Steps to take to become an REO agent

25 Replies

Hey all,
I was just wondering how all of you REO agents started out and got listing from asset managers. Since I invest in foreclosures and I'm an agent. I wanted to know what steps to take to potentially get listings down to road.
Do I just sign up on all the REO sites? What extra could I be doing on equator.com?
Any info is greatly appreciated.
Thanks!

Well, that's a great question. I used to actively do REO (until I started doing more investing) and I did a silly video on YouTube of how to do it.  

Good question though!

@Karl Krentzel
Great video Karl! Very informative, thanks!

Cory, I think BP member @Mark Ferguson is an REO listing agent and he may be a good person to speak to.

Medium jcrp logoJames Park MBA, Johns Creek Realty Partners LLC | [email protected] | 678‑865‑6250 | http://www.johnscreekrealtypartners.com | GA Agent # Broker 344981, CA Agent # Broker 01894781, GA Lender # NMLS 157229

Mark Ferguson
Thanks for the sites. I will check them out and your blog as well.

You need to start doing BPO's and lots of them. Find some of the servicers that the banks use, like Nationstar Mortgage, IServe and others. Also try the Bank of America website. There is turnover as many agents tire of all the work involved. That said, you need to know what you are getting into. Talk to an REO agent in your area and find out how much work they have to do. I think you may be surprised at all the tasks the listing agent is required to do. It is a lot of work!!! Also you cannot buy any of the REO's that you list. Good luck.

Kevin Page thanks for the info. I was unaware that I cannot buy any of the properties.
Could I buy it under an LLC.?

Cory of course you couldn't buy properties. That would make the selling process tainted.

As a listing broker you have a responsibility to get the best price and terms for the asset and to be impartial.

In fact asset managers get a BPO from a third party that are only getting a fee for the report. In this way they can balance that against what the listing broker who is getting assigned the listing gives for a value. This helps to keep the listing broker honest about things and not low ball it for one of their investors etc.

Your LLC you have a beneficial interest and ownership to disclose so that wouldn't fly either if you were the listing broker/ agent.

The expenses to list and sell REO's is crushing. I won't go into it all here. With REO's drying up if you want to sell them it might be best to work for a large REO broker and handle the buyer leads. Let the REO listing brokers deal with the brain damage and you just close buyers. With reducing inventories you might pick up a straggler REO listing here or there but nothing to give massive traction. That ship sailed over 5 years ago. Of course asset management companies will sell you to spend hundreds on programs to be CERTIFIED in their systems. They do this knowing they do not have hardly any listings to give out so most generate revenue in BS fees.

The way that industry really works is not what people think it is. A bunch of smoke and mirrors, BS fees, false promises.

If you go to agentsonline.net and look at the REO/broker section you will gain a ton of knowledge if you are serious about it.

Medium allworldrealtyJoel Owens, All World Realty | [email protected] | 678‑779‑2798 | http://www.AWcommercial.com | Podcast Guest on Show #47

@Joel Owens Joel is correct. The REO shipped has sailed and it may not be worth your time. I am still getting a few here and there but I will be phasing out that business by the end of the year.

@Joel Owens Thanks for all the info Joel! I'll definitely read up on it a bit more on agentsonline to see if it's something I would actually like to do.

The BPO theory is not true.  You won't get any listings from BPOs .. sorry. :\

However, when you do get REO Listings, you will be required to complete BPOs on those listings.

Medium topendlogo gold med2Phil Z., TOP END Properties | 203‑936‑7776 | http://www.rehabhousesinct.com

I think it's a little premature to suggest that REOs are a thing of the past. There are pockets of the country that have chronically depressed economies, and their housing inventory still includes a substantial number number of REOs -- enough to sustain a healthy business. I work a lot in one such area, Baltimore City, and I am sure there are others all over the country. BTW I'm not an REO agent myself, but know a few who do quite well with it in the Baltimore area. I live in Washington DC, which has quite a different economy, and REOs are pretty scarce.

If you are uncertain, look carefully at the community where you want to work, and consider its growth prospects and demographics, how well educated and employable the population is and how well houses are selling. If the economy seems to be picking up, there will be fewer foreclosures and therefore fewer assets from the banks. In that case you should go in a different direction. 

Nancy Roth

@Cory E

Forgive me, I forgot to include your name for the comment I just posted above this one.

Best,

Nancy Roth

Originally posted by @Nancy Roth :

I think it's a little premature to suggest that REOs are a thing of the past. There are pockets of the country that have chronically depressed economies, and their housing inventory still includes a substantial number number of REOs -- enough to sustain a healthy business. I work a lot in one such area, Baltimore City, and I am sure there are others all over the country. BTW I'm not an REO agent myself, but know a few who do quite well with it in the Baltimore area. I live in Washington DC, which has quite a different economy, and REOs are pretty scarce.

