Deciding to become an REO and HUD listing agent was not easy for me, but it was one of the best decisions I ever made. Before I was an REO agent I struggled to find my niche in real estate; I did not like showing houses and calling people I did not know. Selling REO properties for banks provided me with a way to make money selling houses without cold calling people or even showing houses to buyers. I created a steady stream of business listing services from banks and I eventually began listing HUD homes as well.
I have sold over 500 houses over three years thanks in most part to REO and HUD listings. I was able to hire an assistant and I hired another assistant and my career took off. I now own a real estate brokerage (Blue Steel Real Estate), own 20 rental properties and complete 15-30 fix and flips a year. There is no way I could do all of this without finding my niche in real estate through listing REO and HUD homes.
How hard is it to become an REO or HUD listing agent?
Becoming an REO listing agent takes time and hard work; it will not happen overnight, or in one month or maybe even a year. It took me about six months to start getting REO listings after I first decided to go after the business. It took me about two years to get enough listings to know I had found my niche and could focus my career on REO. Not only does it take time to become an REO agent, but it also takes work. You have to be willing to handle rejection because this is a very competitive field. You have to be persistent and it will cost money to get started. The key to being successful as an REO agent is networking, going after the right companies and not giving up. Below is a video of me heading to a new REO assignment.
What does an REO listing agent do?
Every bank, asset management company, hedge fund or government agency has different policies and procedures to list and sell houses. For a detailed description of what an REO agent does, check out my complete guide to listing REO properties. An REO agent has to inspect properties, hire contractors to re-key and repair properties, deal with occupants and evictions, list houses, complete BPOs and much more. Some real estate agents feel an REO agent simply lists a home in the MLS and their job is done; there is much more involved.
What are Broker Price Opinions (BPOs) and can you make money with them?
Before I talk about REO listings it is important to know what a BPO is. BPO stands for broker price opinion and all REO agents must know how to complete them. A BPO is like an appraisal but less detailed and you do not have to be an appraiser to complete one (in most states). Completing a BPO is part of the job when listing REO properties for banks and the better you are at BPOs, the more likely it is you will get more REO listings. A BPO helps a bank decide what a property is worth and what they should list it for. There are also companies that pay agents to complete BPOs, but these BPOs may or may not lead to REO assignments. These BPO companies will pay from $30 to $150 for each BPO.
I completed over 1,000 BPOs in 2013 and it was a great secondary income source for me. To complete a BPO you have to take exterior photos or interior and exterior photos of a house. You have to complete a report on the house, which takes me or one of my assistants about 30 minutes. When you first start doing BPOs it may take much longer to complete a BPO. Not only can completing BPOs help you earn extra income, but they can also help you get REO listings. Some banks will have fee BPOs and REO listings. When they need a new agent to list REOs they will look at who is doing BPOs for them first. When you complete BPOs for fee-based BPO companies that do not have REO listings (these are often called BPO mills) you still may get exposure to banks. Those BPOs are eventually seen by the banks and asset management companies and they will see your name as the person who completed the BPO. When I started in REO I signed up with every BPO company I could and completed every BPO that was sent to me.
How do you get started listing REO properties or HUD properties?
The tricky part about listing REOs is most banks and asset management companies want experienced agents to list their properties. That means the bank want agents who have listed REO properties in the past. How do you start listing REO properties if the banks and asset management companies only want agents who have sold REOs? Eventually, agents who have never listed REOs will have to be hired because experienced REO agents retire or quit the business. There are ways to get experience with REO and HUD properties without listing them. To get experience with REO properties you have to sell REOs and HUD homes to buyers. The more REOs and HUD homes you sell to buyers, the more experience you will have working with banks. The more BPOs you do, the more experience you will have as well. A bank is much more likely to use an agent who has experience with BPOs than someone who does not. It is not easy to break into the REO business, but if you have experience with BPOs and selling HUD homes and REOs, it will be much easier.
