I have many clients who call me looking for deals on short sales and foreclosed homes in the Prescott Arizona area market including Precott Valley, Chino Valley and Dewey-Humboldt. Many think that short sales are better deals than foreclosures, but his is rarely the case.What the difference?The short sale process has many moving parts that must be aligned in order for the sale to close. First of all, the lenders have to agree to a short sale, but sometimes banks won’t agree to a short sale without an offer. This means that the home has been listing for a price that the bank hasn’t agreed to, and once the offer comes in, the bank will assign a loss mitigator to review the process. This could take several months and most likely will involve a counter offer by the bank close to the loan amount…regardless of whether or not the loan has any bearing on market value. Then the games begin.When you buy a foreclosure in the Prescott area, the process is much more straightforward and the prices are set by the bank and not a by the homeowner and REALTOR, who have nothing to lose by listing it below market value. In fact, it stimulates demand and clients for the listing agent and the homeowner thinks there is progress because people are looking at their home and making offers.That’s not to say that all short sales are not good buys. The key to success is being prepared and having a full understanding of the process.For links to more information, see my Prescott AZ Area Foreclosures BlogRead more…
It's been a while since my last blog post - too long! It's not because I'm lazy, it's because of my crushing workload. My team has been expanding to keep up with it all, but even so, I find myself at least as busy as ever, and possibly even more so.I wanted to share with you all my view of where we are headed for the rest of the year. There's a lot of talk about bail-outs and hitting the bottom and market rebounds, and there's also a lot of talk about falling off the economic cliff, outright economic depression, etc. I want to chime in with my own $0.02 - and that's probably about all its worth, but this community is about sharing, so here goes.I do think that the bail-outs are going to help stabilize the credit markets. To be honest, I have not seen a lot of qualified buyers having problems with their loans. People who have good credit scores, good incomes, and good debt-to-income ratios have been getting loans this whole time. People with dicey credit and iffy income have had a much harder time of it - which actually makes sense. A lot of these people maybe should not be buying real estate - unfortunately, that's a big chunk of the adult population, and there's a lot of real estate that needs to get bought, so it's understandable that the powers that be would want to put the credit into their hands to buy these properties.As for Obama's Homeowner Rescue Plan - in my market (northern California), there are precious few people who are going to qualify for this plan. Even nationally, where many more people will be able to take advantage of it, many people simply won't - I believe this epidemic of rational default (or ruthless default as some would say) will continue un-abated. I do think that the Homeowner Rescue Plan will in fact save some homes - and in large part, probably only those of the "most worthy" - that is, the people who are least likely to be back in default shortly after rescue.I think it's a good thing that the government get actively involved in trying to put Humpty Dumpty back together again. I am sure they're bungling the job and that somehow, it could be done much better and cheaper - but I think a large part of the problem is lack of confidence in the system - and if the government shows confidence that it can take steps to fix the system, that will go a long way towards restoring stability and calm.Having said that, I'll say this: I think the bottom is a ways off yet. For my business, 2008 was an extremely busy year - and I expect that 2009 will be busier. I expect there will be more foreclosures in 2009 than there were in 2008, despite the government's valiant efforts. And that is as it should be. There are simply too many homes in the houses of people who cannot afford them. Much better in the long run to move these properties from weak ownership to strong ownership.I also foresee the foreclosures moving up the economic ladder - increasingly, more and more middle, upper-middle, and executive/luxury homes are going to be foreclosed on. You see, in a normal economic cycle, first you have a recession, then you have increasing mortgage delinquencies, defaults, and foreclosures, accompanied by a drop in real estate values.This time around, we had a drop in real estate values, brought on by a "credit crisis" (or, the end of ultra-lax lending practices), followed by an increase in delinquencies - and then, recession. In a normal cycle, we would just now be at the beginning of a surge in foreclosures, not nearing the end of of one. Think we've hit the bottom? Think again.You do see, hear, and read news stories about positive signs that we may be approaching a bottom. I'm pretty sure, though, that I've been hearing those stories for quite some time now, at least a year - and the bottom seems no closer today than it was a year ago. And let's not forget the shadow inventory - it's real, it's big, and it's out there, waiting. I am getting listings that have been secured and vacant for months, never listed, never assigned to an agent - they've been sitting, for months, just rotting and dropping in value with the market around them.In short, I expect it will be another banner year for those of us in the REO Brokerage business. I'd be curious to hear how 2009 is shaping up in your market.
