Dan and Traci & Consultants’ Blog

REOs are assets that the bank foreclosed and obtained possession of the Note.  The bank is now the owner, and the asset is officially considered an REO.  The bank isn’t a residential management company by all means and wants to get rid of the property and return as much money possible from the previous loss.  Some banks have their own in-house REO department that manage the redemption, eviction and sale process, while others outsource it to a third party… whatever the case may be, they still need a local real estate agent to execute all the tasks involved with a successful legal transaction.  My team has been selling Foreclosures in VA, Foreclosures in MD, and Foreclosures in DC.

So how do you become that REO agent?
1.  DO YOUR RESEARCH
Research banks (there are hundreds of them), locate the ones that produce a high volume of REO sales a year in your area.  Find out if they manage and sell REOS in-house or thru a third party, and which (if any) portal is used.
2.  REGISTER WITH AS MANY LOSS MITIGATION ORGANIZATIONS AS POSSIBLE
In order to be considered as an REO agent, you must be registered in their system as an approved agent.  Compile a list and sign-up, sign-up, sign-up!  When registering you will need to provide them with your resume, E&O Insurance, list of areas you service, copy of your …etc.  Most Asset Companies can be found on-line, but because it’s such a long and tedious process, I use a company that signs me up and they provided me with a full list of companies as well.  If you email me at Dan@greetingsvirginia.com, I will provide you with the contact information of the company that I use to sign my team up.
3. OBTAIN ACCESS TO PORTALS
Most asset managers sell their properties by using a portal that tracks the entire REO process (i.e. Equator, RES, etc).  Signing up for these companies will not guarantee you listings, but will likely be necessary to sell REO, be sure to include a list of portals you have access to in your resume!
4.  BPOS, BPOS, BPOS
Do plenty of BPOs… not only will this expand your experience, but it is also the best way to market yourself!  I was, and still am, doing about 250-300 BPOs a month, signing my name on the bottom of those forms and having them viewed by hundreds of AMs is the best exposure!  Not doing enough BPOs?  Call your provider and ask to increase your cap limit!  Be sure to keep your profile up to date and build a relationship with your account manager so that they can put in a word for you with asset managers they work with.
5.  PARTNER WITH AN EXPERIENCED REO AGENT
I believe that this is the best way to get started because it will give you a taste of the REO process (bpos, occupancy checks, cash for keys, etc…).  In addition to building your credentials, you will find out if you are well suited for the business.

Keep in mind, REO sales is not for every agent.  To be successful, it takes much hard work, great systems, a strong dispositon, and the ability to manage well.

I wish you success!

So you’ve finally reached the light at the end of the tunnel…..   your 24 hour days of endless driving, picture taking, research, and data entry have all paid off and you’ve earned yourself an REO listing!!!

CONGRATULATIONS!!!!  DRUM ROLL PLEASE…….

Ok now, how do you keep them coming?  My team has successfully been selling Foreclosures in Virginia, Foreclosures in DC, and Foreclosures in Maryland for several years and trust me…   there is no greater tip that I can share with you besides the one to build and preserve a great relationship with your asset managers.  Over the years I’ve structured my approach to this business with 5 habits that impress every asset manager I have ever worked with…   and the assignments keep coming and coming and coming!

#1.    COMPLETE TASKS ON TIME

Most asset companies have an internal tracking system that rates task turn over time.  Anytime you are late you are dinged and your score is impacted.  Carefully read thru your brokers package that is provided along with your listing and get familiar with the task map and timelines so that you avoid setting yourself up for a late task.

#2.    DO MORE THEN AN OCCUPANCY CHECK

This habit sort of ties in to #1…. your first trip to the assigned property will always usually be to determine the occupancy status.  Be one step ahead, save your gas, and prepare yourself for both options.  If you come across an occupied home you should already know that the eviction process is to come, if your asset company offers a CFK option (”cash for keys”) have a contract on hand to leave with the occupant or to post onto the front door.  If the property is obviously vacant do everything you can to gain access, check for open windows, doors or garages.  Bottom line… GET INSIDE, take photos, complete a damage checklist and any other assignment you know is to trigger next.

#3.    PROVIDE AN IMPRESSIVE BPO

QUALITY vs TIME!  Prove to your asset manager that you are the expert in your area.  Take the additional time to really research your comps and the market so that you can recommend the best selling strategy.  If your BPO value varies drastically from the 2nd or 3rd ordered values…. you will be questioned so be prepared to back your recommendation… (I loved having the opportunity to do that, it gives me the chance to prove my expertise).

