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Scott Godzyk's Blog

By Scott Godzyk | Agent in Manchester, NH

How to become a REO Broker? tips and secrets revealed and a BIG warning

Hello everyone, I get frequent emails from agents who want to break into the REO listing business as they see my multiple answers and posts here on Trulia. The last couple of emails had me pondering how to respond...
 
i get some great questions, some heart felt emails and a few quite rude ones to be short. Todays email actually topped yesterdays.... which really had me scratching my head which has led to this blog post.

First i have been working on REO's since 1989. At the mere age of 22 and already 4 years of real estate experience under my belt, i was thrust into selling the local banks inventory. Then the feds came and started taking over bank after bank which allowed me to sell for the FDIC, RTC, FNMA and VA. With contacts i made there were several downturns as they are now called in the early 90's then late 90's and now the big one.

So getting to the point of these emails i get....

 Most ask for my "list" or my "secret contacts" or how do i get listings and they cant, or offering me a percentage of what they list if i give them my contacts, or begging for the information with a tear felt email so they can list reo homes as they are near losing their own home and need some quick sales. The there is the people offering to swap asset manager information from their contacts in CA for my contacts, (im in NH - CA contacts probabily wont help). And todays "poke in the eye" comes from a local broker in the area that demands....yes, demands... i share my information on how i got a specific listing as they were watching it vacant for months and really wanted to sell it and lastly that some nerve i have listing a home in their neighborhood and furthermore that i should sign the listing over to her/him becuase they have buyers. Well..... how can i answer that nicely, cant... or dont want to right now, so rather than unleash on someone who deserves it i have choosen the nice road.... 

But anyways... here is some things i would like to share with everyone....

1. First, there is no reason to pay for any of this lists or information that isl available for free.

2. There are no short cuts, there is no magic wand or secrets worth paying for.
 
3. Simply put it is hard work garnering experience by completing bpo's. There are companies that just do bpo's that do not assign listings, complete them, do a good job and get your name on them therefore out there to more potential asset mamagers. Then there are the companies who do the bpos and assign listings. I was told that on average 13 bpos will get you a listing. depending on your area it could be higher or lower. However i completed 187 for one company last year, end result 0 listings, this years resolution, no more jumping when they need a bpo done the same day that is 30 miles away. On the good end i completed 28 bpos for another and resulted in 2 listings. So you never know...

4. Most important to consider is that If you want to list reo properties make sure you have a seperate account of money to be able to pay for the upkeep, repairs, utilities and maintenance of these properties. i recomend at least $5000 to$10,000 as you will have to wait 30-90 days to get paid back. 

5.  You will need to make sure you have at least 3 contractors who can get you free estimates usually same day as they request and complete work for you when needed.

In conclusion

There are no short cuts, dont waste your money on lists. Get out there make a name for yourself by hard work and avoid the short cuts, they will lead you to a dead end and less money in your pocket.

Updated Dec. 30, 2010

PLEASE FEEL FREE TO ADD YOUR COMMENTS, TIPS OR ADVICE

Blog Written by:

Scott Godzyk
Godzyk Realty Group

www.ScottSellsNH.com

Comments

By Chuck Braxton,  Wed Jan 6 2010, 03:38
Steve: Thanks for the "straight talk." I am always amazed at people in this industry who want shortcuts. Before the meltdown, I cut the cord on BPO firms that had not generated listings when I was well beyond your suggested ratio, but gee, I got to know some pretty countryside! The sign that things were changing was when I would get followup questions and requests for more information (from somewhere over 1,000 miles away) because some desk jockey could not believe that the property was worth less (worthless?). Yeah, I am driving to a town 30 miles away to get a tax card so you can second guess my careful work for one measly fee? NOT!

I would add one other thought to the REO team and that is a 'trash out' crew that is reliable. Take care of everyone on the team even when the lender holds you up. There are also crews to keep the property looking, uh, OK and plowed out.