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Last night, Jennifer Kraus with my local news, NewsChannel5 did a story on a company called dont4close.com. As a part of the NC5 Investigates report Mrs. Kraus chronicled a very depressing story about a family who is loosing their home due to mortgage arrearages and were taken advantage of by a less than scrupulous man who guaranteed he could save their home from foreclosure.
As a Certified Home Retention Consultant with Titanium, when I saw the story come up, I was entranced and attempted to understand every detail.
Ultimately, the family was facing foreclosure and contacted dont4close.com to help them save their home. Allegedly Charles Jones behind dont4close.com offered the homeowners, the Reynolds, a deal they couldn’t refuse. He offered to pay their mortgage for 1 year and after that time, the Reynolds could start paying him back.
Well, to make a long story short, allegedly Charles Jones sold the Reynolds home to a third party, a woman named Gladiz Romano. After some investigative work by Mrs. Kraus she found Mrs. Romano who admitted she bought the house but has never made a single payment for the home or ever even visited the home.
In closing, NewsChannel5 offered up some “tips” on how to prevent other homeowners from being in this situation. One of the tips they offered was,
“If you face foreclosure, stay away from businesses that guarantee to stop the foreclosure process, require you to sign over your property deed or pressure you to sign papers you don't understand.”
Web link for full story….
http://www.newschannel5.com/Global/story.asp?S=9815589&nav=menu374_2_2
As a HRC, Realtor and concerned citizen, I totally agree with the statement but, what bothered me was, the story left it there…..they didn’t go further. They didn’t explain that sometimes banks will send out representatives to homeowners residences because homeowners loose communication with their mortgage servicers and they (the servicers) don’t have any other choice.
I am sure this oversight was simply due to a lack of knowledge that a legitimate process does exist to preserve homeownership or at the very least avoid foreclosure so, I wrote an opinion editorial to Mrs. Kraus and hopefully will be able to address my concerns with the story but, either way, it’s important that those of us who work hard, legitimately, morally, ethically do what we can to create positive news worthy stories and get the message out, we are here to help!
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Sorry I haven't posted in a little while, I have been busy. I got another REO or two, but I have been consumed with doing BPOs lately. I view BPOs as kind of a loss leader, but I think they are an excellent way to stay on top of the market and to keep your name in front of the eyeballs of some unknown person or persons who may well one day stoke you out by sending you that fattie REO...I've also been busy workin' a few buyers. Oy vey, that's a hard way to make a living. Still, though, I'm excited to work with buyers because, as we all know, nobody ever got rich selling real estate. You get rich by buying it, and is sure a good time to buy it.So here's something funny. I wrote up a couple of offers yesterday. One of them was for a short sale, being sold by an agent - not his primary residence. Looks like we might put that one together. And today, I'm doing a BPO, and I'm researching away...nice house, estate-type property, acreage, ocean views...owned by the same Realtor who is selling the property I just put an offer in on.I make a little trip over to Realquest.com, and I see a notice of default was filed on this lovely property back in May 2008. D'oh.You see a lot of that - many Realtors are losing their homes to foreclosure. I expect the same is true of mortgage lenders. I expect appraisers, though, for the most part, are still happily ensconced in their abodes, they probably have plenty of work these days.So keep muchin' them BPOs, the taste of irony is bittersweet.
