PM

I deal a lot with properties in foreclosure, however I have never represented the seller. Recently I was dealing with a property where the listing agent did nothing (NOTHING) (NOTHING!!!!) but put the property on the market. Everything else, including paying several bills, was done by myself and the attorney's paralegalist, who was out of state.

I just got an e-mail from her attorneys office asking me if I deal with REO property management. I know nothing about representing the seller on REO's. from what I have seen and heard, it is a headache. You are responsible for spending a lot of money on upfront costs waiting to get money back at the closing and sometimes your reimbursement chacks are sent late. Most of the agents that I have dealt with do nothing but complain so I have never really thought about it and I have always been on the buying end trying to beat the price down to by it for myself or my clients.

Ok, enough ranting, what i would like to know is

Are they really as much headache as I hear?
Is the money worht the headache?
What all does it entail having to do?

If anyone has any knowledge expertise or guidance, I would greatly appreciate it.

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Suzanne Champion

N.J. Realty - Westerville Ohio - Columbus, OH

You'll get more input on this from others...but the upfront costs are indeed a fact of REO real estate. So are lower commissions (you always pay a "referral fee" for these). You can imagine the diffficulty in a seller's market when a REO agent is carrying a lot of properties that aren't selling, but EVERYONE is tire-kicking.

Good luck with your research!

Sep 02, 2008 12:01 AM

Andrew Monaghan

The Monaghan Group - Glendale, AZ

CRS, GRI, EPro Associate Broker

Upfront costs are a challenge and im coming to the realization that they banks dont want to pay you back as tehy make it soo dificult to get paid back.

Sep 13, 2008 05:35 AM

Anonymous

Jenny Kottel, Broker/Sales, Sparks NV Dickson Realty

A listing agent for REO's completes Drive By BPO's, a full Interior BPO when it's ready to list, in some cases, handles Cash For Keys as part of the eviction process, hires and supervises people to do trash outs, cleaning, lawn maintenace and sometimes a general contractor to rehab the place. Many require the agent to place utilites on in the agent's name. In between all that activity, they market, show property, complete monthly status reports and periodic full interior BPO's just to keep the seller updated. In my experience, the money is fronted by the listing agent and reimbursed by the owner within an apx. 30-60 day time frame. It is very detailed work and each has a different set of instructions...lots of scanning/PDF's/tons of photos/accounting. Fees vary by company but often a reduced rate.

It's challenging, interesting, fast paced and worth the time and effort! "Tire kickers" are exasperating because they are such a waste of time. Depending upon your market, you might also find yourself acting as a "trainer" to buyer's agents about REO...lots of folks are still learning and want/need education.

Oct 10, 2008 02:09 PM

Rudy Detgen

Troop Real Estate Inc. - Moorpark, CA

Realtor, Real Estate Agent, Homes, REO - Moorpark, Simi Valley

Hi Harry,

An interesting statistic you might check out in your own area is; what is the percentage of REO sales vs. total sales? I'm looking at 3rd quarter stats in Simi Valley California right now, and the percentage is staggering! Approximately 45% of the sold properties were REO!

The point I'm trying to make is that in this market any listing you can get is worth it. Sure REO's are more work than owner occupied, but it beats sitting on your hands, and I think know I'll be a better agent as a result. There are some good things about them as well.

No emotional owner with an unreasonable price in his head.
Not having to coordinate showings around the owner occupant.
I have never staged an REO property yet. (not saying I wouldn't stage the right property)
Very little disclosures to provide

It is true that the commission is usually less, 2% to 2.5%, I have never seen 3% on the listing side. There are carrying costs like locksmith and ongoing utilities, and the banks are making it difficult to get reimbursed. If you do not submit your paperwork with precision you won't see a check anytime soon.

Where I live and work, and in this market, it was a matter of survival for me to go after the REO's. I was speaking to asset managers about work over two years ago when I saw things changing for the worse.

Rudy

Oct 11, 2008 08:53 AM

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