REOs: 2011 May Be a Year to Remember
The three letters to remember for 2011 are: REO. Real Estate Owned properties.
Perhaps a better way to spell out REO is Really Excellent Opportunities, because that’s exactly what they are.
Many agents today are tapping REOs for extra income. And if you think the demand to get these properties sold has skyrocketed because of recent foreclosures, you’re absolutely right.
Consider these statistics:
- RealtyTrac, the foreclosure data firm, reports that distressed homes – including those in default, scheduled for foreclosure auction, and REO – accounted for 25 percent of all U.S. residential sales in the third quarter of 2010.
- What’s more, RealtyTrac’s foreclosure market report for the third quarter of 2010 shows that foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 930,437 properties in the third quarter, a nearly 4 percent increase from the previous quarter. One in every 139 U.S. housing units received a foreclosure filing during the quarter.
Fortunately, agents can bring valuable services to the world of foreclosures and make serious money, too. I have a client in Virginia who made $1.3 million last year working the listing side of foreclosures.
Of course the catch is that REO sales are different because you’re dealing with a bank instead of just a typical seller. So if you’re an agent new to REOs, get educated. (I have a free sheet I’m happy to e-mail you on REO certification. Just e-mail me at REO@CorcoranCoaching.com.)
And you’ll need reserves – cash to carry you through until you start selling houses and getting reimbursed for your upfront costs like rekeys, utilities, maintenance and the like. I’d suggest as much as $3,000 to $5,000 per REO property.
Before you can market the properties, you have to get them. So just like what you’re used to for normal listings, you have to market yourself. But in the case of REOs, you’re marketing to the loss mitigations departments of banks.
Here’s where rubbing elbows comes in handy. You have to take time to develop relationships with those in the mortgage default industry. Network wherever and whenever possible. You might even consider hiring a contact manager, someone who can get you in the door with asset managers and outsourcers.
As for groups and organizations, REOMAC, the trade association for the mortgage default industry, is a good place to start. Use back doors that most agents aren’t using. For example, get to know key players at Safeguard Properties, the mortgage field services company and Field Asset Services. Let them know you’re looking to break into the market. They have direct contact with clients and they may be able to help you. And network with other REO agents in non-competing markets.
Outsourcers tell me they often meet agents at various trade shows, at the National Association of Realtors conventions and through their company’s website, where agents can register to become a real estate services provider.
Once you make headway into the industry, the key is to let asset managers and outsourcers know that you can handle volume. But never over promise and under deliver with your asset managers. Do exactly what they want the way they want it done. Period. Again, being prepared before you get in front of an asset manager is critical.
So the trick is to have your ducks in a row before you enter the REO marketplace. But know that once you learn the basics of REO, the rest falls perfectly into the bailiwick of what Realtors do best: market properties.
What are you your thoughts on REOs? Have you taken the plunge? How’s it working? Are you on the fence? What’s holding you back? Please share any comments or questions you have about this article. Send e-mails to Bob@CorcoranCoaching.com.
Bob Corcoran is a nationally recognized speaker and author who is founder and president of Corcoran Consulting Inc. (CorcoranCoaching.com, 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.
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