In order to get REO listings From Banks you will need to do the following:
- Understanding What A Bank REO / Bank Asset / Foreclosure Is
- Educate Yourself On What It Takes To List and Sell REO and Banks Foreclosure Properties
- Prepare To Market To Banks & Asset Management Companies who Have Foreclosures
- Contact these Banks / Asset Management Companies by Phone, Mail & Site Visits
- Build Your Team To List REO Properties
- Market & Sell Your REO Listings
What Is A Bank REO / Foreclosure?
An REO stands for “Real Estate Owned.” Meaning the bank has taken this property back through the foreclosure process.
This happens when a borrower has defaulted (not paid) their mortgage for several months. There are three ways a borrower can avoid a foreclosure:
- Get the mortgage whole by paying back mortgage payments and any fees
- Deed in Lieu where the bank and borrower work an agreement to give the asset back to the bank
- Short Sale where the bank agrees to allow the borrower to sell the property short of what is owed.
If a borrower is not proactive, the bank will surely foreclose on them and take the property back.
Banks are not in the business of owning property. They are in the business of lending money. So it is imperative for a bank who has property also referred to as REO (Real Estate Owned, Foreclosure, Bank Asset) to sell it and get it off the books as quickly as possible.
This is where real estate agents can Thrive in their business!
What Do You Need To Know In Order To List and Sell REO Properties
Listing REO properties is no easy task. Yes, you can make hundreds of thousands of dollars listing these bank foreclosures. But it takes work to list REO’s.
Now that you know what an REO is, let’s review what’s going on inside the banks.
For one thing, always refer to a foreclosure or REO as an “Asset” when speaking to a bank representative or asset manager. This is a term that is fluid throughout the banking industry.
Smaller banks in many times will not have a designated asset manager to handle the foreclosures. So it is important to find out who handles foreclosures when the get them.
Larger banks will have dozens and even hundreds of asset managers. In many cases they will outsource them to Asset Management Companies who handle inspections and hiring / firing real estate agents. REO Nationwide for example.
A list will be provided below.
How To Market To Banks To Get REO’s / Foreclosure Listings
In order to market to banks to get REO listings you will want to do a few things.
- First, you will want to build your professional resume with your bio, sales stats, marketing plan / techniques, financial strength and how you separate yourself from the competition.
- Second, you will want to gather a list of banks and asset managers to market to.
- Third, you will need to apply with them all via online, email and mail. I recommended doing all 3 (or 2 if they do not have online applications).
Make Weekly Contact With The Managers Handling REO / Foreclosures
95% of your competition isn’t going to be aggressive in listing REO properties. The 5% who are, likely will win the business. Just explain to each manager that you are very disciplined in your marketing strategies thus the consistent calls.
Set a weekly schedule to call the bank and REO asset managers, each and every week. And call them. THIS IS VERY IMPORTANT. If it is a local bank or credit union stop in every other week all depending on how many REO’s they get. Also, take them to lunch if possible.
“Don’t do you agree that if I am calling you every week in order to just get one listing from you that you will be getting weekly updates on the property condition / status?”
This is my script I would use all the time. The REO / Asset managers usually have 1-2 agents already in your area working the foreclosures. Some times they are happy with the agents and do not need any more. However, all you are doing is asking for one (1) REO to handle and list on their behalf.
If you are aggressive enough over several weeks or even months, you may get your shot! If you are fortunate to get your shot, then you have to outperform the other agents who list for that bank / asset management company in your area.
If you do, they will give you more. Sometimes more than you can handle.
When contact REO / Banks asset managers you will want to keep copious notes as you should be calling 20-50 weekly. Be sure you know what the conversations were like so you can keep a good flow going.
Remember, they are humans on the other side.
Build Your Team To List REO Properties
If you are serious about listing and selling REO properties, then this is probably one of the first steps you should take.
The asset managers are going to rely on you in many cases for the following which you will need the appropriate staff / contractors to assist:
- Initial Inspection – The initial inspection, be wary as in many cases you will not know if anyone is living in the premises like the previous owner or even squatters. Depending on you area you may want to hire a security officer to attend with you. Either way, be sure to have at least one other person with you and be prepared. Check out this article on Agent Safety.
- Trash Out – I can tell you from past experience that 80% of our REO listings had a ton of trash inside and out. You will need a good company on hand to trash these places out.
- Handyman – Many times asset managers will ask you if there are any simple things that can be done to the property to ensure FHA / VA financeable, etc. And / or to make safer. You will want a good licensed handyman for this.
- General Contractor – Sometimes you will have to hire a GC for larger projects. A big item here in Florida are pools. By law pools have to be secured with a fence, screen lanai, etc. And many times they are destroyed needing a platform built over the entire pool. A good GC on hand will be helpful for some of the larger jobs.
- Lawn / Land Maintenance – Most times upon your initial inspection of your REO listing, the lawn, shrubs and trees are completely overgrown. You likely will need to hire a company to do an initial clean up as well as routine lawn care.
- Weekly Inspections. This is one of the more tedious tasks you will be responsible for all the way up to closing. Most REO managers will demand weekly inspections with date stamped photos. I recommend having someone on your team to handle this so you can work on listing more REO properties.
Market & Sell Your REO Listings
At the end of the day, these REO listings will be priced competitively and sell fairly quickly. But, now that you have your REO listing, go to market like any other listings with high quality photos, drone and video.
Send all of these links to your REO / Asset manager for review and hopefully to impress. Let’s face it. You see what these other REO agents are doing. In many cases it is a shit job.
Go above and beyond and impress. You will get more listings from the Asset Managers.
Want To Help Families Instead Of Banks?
If after reading this you have a desire to help families avoid foreclosure, then take a look at this comprehensive guide on Short Sales.
REO / Asset Management Companies
Below you will find a list of REO / Asset management companies you can start with. Be sure to do you own independent research on each as well. Some outsourced asset management companies go out of business or merge with others, so some links may not work in the future.
I wish you much luck in listing and selling REO properties!