A recent column on how to work the foreclosure market generated more than a few responses. Of particular interest was the question of how to go about getting REO (bank-owned property) listings, which represent a significant – and growing – percentage of all existing home sales.
The truth is that we’re now in the fourth year of this foreclosure cycle, and those agents just now looking to get REO listings are definitely late to the game. Moreover, a “business as usual” approach doesn’t work in unusual business cycles. And we’re definitely in one of those right now. Most REO asset managers aren’t taking cold calls, and seldom look at unsolicited requests for listings, even though we all know they need the help.
One of the biggest reasons for this is that they’re simply overwhelmed by the sheer volume of bad loans they’re processing. In a “normal” year, the industry might process 160,000 REOs; we’re seeing about half that volume every month. So there’s a “Catch-22” scenario where the people who need help to move the assets are too busy to get the help they need.
Speaking with agents around the country in the REO space, what I’ve heard time and again is that the best way to get listings is via personal referrals. Find someone in your area who’s doing REO business, buy him or her lunch and ask for tips on how to get into the business. If there’s someone you already know, ask for an introduction to their REO asset manager with the notion of getting some of the listings that your friend isn’t getting, and finding a way to refer each other business going forward.
Another, less obvious, way is to focus first on REO sales rather than REO listings. You might start by working with some buyers who are interested in REOs (which would give you access to REO listing agents, and sometimes the asset managers) or in foreclosure short sale properties (which would get you in touch with loss mitigation managers, who can introduce you to the REO folks). Go to local investor club meetings to find these buyers. Sponsor the coffee and donuts – it’s the cheapest marketing you’ll do all year.
Look into opportunities with smaller, local banks and credit unions, which may not have embedded infrastructure in place to deal with REO disposition. Network: Go to local or national meetings of trade associations that focus on the REO and default markets like REOMAC (see www.reomac.org) or check out some of the larger industry events like the annual Five Star Default Servicing Conference (www.fivestarconference.com) to meet people in all aspects of default servicing. Also, look into opportunities with companies that handle REO assets on an outsourced basis like Keystone Asset Management, National Default Servicing and USRES (you can find them all with a Google search) and see if they need local market coverage.
Above all, don’t give up. We’re going to have REO inventory that needs to be sold for at least the next 2-3 years and if someone’s going to sell it, it might as well be you.