Nancy would you mind sharing your experience with working with REOs. Properties that meet my criteria here in Baltimore City and Baltimore County seem to be REOs. I do not have the capital to invest in them myself. My current business model is wholesaling. From what little research I have done here on BP, I believe it is possible to wholesale REOs. Any insight? How have you been acquiring REOs in Baltimore? What REO agent/broker have you been working with? Are good REOs in Baltimore going for asking, above asking or below asking? Are you working with an asset manager?

Thanks in advance.

E. Harris

@Eric Harris I'd like to be more encouraging, Eric, but REOs are generally problematic for wholesalers. I believe regulations require banks selling off their real estate assets to list them with a licensed agent, which is why the original post is kinda focused on becoming an REO agent. But as @Joel Owens mentioned above, agents may NOT buy their listed REOs for themselves and/or their clients. 

In Baltimore the agents who seem to do best with REOs have cultivated their relationships with the banks that have the assets, as noted in the You Tube video posted by @Karl Krentzel. The banks start sending them more listings as the agents build a track record of managing and selling them expeditiously. Perhaps you can pick up and wholesale a listing whose price has come down after a long while on the market. But you have to make sure the bank will let you assign the contract. I do know of cases where this has worked for a wholesaler.

Houses that have not sold after a certain period of time generally go to auction, often starting at lower prices, though the bank may set a reserve price for an acceptable bid. If you are tracking the market, get on the email lists of auctioneers in Baltimore, like Alex Cooper, Ashland Auctions, and Billig and track what is coming up for on sale in those neighborhoods. Online auctions may be another source. In many cases you can buy a property before it goes to auction, if you meet their reserve price, which may work in a later wholesale transaction. 

There's also a ton of government-owned REOs, like those listed by Fannie Mae HomePath, HUD, Freddie Mac, and FDIC (see websites). But those are often involved in a lengthy, bureaucratic selling process, which is, like, death to wholesalers.

Best of luck to you, whatever path you choose.

Nancy Roth

I just came across the post, and I see there are a couple different perspectives when it comes to BPOs and being a REO agent. I am trying to figure out if one must have a Broker's license in order to be able to take on REO listings AND perform Broker Price Opinions (BPOs)? Any guidance would certainly help. 

I do a lot of REOs, and the only thing I will tell you is that doing BPOs will not get you any listings.

Medium topendlogo gold med2Phil Z., TOP END Properties | 203‑936‑7776 | http://www.rehabhousesinct.com

Hey Cory. I list and sell 100+ REO's a year in the Baltimore, MD area. Depending on location there is little or a lot of inventory nationwide. Getting in with banks is not impossible and is something that you have to spend some time working on... building a resume and doing constant followup with banks and asset management companies. A great book that is mostly about being a real estate agent is 6 steps to 7 figures by Pat Hiban. He has a chapter about how he went about switching in 2008 from a traditional agent to a REO agent to weather the market.

It is correct that you can not buy any of the properties you list because of the conflict of interest. It is labor intensive requiring a lot of man hours. If you get in you need to do volume to support the staff that needs to be hired to manage it all. Let me know if you have any questions... here to help.

I'll echo what @Phil Z. says about BPOs - I used to read how people would say to do BPOs in order to get listings. That has NEVER happened to me and I used to do LOTS of BPOs. 

I spent well over a year tracking the HUD AM bidding process and then applied and got it. I was well prepared.

You could make the argument now is a great time to get in, and when large inventory of REOs hit the market again, you'll get that wave. 

I will add that large sources of REOs such as Fannie, HUD, etc. are really trying alternative disposition strategies so even less inventory is trickling down to the MLS.

[email protected] | 215‑490‑4851 | http://www.atanosmanagement.com | PA Agent # RS314542, NJ Agent # 1221341

@Mark Gallagher  "alternative disposition strategies" - Interesting... can you explain/list some of these? 

I fired and blacklisted a listing agent working a property for me that tried to buy the property we were selling even though their offer was over list price. That agent will never get another property from us again. If an agent tries to buy a property there is a huge conflict of interest- how can the client trust the broker/listing agent? Another issue is how can the bank/asset manager trust the listing agent in that they will present all offers? There are plenty of other issues that come to mind with this as well..

Great video @Karl Krentzel !

Does anyone have recommendations for banks or services to register with to get listings? I'v registered with HUD a few months ago but have never heard anything back.

Should I track down the asset manager of local banks and email them directly?

Malcolm Lawson, Key Partners of Keller Williams Select Realtors | [email protected] | 4104438140 | http://YourMarylandRealEstateAgent.com