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A few weeks ago, we had some guy come to our regular office meeting to do a presentation about something. He trotted out a list of the top 10 surnames of new home buyers in California. One of my colleagues made a wry comment that that list of names probably looks a lot like the list of surnames of the folks who are presently losing their houses to foreclosure.I am getting ready to go to that "invitation only" REO seminar in Las Vegas next week (I didn't get invited, but I asked if I could go, and they said sure, no problem). I thought I'd prepare a little packet of info for any asset managers I might stumble upon while there, and for this packet, I thought it would be interesting to include the Top 10 Surnames on the NOD list of the primary counties where I work. I'll share them here with you:Top 10 Surnames - May 2008, Notices of DefaultSanta Cruz County----------------------------------------LopezRamirezJimenezGonzalezSantosSanchezRiveraMartinezHernandezGerbodeSan Benito County----------------------------------------GarciaRochaMartinezLopezTorresRamirezHernandezGonzalezGomezEspinozaMonterey County----------------------------------------RamirezGarciaSanchezMendozaHernandezRodriguezMartinezGonzalezRiosPerezNow why did I go through the trouble to compile this list? Because I'm fluent in Spanish. I think that in this market, in this particular market segment, the ability to speak the primary (and in many cases, sole) language of the people you're dealing with is an important skill to have. I hope the asset managers I come across will think so as well!
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www.NRBA.com or National REO Brokers’ Association of America is a new site to me. I just came across it from a fellow REO Broker who gave NRBA some high marks. I have to be honest, when first viewing the website, it didn’t instill any confidence at all. It appeared to me as if they were some awkward knock off of Shop at Home.com. All those little boxes, solid white background, red writing, I swear I thought I was about to buy a gold electro plated magnetized wrist joint amplifier for 3 easy payments of only 19.99. Either way, I am glad to see they are “renovating” the site, hopefully it helps.
Once I got passed the strange exterior, I decided to dig a bit deeper and see what this site is all about so, I did what any red or blue (depending on what part of the country your from) blooded REO Broker would do and that was click on “Real Estate Professionals Start Here”. Ok, I may have been a bit hard on NRBA in paragraph 1 of this commentary however, now I am truly being as serious as I can be. After clicking the link, I am taken to a black background with red and white writing power point flash presentation of how I can make 6 figures by becoming a member of NRBA! By this time, I am now truly turned off, to me, this whole thing has come off as a rainy day garage sale on the wrong side of town. Truly, I tell you, this whole website has just come off as if they went into Goodwill and asked the marketing person to design a website. So, 2nd class…… (by the way, I like Goodwill, when I was kid, it was the only place we shopped, we didn’t have much back then. In fact, sometimes I still go, now it’s a bit different obviously but, I do like the store and donate maybe once or twice a year.) As I suspected, it was fairly predictable where this screen shot presentation was leading, I was asked the 20,000.00 question, “Join Now!” My first thought was, are they serious? Then I quickly realized, oh hell yeah they are serious…….lol.
So I pressed the button, not because I was impressed by the presentation or marketing ploy but, because my REOPro Agent colleague gave this group of people a huge thumbs up and said I should join. Once you hit the button, you’re taken to a 2nd screen where you can read some of the FAQ’s, it’s small so you have to be determined to look for them but, you can find them and read them over. The first question is, “Can anyone be a REO Broker?” ultimately the answer was No! but, not for the obvious reasons like, commitment, dedication, work load, long hours, etc….., they said it was because they all wanted to protect their 6+ figure income. ROFLMAO! Are you serious, by now I really felt this was an exercise in the absurd but, I went along with it. After reading over all the FAQ’s I felt as if I had just finished reading a bad version of the Top 10 List with David Letterman. Granted, I found some useful information like cost, which my REOPro Agent Colleague forgot to mention but, overall the FAQ’s almost seemed a waste of web space and band width.
Speaking of cost, it isn’t cheap, it’s 1999.00 a year paid monthly or annually. That wasn’t cheap for me, I am a bit of a tight ass hence, I still visit Goodwill occasionally however, I didn’t think 1999.00 wasn’t going to be a cost that many Realtors would be interested in paying in the first place, I am sure it’s going to protect some bodies 6+ figure income. I read a little further because I still had this overwhelming almost nagging voice of my REOPro colleague saying, “you should try it, I did and it is working for me” screatch across my forehead like a Mack truck applying the brakes on a downhill 9% grade highway. So, I got ready to hit the Join Now button and, then BANG! A flash of lightning hits my neighbors tree and we loose power. Ok, I will be honest, no flash of lightning however, I did loose my power because my dog’s tail wagged and somehow turned off the power strip. So, here I am now, not sure if I should join or not, I don’t really know much about this organization other than what my REOPro colleague said about it. I figure I should get some more insight so, if you are a NRBA member or a holder of the CREO Designation they offer please, leave a comment and convince me either way, should I join, or should I steer clear!
