How I Got To List REO's...or No, Not Another Free BPO!

My business today is focused on the REO market and working directly with banks and Asset Managers – taking the REO listings and selling them in our area. What I would like to do here is answer the question of what does it take to break into this business, as I am asked constantly by agents, not only here in Hemet, CA…but Southern California and across the country as well.

First, I should point out that to be a successful REO Listing agent, do not expect this to be a slam dunk walk-in-the-park listing arrangement. It is very expensive and very time consuming and definitely not for the weak at heart.

You next need to understand that REO listings typically do not come from a bank, rather from an Asset Manager which is a third party vendor hired by the banks to manage and liquidate large portfolios of properties. It is the Asset Managers who then hire the local vendors, including Title Companies, Escrow Companies and local REALTORS®. Of course, there are exceptions to this rule, such as Countrywide who manage the entire process themselves.

Requirements that an REO agent must posses to obtain REO listings include a license to sell real estate (agent or broker) in your state as well as an Errors and Omissions insurance policy (minimum policy limits range from $500,000 to $1,000,000). Perhaps the most important and most difficult requirement to have an Asset Manager assign a listing to you is a list of references.

OUCH – How Do You Get a Reference if You Have Never Listed an REO?

That I suppose is the age old question in any business endeavor. I suppose like in any situation, you have to find a creative method that will work for you. Some agents will join a REO team for the experience and then branch out on their own. Others will network and do their best to get some one with authority to like them and give them a chance. Others will start like I did and do BPO’s (Broker Price Opinions) – delivering a superior product and constantly impressing asset managers with my in-depth knowledge and understanding of the local market and impress them by ALWAYS delivering a finished product to the Asset Manager before it is due.

Before I go any further, I should let you know that this series of article is not going to be an in-depth tell all. I can tell you right now, I am not going to be revealing my specific resources. This information I would consider to be a propitiatory trade-secret, so please don’t ask for this information, for free. I suppose, occasionally, I will let a bit slip out and if you read through the entire series I am preparing I am almost certain that I will reveal more than I wanted to. However, please understand this is my business and I do have competitors, just like you do.

I got involved doing BPO’s for asset managers back in late 2006. One company paid me $50 a piece to do them – with the express understanding that all I was doing was BPO’s and that they did not get involved in the REO side of the business. They did tell me that Asset Manager’s were always given my contact information and that I might be assigned the REO from time-to-time. Well that hasn’t happened in a year and a half.

Another company that I aligned myself with, after figuring out the BPO side of things, wanted me to do at least 10 BPO’s for free; that I would be evaluated on the quality of my work and my ability to meet their deadlines.

This was my introduction to REO’s!

It actually started out kind of rough. I had done numerous BPO’s, not really keeping accurate track. They were slow in coming – I think my first month I only did about 2. Then 3 or 4 the next month, and another 3 or 4 in the third month. In the meantime, the BPO Company had me cranking out 20 or more a month.

I recall turning down 2 or 3 in a row, when the assignments came into my email, as I was getting bored with them. Then I got a phone call asking me to please do one of the reports for them and I pretty much told this Asset Manager to take a hike that I no longer wanted to be involved with this company as I no longer believed they really had REO’s to assign and that I felt as if I was being played.

The next week, I got another call. This one took me for the ride of my life. I was told that after my firing of the company, they took a closer look at my collective work before transferring me to an inactive status. My portfolio had then been circulated between a circle of decision makers and was told that I had been selected to accept an REO listing. They wanted to know if I was interested in the assignment.

Duh

What they didn’t tell me was that I had to pay a very expensive subscription to a website that the company uses for the management of their REO’s. Once again, I thought to myself that it was just another gimmick. First they had me do close to $1,000 worth of BPO’s for free and now they want me to spend an amount close to that to subscribe to their site for one stinking REO. How many ways can I get burned by one company I found on the Internet?

Well, at this time, I talked it over with my now partner. Unbeknownst to me, he had been trying to pierce the REO veil for over a year using his contacts and establishing new ones in the industry. The Title Company, with his contacts that he had been pursuing, still has not been able to help us advance in the REO world – so be careful what tree you bark up.

My confident and now partner was all excited about what I had been able to accomplish and encouraged me to take full advantage – heck he even offered to ante up the fee if I wanted. What I had stumbled in, he had been working very hard to accomplish, without any apparent success on the horizon.

So the rest is as they say, history. We have formed a very impressive system for our business, building a team of true professional along the way. Just like working any real estate niche, we realized there had to be a system in place so that we could duplicate our efforts while maintaining our very high self imposed standards. It has taken a lot of time and energy to accomplish what we have. You just don’t wake up one morning and find yourself with 35 REO listings. I may have gotten 2 or 3 that way…but after that my team and I have proven ourselves every step of the way.

If you subscribe to my blog, you’ll have the opportunity to follow along as I document the highs and lows of the last year. You’ll share in our triumphs and low-points as well. We are not without mistakes that have been turned into lessons. I’ll share how we made our mistakes and turned lemons into lemonade.

I look forward to the next article, when I’ll discuss more of the entry requirements into the REO world and some important tips I’ve picked up and trained on about BPO’s.

Blessings to all who read,

John Occhi, REALTOR®
Century 21 Crest - CrestREO
CrestREO.Com
Hemet - San Jacinto Valley
951-927-9473

Servicing THE REO Needs of Asset Managers, Banks and Lending Institutions in the Hemet - San Jacinto Valley, Temecula, Murrieta, Winchester, Wildomar, Menifee, Sun Valley, Perris, Moreno Valley, Romoland, Homeland, Nuevo, Banning, Beaumont, Cherry Valley, Yucaipa, Redlands, Mentone, Loma Linda and throughout South West Riverside County and The Pass Areas of The Inland Empire in Southern California. If you are a buyer, investor, first time home buyer or are just interested in REO real estate, please contact us at the above website or phone number.