Before you start trying to get REO listings you have to be prepared
If you call up a bank or asset management company and ask for an REO listing, there is a good chance they may not talk to you, but if they do you have to be prepared. They will want to know what experience you have, they will want a resume and they will want a copy of your E and O insurance, real estate license, W9, and other documents. You want to have all this information ready to go in an REO packet. I have spent years perfecting my REO packet and I have different configurations depending on what client I am targeting. When HUD asked me for an REO proposal a few years ago, my completed packet was about 50 pages long! Other banks may want a simple resume and others will want much more. You have to be prepared with at least the basic documents and insurance requirements if you want REO listings. When you do get an REO listing you also have to know what you are doing. Banks and asset management companies have strict deadlines, expect quality work and fast communication. The last thing you want to do is get an REO assignment, have no idea what to do and lose the client. Below is a video of me going to a HUD assignment.
How do you find banks, asset management companies, hedge funds, and other companies to list REOs for?
There are many websites, many REO organizations, many banks, many asset management companies and many hedge funds in the REO industry. Most of the websites will claim to get you REO listings simply for signing up and paying them. These sites are mostly worthless, but a few are worth spending money on and a few more are free. I signed up with one site when I started that allowed me to work with three new clients in my first year just by being on that site. I also belong to multiple REO groups that do charge and some that do not. There are many asset management companies that have listings and many that do not or have gone bankrupt in the last three years. There are some unscrupulous companies that claim to have listings that do not and will rip you off. There are many tricks I have learned over the years to find the companies that do have REO assets, that will help you get listings and how to avoid the bad companies. Unfortunately, I cannot disclose that information on a public website, because many of those companies do not want that information made public (the good and the bad). In my REO and BPO starter kit I include the 35 + companies I list REOs for and many other companies I know have REO assets. I also include a list of the BPO companies I work with that you can sign up with. I discuss how to put together an REO packet, how to contact asset managers and how to get your name seen over and over in the industry. Here is a link to the Fannie Mae site for REO brokers to help get you started.
Why would it be a good time to become an REO agent when REO inventory is low?
I was selling REOs when there were a lot of foreclosures. When there were a lot of REO properties, there were a lot of real estate agents trying to get REO listings. There was an incredible amount of competition, and it was very difficult to become an REO agent even with a lot of REO inventory. Now that there is less REO inventory, there are much fewer agents trying to become REO agents and many REO agents have retail agents.
When there was a lot of REO inventory, the asset managers who handle the properties for the banks were swamped with work. They didn’t have time to hire new agents unless they had too. Now that there is less inventory, the asset managers have time to talk to agents and possibly add new agents to their network.
Listing REO properties does not happen overnight. It takes time to build up business and working with one bank is usually not going to give a real estate agent enough inventory to be successful. The best way to get into REO is for banks and asset managers to see your name and face at conferences over and over. The sooner you start marketing yourself as an REO agent, the sooner you will get REO listings.
Are banks hiring new REO agents?
If an agent calls a bank or asset management company and asks how to list REO properties, the bank will say our network is full and we aren’t hiring new agents. This is how the bank weeds out who is serious and who is trying to get some easy listings. I started listing REOs in 2007 and almost every company or bank told me they weren’t hiring REO agents. Yet, I have listed REOs for over 35 companies even after they said they weren’t hiring new agents, so don’t believe them! Banks are always looking for new agents because their current agents are retiring, changing professions or screwing up. Banks are also looking for agents to cover rural areas because there are usually very few if any REO agents in rural areas. Many times REO agents from 30 miles or further are asked to cover rural areas. Banks are always hiring new REO agents no matter what they say.
Will REO inventory increase or decrease in the future?
The amount of foreclosures in the United States is constantly changing. REO inventory goes up, goes down, then back up again. Even though REO inventory is down now, there is a very good chance it will be increasing again. The big question is when will it increase? 6 months, a year, two years or longer? The sooner an REO agent starts pursuing business from banks, the better positioned they will be when REO inventory comes back. No one really knows what will happen; a few years ago many REO experts predicted we would be hit with a tsunami of REO inventory and REO inventory actually went down.
It is not easy to get into the REO business; it takes hard work and time to start getting listings. It takes even more hard work and time to get a lot of REO listings. It is true that REO is down in most parts of the country, but this may be the perfect time to start listing REO when there is not as much competition. REO always moves in cycles; it may be down now, but it will be back again. If you want some help breaking into the industry I suggest you check out my REO and BPO starter kit.
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“Mark, thanks for your expertise yesterday. You’ve got me thinking more about when the time is going to be right to bring on an assistant and if building a team may not be a good move in the future. Thanks for sharing your knowledge.