#4.    Set up the transaction for SUCCESS

ALWAYS, ALWAYS screen your prospects! It’s typical for an AM to ask for your opinion on the best offer.  You may think that highest offer is always best… but you may be wrong!  If your buyers agent has a history of 6 month closing timelines and the lender has never worked on the financing program of the buyers choosing then buckle up and enjoy the ride.  Your client wants to sell the property and often wants a recommendation on which offer has the best chance of getting to the closing table on time.

#5.    UPDATE, UPDATE, UPDATE

This assures your asset manager that you are working hard on moving this listing along and that things are being done even when he/she isn’t tasking you to do things.  If there’s nothing to update a simple “we are on schedule” or “no updates to share at this time, will follow up again tomorrow” will be appreciated!

For a homeowner, a short sale is a way to avoid foreclosure and reduce the damage to their credit. Today, as we see foreclosures climbing while home prices fall; short sales are bound to increase.

A short sale means the seller’s lender is accepting a discounted payoff to release an existing mortgage.  Just because a property is listed with short sale terms does not mean the lender will accept your offer, even if the seller accepts it.  A lender may consider a short sale if the seller is current but the value has fallen.

Opportunities abound in today’s market. According to Zillow.com there are about 14% of homeowners nationwide that are currently behind in their mortgages, and in many areas it’s much more. 

Short sales take time and can take anywhere between 3-6 months to complete.  A short sale is not always the best option for a buyer; often other properties such as REOs may be a better find for a buyer.

Finding professionals who are experienced handling short sales is crucial to the successful completion of the transaction.  If you would like to know more about Short Sales in Alexandria, Va or Foreclosures in Alexandria, Va, drop me a line; I would love to help.

By Dan Rochon

I have met many successful real estate agents and I often ask them, “What are you doing in your business that works? What have you done in the past that has not worked?” It amazes me that the successful agents answer these questions with similar thoughts. These are the top 5 traits that I have compiled:

1. Emulate Models. When seeking ideas for marketing, prospecting, lead conversion, management or other areas of real estate sales business, the successful agents first look to find others success in the area that they are focusing on. Let’s face it, there are no new ideas, so if you cannot find a model for your idea, it is probably a bad one. If you do find a model, and if you emulate it, odds are you will receive the same success.

2. Focus on Markets of the Moment. Real estate is a constant evolving business. The successful focus on upcoming trends and stay in front of them now. Those that positioned themselves a couple of years ago to succeed at selling short sales and REOs are enjoying some of the most profitable years of their careers. My team has focused on selling Arlington, VA short sales and Arlington, VA foreclosures.  By being specific in our niche and focusing on where the business is, we have been able to enjoy a successful sales business.

3. Network. Network. Network. There are 2 primary ways to generate business. You can either prospect or you can market. Prospecting takes a large amount of time and little money and marketing can take a lot of money and little time. So in the absence of money, the successful focus on prospecting through networking and meeting as many people as possible. The best way to effectively network is to give to others without expecting anything in return. If you can help others, they will help you, but remember that your return will be less than what is put forth.  So be prepared to give a lot.

4. Get educated. The best understand that there are ALWAYS better. Successful real estate sales agents fully embrace learning and understand that their education is a journey.

5. Try. Try. Try again. If I could identify 1 characteristic that I believe is the quality that ALL successful agents share it is diligence. If you want to succeed, you will have to be persistent and understand that there is no failure – only opportunities to learn. Successful agents find that they “learn” more often than they succeed.

By far, these are not the only traits for success. I would love to hear about your accomplishments. What are you doing in your business that works? What have you done in the past that has not worked?

What are first time buyers doing?

The tax credit extension and expansion in November has fueled new discussion about home buyers and the housing market in 2010. Here’s a look at first-time buyers in 2009.

• The median age is 28, significantly down from where it was in 2005 at 32.
• Location or Neighborhood was the No. 1 “must-have” for 36% of buyers.
• 2 out of 3 sellers paid at least part of the buyer’s closing costs.
• 76% used their own savings for the down payment.  
• 1 in 4 had help from their family for the down payment.

As elevated levels of distressed properties are expected to continue for the next few years, here is a glimpse of buying a distressed property:

• 27% of foreclosures* were purchased by investors.
• 47% of  distressed* properties were purchased by first-time buyers.
• 89% of those first time buyers that purchased a distressed property were motivated by the $8,000 tax credit.
• 7 in 10 agents have seen an increase in multiple offers. 
• Approximately 3 out of 5 agents discuss the differences between buying distressed and traditional properties at the buyer consultation.

          * Distressed – Short Sale and REO, Foreclosure – REO Only

What is the Process When Buying a Short Sale or REO?

When purchasing a Short Sale or REO there are factors to consider that a traditional sale does not present.

