75 5. Working with REOs and REO Specialists In this module: Working with a listing agent on an REO property Understanding the impact of inventory on your client base Following the foreclosure transaction revenue Understanding buyer representative compensation

76 REOs Before and After Foreclosure Lenders’ costs accumulate: Accrued interest Legal fees Condo fees/assessments Property taxes Water/sewer Pre-foreclosure sales make the best economic sense for everyone.

77 Discussion Question 9 1.What could you say to convince a lender that a buyer’s representative is the “best bet” for achieving a profitable liquidation of a property in pre-foreclosure?

78 Working with a Listing Agent REO property buyers are typically investment driven. When showing properties, accompany the buyer—do NOT allow the buyer to go alone. Properties may be indemnified from disclosure (inspections are necessary to protect the buyer). Concessions may or may not be made for repairs.

79 Writing the Offer 1st offer will be written on the buyer rep’s contract, then follow listing agent’s recommended procedure Listing agent sends offer to the asset manager Asset manager approves or submits a counter-offer addendum Senior management approval may be necessary

80 Title Companies and Inspections Title Companies Typically selected by the seller Inspections Educate buyer on problems Sellers typically do not make concessions City Point of Inspection Required in some states Used to assure the quality of safety, soundness and security Buyer typically is responsible for repairs

81 Walk Through and Closing Final Walk Through Assures property is in the same condition as originally viewed Should be sure this is included in the agreement Closing Dates Adhere to the dates—may be charged late fees Asset manager goal may be to close at the end of the month

82 Learn the Business Inside Out Working alongside of the REO listing agent is the best way to learn the business “inside out” The end result could be a better outcome for your buyer-client and future business for you.

83 Benefits for You and Your Buyer-Clients Retaining clients Differentiation Attracts investor/clients Expands your sphere of influence to high-visibility clients like lenders, attorneys, and CPAs

84 Other Revenue Opportunities Broker price opinions (BPOs) Drive-by BPOs Internal and external BPOs BPOs consider required improvements (repairs), CMAs consider completed improvements May require a reconciliation or “Recon” when a wide variance of BPOs and appraisals occur

85 Other Revenue Opportunities Preservation services Prepares property for sale Makes sure property is vacant Includes re-key, trash-out, sealing (boarding up)

86 Getting Started Research Web sites looking for listings, investors, self-marketing opportunities, eg, Contact REO dept of banks Create foreclosure-specific marketing Other?

87 Discussion Question 10 1.What actions can a real estate professional take in order to get started in the foreclosure business?

88 Foreclosure: Prevention and Opportunities for Buyer-Clients Thank you for your participation!