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REO MARKET

2. How to Get REO Listings from Banks

3. Real estate owned properties or REOs are a class of property owned by the bank or any other government agency following a failed sale attempt at a foreclosure auction. When home buyers default on their mortgage payments, foreclosures remain the only option for lenders. However, if the bid is unsuccessful, the property is listed as an REO in the bank’s books. It will then select a real estate agent or broker, who will oversee the sale process, and earn a sizeable amount in commission. With foreclosures taking place increasingly, banks rely on these agents to sell the property on their behalf.

4. In order to get the REO listings from banks, it is important that you educate yourself about the REO industry. You will need to maintain a strong portfolio, which convinces banks that their property will be sold, and all the necessary requirements will be met.
Banks and asset management companies have strict regulations and will only put their faith in those agents who are qualified and competent

5. You will need to register yourself with the bank by providing a signed W-9 form, copy of your license, Insurance policy and other relevant information. Moreover, don’t forget to mention the zip code as listings will be handed out accordingly.

6. In order to save some time, list yourself in REO directories or build a Broker Price Opinion (BPO). REO directories are an easy way for banks to trace your existence, which they obtain through the internet or through companies such as REOBroker and AssignREO. BPO is another route for agents wishing to get REO listings. This is a report which compares other properties of similar dimensions in the area, giving banks a fair idea of the value of their own real estate. Preparing this report allows agents to gain valuable experience and show they have the necessary expertise to assist banks with foreclosure deals.

7. Having gained valuable knowledge, reach out to the banks or the asset management company, handling the REO case. The industry usually relies on word of mouth, and any agent who has a good reputation is likely to be given the task of selling the foreclosed property Fill out the application by providing
details of your qualifications, licensing
and experience. Read the fine prints in
the contract and start with the work assigned to you

8. What does a REO broker do?

9. REO stands for Real Estate Owned and is the term banks use to describe properties that went through foreclosure and the banks own. Many traditional agents tend to think listing REO properties is a pretty easy job; get listings, put them in MLS, submit offers and collect a check. The truth is, when you list REO properties, it is a lot of work! Working with banks is much different from working with a traditional seller. REO brokers are working with out-of-state sellers who never see the property. We have to be the eyes, ears and nose for the seller. Here are some of the items you have to do when you list REO properties.

10. 1. REO agents drive a lot inspecting property
A REO agent has to constantly inspect properties. Most likely the properties are vacant and have a better chance of being vandalized than an occupied property. Most banks and HUD (department of housing and urban development) require weekly inspections on properties. They also require an initial inspection to be completed on the property with 24 hours of the property being assigned.

11. 2. REO agents handle maintenance and repairs
When you list REO properties, the banks will expect you to hire contractors to maintain properties and complete any repairs. This includes rekeys, winterizations, yard maintenance, and in some cases full rehabs. When doing certain repairs we have to get at
least two bids and sometimes three, before the work
can be done. If the work is going to cost more than the
bid, we have to get prior approval before any additions
can be made. We are not allowed to use any friends
or family for the work being done.

12. 3. REO agents Front a lot of money
Many banks also expect the REO agent to pay the contractors for any work done. The REO broker then has to submit invoices with proof the work was done (before and after pictures) to the bank and wait for the bank to reimburse them. A REO agent can have $10,000 or more in outstanding invoices per property! Many REO brokers have problems with banks not paying back reimbursements in a timely manner or at all. We have to keep very good track of invoices and make sure we are getting paid back. Some banks even charge us processing fees for paying their bills for them.

13. 4. REO agents need to know about repairs
Banks require a REO agent to be knowledgeable about the repairs needed on a property and the cost to repair. Whenever I receive a new assignment, I have to walk through a house, note any items that need repaired, take pictures and then calculate the cost of those repairs.

14. 5. REO agents take a lot of pictures!
I have to take pictures of everything!  I have to take pictures of every room, each exterior side, the yard, address, street scenes and sometimes neighboring properties. Most pictures have to be date stamped, but listing pictures should not be date stamped. I literally have thousands and thousands of pictures on my computer.

15. 6. REO agents have to know how to complete BPOs
A BPO, is a broker price opinion and is like an appraisal, but performed by an agent. A BPO consists of sold comps, active comps, subject details and commentary explaining all about the subject, comps and values. The banks require comparable properties to be within a certain age, square footage and distance from subject.  They also prefer similar bedroom count, style, and condition. Many forms will also require adjustments to be made for any differences between subject and the comps.  Whenever I list REO properties, I also have to complete a BPO on the property.

