You just have to love real estate. Even when times are turbulent, a smart agent can still make a good living in the business.
Oh sure, you hear some agents and brokers whining about the market and how bad things are. But there are plenty of other agents singing a much different – and a much happier – tune.
These agents are tapping an often untapped source of extra income, real estate owned (REO) properties – properties that go back to the mortgage company after an unsuccessful foreclosure auction. And yes, you’re absolutely right; the demand has skyrocketed because of the recent explosion of defaults and foreclosures.
I personally think you could call REOs -- Really Excellent Opportunities! That is exactly what they are.
Here’s the gist: banks are in the money business -- not real estate. They don’t keep real estate on their books; they want cash on their books. So the banks are looking to sell these foreclosed properties. And there you have it – business just waiting to be plucked. Low hanging fruit ready for the taking for the ambitious agent who likes to make a little extra money.
Hmmm. Let me rephrase that – sometimes a lot of extra money. One of my clients, whose business is solely in the REO market, had a commission income in 2006 of $590,000. After signing up to work with us in our one on one coaching program, she finished 2007 with a commission income of more than $2.5 million. And this year, she’s looking to double that.
And another client who, just days after finishing the first phase of our REO Quick Start Program, received approvals from several banks and got his first home to sell. And these aren’t small commissions – most range from 5 to 6 percent.
The only catch – and I mean the only one – is that, yes, REO sales can be a little more complicated because you’re dealing with a bank instead of just one seller. But that’s precisely why I started offering my REO Quick Start Program, to eliminate the complications, and to make it simpler and easier for agents and brokers to take advantage of REOs.
After you spend just a few hours looking over the details of our Quick Start Guide, you are ready to go out and start making deals. After compiling the information that you need, which is outlined in our “What You Need to Get Started” document, you are literally days away from being approved as an REO agent. Right now we have over 70 banks that offer brokers and agents REOs. Plus, a list with over 500 names and direct contact information for asset managers and pre-marketers – the folks who actually assign the properties. We also include four group calls during one month where you can ask questions of an implementation specialist. Basically, we give you the tools to get started in this highly profitable venture in real estate.
Some of your early considerations should be:
- Having funds available to care for and maintain the REO properties
- Hiring help to handle REO work
- Creating an effective REO team
- Staying in contact with REO departments for new business
- Focusing in on the most profitable zip codes
- Streamlining the REO process
- Developing REO specific scripts
- Targeting investors as buyers for REO properties
- Handling the costs of fixing up properties
- Crafting effective marketing strategies for REO listings
- Continuing your normal business of taking residential listings while maintaining REOs
Another service banks pay agents and brokers for is the BPO -- Broker Price Opinion. Basically it’s your paid opinion of what a defaulting property is worth. The bank pays you to assess the property and assign it a market value.
I know some agents have found it easier to start with BPOs and then move into the REO market. They use BPOs as a way to get to know the players at the bank. That’s certainly an option and I say go with what you feel most comfortable with. But the key message here is this: a lot of money is being left on the table for brokers and agents.
Best of luck to you!
(Bob Corcoran is a nationally recognized speaker and author who is founder and president of Corcoran Consulting Inc. 800-957-8353), an international consulting and coaching company that specializes in performance coaching and the implementation of sound business systems into the residential or commercial broker or agent’s existing practice.)