To Get Started

To buy a short sale or Real Estate Owned (REO) property, as when buying any type of home you should first get approved for financing.  This allows for you to look at homes that are in your price range.  More importantly, a bank will not even look at your offer without a letter from your lender stating that you have the ability to finance the property or you can prove that you have assets available to purchase all cash.  The buyer must document with their offer proof of funds available for the down payment or all cash offer.  Any seller will be impressed with such a complete offer presented to them and your offer will be considered above others if it is competitive.  Short sale and REO transactions can be extremely time sensitive and it is vital to be able to perform in a quick manner.

After you speak with a lender and know what price range that you are able to afford, the next step is to find a home to buy. When you are looking at short sales and REOs it is important to know that these are not traditional sales and that they have unique challenges.  A great obstacle to be aware of is the fact that the final decision maker is an institution that makes decisions based on how it serves their business and does not make emotional based decisions. The bank is only interested in selling the asset at the highest price with the best terms in the shortest amount of time possible.

When Buying a Short Sale

When a borrower is upside down on their mortgage, have a valid financial hardship, and need to sell they sometimes will qualify for a short sale.  There is no guarantee the bank will approve the short sale, but often it is the best course of action for both the bank and the seller.

If you are looking at a short sale you should find out details such as, how many banks have lent money on the property, what is the deficiency, is the seller willing to sign a note is the bank requires that to release the loan, and where are they in the short sale process?  For example, it is important to know if a previous buyer had made an offer on the home and then decided to not buy (this happens often and is important to know

because it allows for the short sale negotiating process to begin) and you will want to find out if a Brokers Price Opinion (BPO) has been ordered and completed. A lender uses a BPO in short sales and REOs to verify the fair market value of a property. When making an offer on a short sale, the buyer should understand that this process can be much longer than in REO and traditional sales.

When Buying an REO

An REO is a bank owned property.  This is when the foreclosure process has been complete and ownership of the property reverts to the lender and the property is listed for sale.

When you are looking at REO property you should know that when making an offer, you are dealing not only with a listing and or selling agent, you are dealing indirectly with an asset manager who works with the banks to sell their properties through a listing agent.  When an offer is submitted, your price and terms will be submitted to the asset manager via the listing agent.  The asset manager will then either make a decision on the offer or submit it to an investor that owns the loan to make a decision.  Often times there are delays in this process because many people past the listing agent are involved in the decision.

REOs are priced according to market conditions. In most cases the asset manager has hired several real estate agents to perform a BPO and have ordered an appraisal to determine the listing price. The lender wants to sell the property as soon as possible so they will likely price it aggressively to get a ratified offer within 30 days of listing.  When making an offer, you should consider that the property is probably priced at or below the bottom of the market price. The lenders will probably not accept an offer that is far less than the listing especially in the first 30 days of marketing.

Typically in REOs, offers are transmitted through an online system by the listing agent.  In this system the listing agent inputs the offer price, seller requested subsidies, the name of the buyer, financing information, and a few comments about the offer.

Although lenders expect some negotiation, understand that because they price aggressively, often there are many offers on each property and sometimes they are sold for above list price.  It is VERY unlikely that they will accept an offer for much less than what it is listed for (especially during the first 30 days).  Offering far less than the current

asking price, unless the home has been on the market for many months and no activity, is typically a waste of time.

How to Navigate These Sales

To purchase a short sale or REO, contact an agent who specializes in these properties or an agent who has successfully represented a buyer in REO and short sale transactions. They will be able to guide you through the process and ensure that nothing is overlooked.  Many obstacles can be overcome before it becomes an issue and an experienced agent will be able to foresee most problems so they won’t be a surprise.

Once you have decided that you want to purchase the home, have your agent present your offer.  Due to the competitive real estate market, be sure that your first offer is your best offer since there may not be an opportunity to change the offer.  The offer will then be submitted to the owner of the property along with your pre-qualification or proof of funds available.

If a bank owned property gives you a counter-offer, be ready to respond within a few hours as other offers may beat you to punch.  Sometimes a bank would rather work with a buyer who can act fast even if someone else may have a higher offer.  If it looks like the buyer may be difficult to work with or the offer is too high a may encounter an appraisal issue, that will end up causing a delay in settlement and will cost the bank more money in the long run.  So, write a clean offer with good terms and be available to act quickly on the ratification.

Congratulations, you are well on your way to creating home ownership or investment opportunities!

About the Author:  Dan Rochon is Team Leader for Dan and Traci & Consultants with Keller Williams Realty and co-owner of Keller Williams Realty in Alexandria-Kingstowne, Va.  He is licensed in Va, Az.  His wife, Traci Rochon is licensed in Va, Md, and DC.  Together they and their team specialize in serving short sale and REO clients.  Dan Rochon is a Certified Distressed Property Expert, which is an exclusive designation awarded to select real estate agents that have taken on extensive training in working with short sales.

Follow Dan and Traci at www.Twitter.com/DanandTraci