16. 7. REO agents have to know how to handle cash for keys and evictions
One of the most difficult jobs when you list REO properties, is completing cash for keys and evictions. Cash for keys, occurs when a bank forecloses on a property, but the previous owners or tenants still live in the property. The bank will usually offer the occupants a certain amount of money to move out in a certain amount of time. Many times they will offer twice the market rent for a property to move out in 30 days.
When the occupants move out, they have to take all personal belongings and clean the home. If they do not clean or remove everything, the REO agent is not supposed to pay the occupants. If the REO agent does pay the occupants and the home is not clean, then it is possible the bank will charge the agent for cleaning! If a cash for keys agreement can’t be worked out, then the bank will evict. The REO broker has to coordinate the eviction with the sheriff and clean out crew. The REO broker has to be there for the eviction and oversee everything.

17. 8. REO agents list a lot of properties
Finally, we get to list REO properties! When we get a listing from the bank, they give us 24 hours to list it in MLS and send the MLS sheet back to the bank. Most banks have certain wording they want in MLS to convey to the public or other agents. We are supposed to write a detailed marketing description and treat the listing as if the bank were a traditional seller who wants the home portrayed positively. We have to upload multiple pictures, room measurements and other pertinent information. Some banks will require the sign and marketing materials (flyers) to be at the property and pictures sent to the bank within 24 hours of the listing agreement being sent.

18. 9. REO agents submit a lot of offers
If a home is priced right we usually get offers right away and sometimes multiple offers. The seller loves multiple offers, because they can try to get people into a bidding war. The REO broker sees a lot of work ahead, when there are multiple offers. With each offer, the agent has to submit either the entire offer or the terms of the offer to the bank depending on the system the bank uses. Once an offer is submitted we wait for the bank to respond and we convey that to the buyer’s Realtor. When we get multiple offers, we have to submit those to the bank, then send out a multiple offer form to all agents involved. Wait for new offers to come in and then resubmit all the offers again. Depending on the system the bank uses, it can take from 5 minutes to 20 minutes to submit an offer.

19. 10. REO agents have to handle inspections and appraisals
With many banks the REO broker is responsible to get the water and all utilities on for inspections and appraisals. We have to meet the city or utility company, get everything turned on and then have the property re-winterized if it is during the winter months.

20. 11. REO agents have to know about closings, loans, etc.
During the under contract phase, the listing agent has to update the bank on the buyers loan process, inspection, appraisal and any other issues that come up. If there are appraisal requirements, inspection requirements or lender problems, we have to communicate with the bank, buyer’s agent and come up with solutions. Many banks won’t make repairs, even for appraisal requirements. In those cases, the home goes back on the market and the entire process starts over again
Prospecting in its purist sense is the development of prospective customers that are in the market to buy your products or services. Prospects are the lifeblood of any sales person, there’s an old effective but corny saying that says, “A salesperson without prospects is a salesperson without prospects”. 

One of the key things to remember is that although prospecting is an essential part of a sales cycle it is a separate form of activity and should be focused upon to produce a quality list of potential buyers to enable you to start the sales process.


21. 12. REO agents may or may not be at closing
We made it to closing!  Some banks require the REO broker to be at closing and some do not. I prefer not to be there, due to the time it takes. I can also do more to solve a problem at my desk in the office, than I can at closing. After closing, we have to get our lockbox, sign, take utilities out of our name and get all invoices into the bank ASAP.

22. 13. REO agents have to work on strict time lines
The last thing to know and the most important when you list REO properties is the bank’s timelines. Each bank has different requirements for when tasks are due, but it is very important that the tasks are completed on time. I usually get 24 hours for initial inspection, 48 hours for BPOS, 24 hours for MLS sheets, 72 hours for HOA info and there are many, many more tasks. If you do not complete tasks on time, the bank will find someone who does. There are a lot of agents looking to get into REO and the banks do not have to look far to find a replacement.

23. 15. REO agents have to teach other agents

24. 16. REO agents have to communicate well
Communication is huge for a REO broker since we are on call 7 days a week. Asset managers will call or us at all time of the day and on the weekends if they need something. It is expected that we get back to them within the same day if not within a couple of hours of when they contacted us. There are many weekends that I am working, because I received a new assignment on Saturday or Friday night. I have 24 hours to complete tasks, not 24 business hours. I also have many buyers and agents contacting me all the time. I have to be good on the phone, even though I try to get people to me as much as possible.