A Career in REOs?

Question

Hello BP,

I'm in the process of getting my real estate license and was looking at REOs as a potential niche. So far from what I gather its a process to get started in this path but I think it could be very lucrative. If you're already working in this niche, I would like your opinion on the current state of things given where the market has been as a whole lately. I heard a good way to get started in this is by doing BPOs. Are you still getting BPO work? Are you getting enough REO listings? Are they still being sold or have things slowed up in this niche as well? Hope to get some insight.

Bruce Lynn · Answer

Possible, but I would say right now there aren't that many REOs....at least in my area.  10 years ago HUD might have had 400 at any one time in the DFW metroplex area....I can't remember exact numbers, but there were plenty to choose from and if owner/occupants didn't buy them, investors would.  Now there might be 40 for all of Texas.   For NY right now I see 10 for the entire state.   https://www.hudhomestore.gov/L...   HUD of course is not the only player or source, but gives you an idea of how many opportunities there might be.     Depends on how much income I guess you need, but my guess is you would need to work more than this niche.

Just a warning too, while there is money to be made, it can also be a ton of work.   I did this for a while back during the foreclosure crisis and asset managers were pretty demanding and sometimes asked for unreasonable things....they'd ask you to do things like turn on utilities and do property maintenance out of your own pocket and would say they would reimburse you, but when all said and done they wouldn't.  It got so bad at one point I just had to stop fronting them any money and just put them in touch with vendors or property preservation companies that billed them direct and some of them got shafted too.   There were listings I also got probably 100 offers on....everything from $1 to list price....asset managers weren't always fastest to responded, so not only do you get 100 offers, you get 200-300 phone calls asking about the offer, and all the details, you get text, emails, and more calls asking why you didn't respond to $1 offer.....so you have to be geared up for that.

Probably more coming down the line....and most of the agents who did this 10-15 years ago are out of the business or won't ramp up again, so you have some runway I expect.

Mohammed Rahman · Answer

Hey Account Closed - congrats on making the decision to start out in real estate! It's not as easy as it looks, but with the right amount of hardwork and knowledge you can make it work for you. I'm an investor & realtor that quit his job and got into real estate full time late 2021.

I have a couple of videos for new agents on my YT channel (checkout my BP profile, and click on the YT link) that you will find helpful (for some reason if I link directly to a YT video in the comments, the moderators remove it). You will "hear" a lot of things from people telling you that BPA, REOs, etc etc. are a good way to get started and ultimately you will learn from trial & error.

The best advice I would give is to join a brokerage that has enough agents in it that wouldn't mind mentoring you for a couple of months, that's the quickest way I learnt. An advantage of doing this with a more senior agent is if they let you host their open houses, you will most likely be able to retain the clients for your own buyers list.

Good luck and feel free to connect if you want to chat further!

Jonathan Dicent · Answer

Thanks for your input Bruce, it’s greatly appreciated. Yea I’ve heard a lot of that as well. All the work that has to go into it, up-front out of pocket expenses and so on, definitely food for thought if this is going to be the path I walk especially as a rookie agent. I was thinking Of just getting started doing BPOs for some of the BPO companies as a way to get a little exposure, experience, and get some money in my pocket. Would you happen to know if there’s enough work from those companies to go around or is that drying up with the REOs as well(which would make sense)

*Anyone else on here welcome to join the discussion.

Bruce Lynn · Answer

I think most of that BPO work got outsourced to India now...and also over the last 10 years there have been some pretty good AVM models developed, so many lenders may not even use BPOs any more.....I haven't had any request for BPO in years.  It is a way to get started.  I used to charge $100 for them as it was a fair amount of work and it was too easy for people to ask you to do them for free....so thought I would cut the serious asset managers from the tire kickers by charging.   Probably they can outsource them now for $10 or less.   That's my guess.   https://www.expertmortgageassi...

One thing you might do is pull the preforeclosure list in your area.  Sort it by lender.  Pick the small ones where when you call you can get to the asset manager in 1-2 tries.  So not the big mega banks where you will likely never find the right asset manager if they ever answer.   Then start talking to them.  Ask them if they need BPO or plan to list the property?....First you get one lender, then another, then 3....then you have a track record...and go from there.

A Career in REOs?

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