Thanks in advance for the help!
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As you may guess, the number 1 question I get asked is, how can I start listing REO’s? Well, if it was as simple as a “one line” answer, then everybody would be doing it however, it isn’t that simple. In this blog, I will try to break it down for you.
First of all, get an education. If you have no experience what so ever, you need to at least get an education. Many different companies out there offer many different “certification / designations” however, be careful because you don’t always get what you pay for. I got my RCDPro (REO Certified Default Professional) designation through www.realestateeducate.com. I found them to be professional, organized and the information they provided was precise and accurate. They seem to be a bit expensive however, once you are certified, you are placed in their system and shopped out to their clients for consideration. I know they have some big clients, of which one is WellsFargo. You can also get educated through 1 of the 2 major Default Industry Conferences, 5 Star. They have a online course you can take as well however, I haven’t taken it myself. 5 Star has a lot of credibility in the industry so I am sure anything they offer is going to be reputable and recognized. You can get to their website by going to www.fivestarinstitute.com.
Now that you have an education, it’s now time to get the office ready. Through your education process, you were most likely told about what a REOPRO Agent is going to need, make no mistake, you are going to need to have your office ready. Things like high speed internet, digital camera, scanner, email, cell phone with sms and email capability, adobe acrobat, fax, access to public records, mls, organized filling system and a reliable car are essential. Other things you will need to consider are, some Asset Managers require you add them to your E&O Insurance and have a minimum of 2 million in coverage. Some even require that you carry specific liability on your automobile as well. You will want to dedicate a credit card to your business and be prepared to spend money to preserve the property. You will be reimbursed later however, some companies take 2-3 months to reimburse and you can rack up thousand of dollar per property in maintenance, utilities, vandalism remediation, etc….. In other words, be prepared to spend, you might need to.
Once the education and office are out of the way, next you need to get some experience. A lot of the older more seasoned agents tell stories about how they had to do BPO’s for years before they got their first REO. This is still true through a large part of our Industry so, you most likely are going to need to sign up with every bank you can find and offer to do BPO’s. Our industry does offer a BPO certification through NABPOP (National Association of Buyer Price Opinion Professionals) and you can access their website at www.NABPOP.com. This is a nationally recognized certification and can help significantly on your way to a REO business.
Now if you have been doing BPO’s for years and still the REO seems to be elusive, then several things may be against you. First of all, keep in mind that most AM’s (Asset Managers) grade your BPO’s on a variety of metrics like, turn around speed, accuracy of information and list to sale price ratio’s. These metrics minimum standards are typically very high, for example, most lenders require a 95% or higher list to sale ratio for new agents before they will ever get a REO. It may seem a bit unfair however, it is what it is. The lesson here is to ask and you shall receive. Ask the people sending you the BPO’s and ensure you are qualified to receive a REO. If not, ask why and or what you can do to improve. If you find out all is ok and, you still haven’t gotten a REO, then more drastic steps may be in order.
For those of you who have been doing BPO’s for some time and still can’t get the REO even though you are “qualified” then you may need to go the conference’s and meet the Asset Managers in person. The annual conference’s held by REOMAC and 5 Star are our nation’s largest default servicing events. This is the place where everyone comes together and networks. Here you can get one on one with these AM’s and essentially interview for the next REO. Competition is tough, every agent there is doing the same thing you are, so being the tip of the spear is critical to your success. Dress to impress, pop in a tic tac and, get ready to schmooze. If you can convince the AM to take a chance on you due to your incredible skills interviewing, then you will have succeeded where many others will fail.
So there it is, part 1 of a continuing series on how to get started in the REO business. Look for more blogs in the near future. Hope it helps.
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