New agent wanting to get into REO's and BPO's
Flipper/Rehabber · Lexington, KY · Member since 2016 · 74 posts · 14 votes
Hello! I am a relatively new agent (6 months or so) and I am wanting to get into listing REO properties and do some BPO's as well to get started. I have read a little bit about how to get started but I am by no means an expert and wanted to get some advice from someone with some experience. I am in the state of Kentucky if that helps.
I am in the process of signing up for RES.NET and wanted to get peoples advice on using this site and others like it to get BPO'S. Have sites like this one been helpful to you and are they worth the money to access them? What are other ways to approach banks to get them to send work your way? It seems like getting through to the asset manager is one way but I really don't even know where to start in contacting them and what I should say once I get ahold of them!
Any advice would be greatly appreciated
Samuel,
+1 for Ronald's advice. Where you hang your license can make a big difference. If your DB/agency or an agent in your office handles a lot of BPO/REO then it makes things much easier. If not, you're in for some work.
Go visit REO properties (you need to do this to know your market anyway, and you might find a deal to buy), find out who does property preservation work. Their number is usually on the paper in the window. Call them, tell them what you want to do, and ask for their contact name, number and what institution owns the property (you do have a database set up, right?). Talk to the lawyers in town that do foreclosure work, tell them what you want to do, ask for names, numbers and companies.
Finally, your appraisers, find out if they are doing any work for REO/foreclosures, and see if you can get names/numbers. BTW you should have a couple of appraisers in your pocket. FInd out who their #1, #2 and #3 clients (Mortgage Brokers/Bankers). Then go see those Brokers/Bankers, take them out to lunch or coffee. Ask for buyer referrals, BPO/REO names and numbers. Let them know as you get listings and buyers you will send that business their way. When marketing your listed REO property, make sure there are some examples of possible financing/payments from your Bankers/Brokers in the house, and available for your buyers.
After that, it's smile, dial and service. You might want to become a full service REO person (Preservation/Repair/Management). Once you start in the BPO/REO business, this is also a good place to start to understand the NPN business. It's asking lots of questions about how that process works.
I would suggest that this is a sideline business (don't neglect the regular listing/selling business) at least until you get it up and running.
Good luck!
Jim
Unless you've had prior experience with REO's and BPOs in the past 8 years, you'll probably experience a lot of frustrations along the way. BPOs are a fraction of what they once were and REO listings are slim with the majority of the REO Listing going to experienced agents.
I don't want to discourage you, but those are the facts Nationwide. Much was written on how you could make a fortune with REOs and BPOs but that day has come and gone.
Talk this over with your Broker, see if they have a plan in place for REOs.
Good Luck with your venture.
-ron
Samuel,
+1 for Ronald's advice. Where you hang your license can make a big difference. If your DB/agency or an agent in your office handles a lot of BPO/REO then it makes things much easier. If not, you're in for some work.
Go visit REO properties (you need to do this to know your market anyway, and you might find a deal to buy), find out who does property preservation work. Their number is usually on the paper in the window. Call them, tell them what you want to do, and ask for their contact name, number and what institution owns the property (you do have a database set up, right?). Talk to the lawyers in town that do foreclosure work, tell them what you want to do, ask for names, numbers and companies.
Finally, your appraisers, find out if they are doing any work for REO/foreclosures, and see if you can get names/numbers. BTW you should have a couple of appraisers in your pocket. FInd out who their #1, #2 and #3 clients (Mortgage Brokers/Bankers). Then go see those Brokers/Bankers, take them out to lunch or coffee. Ask for buyer referrals, BPO/REO names and numbers. Let them know as you get listings and buyers you will send that business their way. When marketing your listed REO property, make sure there are some examples of possible financing/payments from your Bankers/Brokers in the house, and available for your buyers.
After that, it's smile, dial and service. You might want to become a full service REO person (Preservation/Repair/Management). Once you start in the BPO/REO business, this is also a good place to start to understand the NPN business. It's asking lots of questions about how that process works.
I would suggest that this is a sideline business (don't neglect the regular listing/selling business) at least until you get it up and running.
Good luck!
Jim
@Samuel Watts Do the math.....there about 10-15% the number of Foreclosures/REO's as there were a few years ago.....with all those experiencd REO agents still around.
Normal path to do REOs and BPOs:
You have to become a broker. In Kentucky, you need at least 2 years working at lest 20 hours per week as a licensee with experience validation.
Once you pass the broker's exam and get a broker's license, you should take a BPO certification course, which you can't take until you have 2 1/2 years of experience. You'll need to have your own E&O insurance or least what is provided by your office. Resume so they can see your experience. W9. Keep your packet up to date.
Then you can join various networks to get BPO assignments. Once you've done enough BPO's, you will build up enough trust with certain lenders to be able to list their properties.
BPOs don't pay much. No one in my office does them. It's not a product use of their time. But, if you want to get into REOs then you'll need to do them.
Lenders want brokers with experience. To get that you can work with buyers to acquire REO's.
The other option is to network with banks. It's easier if you used to work for one. But if you haven't, you have to find a way to make contact with the various departments that handle working out their inventory.
You should also learn property management skills. Often, you'll have to deal with evicting occupants, changing locks, replacing stolen lockboxes, boarding up broken windows or doors, dealing with clean out, landscaping (towns are complaining about zombie homes). All on your own dime until you're reimbursed.
Most agents are getting out of REO right now, they can't make any money. The best days were right after the market collapse. Obviously, this will vary depending on your area and runs in cycles.
The listing agent makes less than the buying agent. So, REO agents make their money on bulk. But that means a lot of property management and you'll need a staff to help out.
Hi Sam, most of the inventory of REO's slowed down in the past years mainly because banks are selling the non-performing paper (notes) to hedge funds rather then taking them to REO's and then selling them through local agents (as stated by these professionals on this thread). I have become a note investor specifically to gain access to both performing notes and these non-performing notes that can become my "personal REO" through foreclosure or DIL (if borrower is unable to modify their loan). You might want to consider note investing. We have a group of note investors starting up this year in Lexington, KY. Let me know if you'd like to learn more about this alternative investing.
Hello Sam,
I am in Michigan and here you do not have to be a broker to do BPO's so make sure thats not the case in Kentucky. Like others said visit as many REO's as you can to get a feel for them and what to generally expect. If you able to I would go clear value consulting and click connect. There is alot to fill out but this may help you.
Hi Sam, most of the inventory of REO's slowed down in the past years mainly because banks are selling the non-performing paper (notes) to hedge funds rather then taking them to REO's and then selling them through local agents (as stated by these professionals on this thread). I have become a note investor specifically to gain access to both performing notes and these non-performing notes that can become my "personal REO" through foreclosure or DIL (if borrower is unable to modify their loan). You might want to consider note investing. We have a group of note investors starting up this year in Lexington, KY. Let me know if you'd like to learn more about this alternative investing.
Hi, I've recently come across note investing and I'm very interested in the strategy. Any advice on where to acquire more information before I dive in? Thanks for any insight you can provide.