Great point about cash. I would say that the upper end of that range is essential. Oh, and that is real cash, not credit cards. As always, I appreciate your comments. Chuck Braxton, REALTOR, Meredith, NH 603/677-2154
By David Nuss,  Thu Jan 14 2010, 19:57
Scott,

Bottomline, hard work and persistence will get you places. Those that want to take the quick and easy road will never get there. I too get tired of hearing the moaners crying about how unfair life is as they sit around waiting for the world to bring them a sale.
By Algeee,  Tue Jul 27 2010, 11:17
Got any free listings?
By Cj Johnson,  Wed Sep 1 2010, 07:10
Scott, straight talk is the best advice, thanks. I would add that it is not enough to prospect for REO listings. If an agent does register to do BPO or REO work and then gets an order what will they do next? Most don't even know the language of REO..BPO/OV/UD/CFK, etc. I teach a two part workshop in CA for those that think they might be interested in working that niche. I too have been selling REO's since 1992 and closed over 70 REO transactions last year. Our next workshop will be at the Burbank Association of REALTORS on September 28th and costs $99.00 for a live 6 hour hands on workshop. If anyone is interested call or reservation desk at (661) 972-9642 for details. We are endorsed by the Southern California Chapter of CRS.
By Eric Egeland,  Sun Sep 19 2010, 11:08
Great post Scott....couldn't agree with you more
By Kevin Olson & Jessica Laude,  Wed Sep 29 2010, 10:17
So what's the answer? Just kidding! I get this all of the time too. The truth is Scott, you could give away all of the information in the world and still more than 95% of people wouldn't get anywhere with it because they don't realize you have to work at it, it's not an overnight thing. Work ethic is a thing of the past in Real Estate, and those of us that still have it are the ones who will succeed.
By Scott Godzyk,  Wed Sep 29 2010, 10:47
I actually had another agent from another company call me and ask for tips how to complete a bpo on a property that i had no association with. You are correct that hard work pays off... there are no shortcuts...
By Desari Jabbar,  Tue Oct 5 2010, 18:29
Anything that you want in life, takes hard work to get. Real estate is not any different. If an agent is lazy, REOs are not route for them.
By Barbara Grandolfo,  Tue Oct 5 2010, 18:44
Hi Scott,

You are absolutely correct about the money it takes to maintain REO listings. In most instances, I have advanced monies that are equal if not more than the commission I will receive for listing the property.
By Rita Mccormick,  Thu Oct 21 2010, 17:06
How long before the market will change from reo's - I am guessing when the economy gets healed. I have seen over the charts sellers market and also buyers market, I was around when 100% started, I hung in going with the flow, I just don't see a forcast for what could be next. Does anyone else?
By Rita Mccormick,  Thu Oct 21 2010, 17:10
I lost over 800 last yr to bpo companies going belly up. Has this happenend much? And OH I find it difficult to find HOA companies since you don't talk to the owner. I can't believe some savy computer wiz has not started a national HOA directory. charge 25 a yr at well how many there are big bcks I'd say. Wished I knew how to do this. What goes around comes around maybe someone will pick up on the idea.
By Rian Muleback,  Fri Mar 4 2011, 19:00
Scott, what sort of deal do you have set up with your contractors? I may not understand this correctly but if they are going out and doing free bids for you all the time with no chance of getting any actual work, don't they just see it as a huge waste of time? I have very rarely seen REO's fixed up but perhaps they do get repaired from time to time. Thanks for the answers!
By Scott Godzyk,  Sat Mar 5 2011, 06:28
i only solicit bids for properties where i manage the preservation tasks. If there is a national preservation comopany, i do not solicit bids. By far i never waste my contractors time if they do not have a fair shot at getting the job. In the event the bank does request additional bids, they do pay trip fees for them.

Routinely the preservation tasks i handle all the time are rekey, trash out, general cleaning, window replacement or board up, plowing, lawn care and for homes where value will be increased, interior paint, steam cleaning and safety issued.

The banks that do assign me the management know i can get the work done quicker than a national company, at a better quaility and at a substantially lower cost that a national company. My asset managers are pleased with the job that i do and the assistance i provide in getting a quick sale at the best obtainable price. My REO listings on average are under contract in under 7 days. The only ones that seem to stay a bit longer are the ones they over price, then in 30 days reprice it where it should have been to begin with.
By Belinda Spillman,  Sat Mar 5 2011, 09:29
Scott. My daughter works in Loss Mitigation at SLS and she was just telling me last night how it is such a big cash outlay to do REO's. You would think she could get my foot in the door, but nooooo.. Oh well.
By Akil Walker,  Sat Mar 5 2011, 10:31
Scott,

thanks for the post and good information. I have a done roughly 20 BPOs, and I was hoping to make the next step into REO. The 10K set aside, I will need to work on that.
By Rian Muleback,  Mon Mar 7 2011, 16:56
Thanks for the response Scott. Good info!!!
By Scott Godzyk,  Mon Mar 7 2011, 17:03
Thanks for the comment Rian
By Scott Godzyk,  Mon Mar 7 2011, 17:07
Thanks for the comment Akil,

Different banks have different requirement for the amount of BPO's to complete as to actually earning a listing, 1st thing make sure they assign listings and are not a bpo mill. It used to be a mere 13 bpos per listing, now it could be upwards to 100 for some banks. Once you get your first one, you do a good job and get a good rating the listings come quicker. I complete on average 4 bpos a day, lately it has been averaging more. Good luck with getting that 1st reo listing
By Rita Mccormick,  Tue Jun 7 2011, 06:37
How long before the market will change from reo's - I am guessing when the economy gets healed. I have seen over the charts sellers market and also buyers market, I was around when 100% started, I hung in going with the flow, I just don't see a forcast for what could be next. Does anyone else?
By Radinka Ilsink, Broker Associate,  Fri Jun 10 2011, 18:13
Just wanted to thank you for the great post!
By Linda S. Cefalu,  Fri Jun 10 2011, 18:41
Scott,

"And today's "poke in the eye" comes from a local broker in the area that demands....yes, demands... i share my information on how i got a specific listing as they were watching it vacant for months and really wanted to sell it and lastly that some nerve i have listing a home in their neighborhood and furthermore that i should sign the listing over to her/him because they have buyers. Well..... how can i answer that nicely, cant... or don't want to right now, so rather than unleash on someone who deserves it i have chosen the nice road.... "

For real??? This is just one more ridiculous comment that makes us all look bad. It is also the type of thing that causes those agents to NOT PUT THEIR CLIENTS INTERESTS FIRST. I would not have even responded to this agent and he/she should be ashamed. If they are in that state of desperation, they need to find a new career. So many of us have been in dire straights in the past several years -myself included. Don't feel guilty for being successful. You put in your time and you deserve to prosper from it.

Wow. That's all I can say,,,,,,,,,,
By Rita Mccormick,  Tue Jul 5 2011, 16:45
How long before the market will change from reo's - I am guessing when the economy gets healed. I have seen over the charts sellers market and also buyers market, I was around when 100% started, I hung in going with the flow, I just don't see a forcast for what could be next. Does anyone else?
By Voices Member,  Tue Dec 27 2011, 06:53
There’s a great book called “REO BOOM” by Aram Shah and Tim Shah. This book will explain step by step procedures on how to become a successful REO Agent. You can also become a top producer in the wonderful world of REO's
By Annette Lawrence 727.420.4041,  Tue Dec 27 2011, 12:03
Scott, great information and direct from the expert himself. Thanks.

Kevin, there's that 95% again. At some point the need for action should be clear. There's nothing easy in REO or any other segment of real estate. Unfortunately, if you're not successful where you are, you won't be more successful where you're going.

Sharing Scott's 7 days sold statistic should put a bit of a fire under those mug womps.
By kevin Messiha,  Wed May 23 2012, 19:47
Ive assigned up with about 10 bpo companies so far.. havent heard from them yet? do i just have to follow up everyday?
By Caroline Boskovic,  Mon May 5 2014, 07:33
Question please.... I requested $55 for drive-by bpo's and $125 for a full-form bpo. Now the bank is telling me that I do not get paid on the full-form bpo since I receive the listing and get paid via the commission. Is this right? Is a bpo not a separate task from the actual sale? Shouldn't I be paid for the full bpo in addition to the agent tasks associated with selling a property? Some insight would be greatly appreciated.

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