Basic knowledge of residential real estate as well as how to deal with bank owned properties is a must. A real estate license, membership to the local real estate association and Multiple Listing Service (MLS). You will also need your own computer—nothing fancy, a Pentium-class system will work fine—with internet access, email and knowledge of Microsoft office/other software. It would also be helpful to have marketing, budgeting and financial management knowledge. Not to be forgotten are strong negotiating skills, time management, lots of patience and ability to work with different personalities. What other skills do you think or have you found necessary?
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Posted by Barb Shewmake on January 10, 2009 at 7:08pm
I just had to tell you all about the day I had today. It began as many Saturday mornings do at my house. My husband is an REO Broker too and almost every weekend, we catch some 'quality' time together driving everywhere and taking BPO Pics, doing property inspections, etc., which we actually look forward to and enjoy (Please, someone, jump in and tell me this is not really as pathetic as it sounds.) Anyway, we grabbed our list of addresses, our camera, and off we went. About 1:30 in the afternoon, we drove by a property in the worst part of town, stopped, snapped 3 pictures and drove away. A block or two away we looked in the rear view mirror and here comes the car that was parked in front of that house speeding up from behind us. We tried to dodge him by zigzagging down a few side streets but we couldn't lose him. We reached the highway and took off. Then this crazy maniac chases us until he catches up with us, first on one side, then the other, then he pulled in front of us and slammed on his brakes, determined to force us to stop. My husband, being the excellent driver that his is, swerved around him and started driving toward the Sherriff's Dept. By this time, I was on the phone with 911, being instructed to pull over and see if he would just go on. I'm like, "Yeah right. He might have a gun. No way we're stopping, this guy's crazy". So we ended up in this lengthy chase, having to cross a bridge to get to the Sherriff's Dept. At one point he must have figured out where we were headed and he took off. Don't know if the police caught up with him yet or not. They have his address :) and license plate, so one would think so. I suppose we will find out more tomorrow. But with more and more desperate people losing their home and/or rental to foreclosure, it's really getting bad out there. I'm definately going to put this incident in my BPO in regard to describing the neighborhood. Anyone else ever have something like this happen? I am beginning to think twice about accepting BPO's in bad neighborhoods for $50.I do have a friend/client who is a parole officer. She goes with me sometimes to do occupancy checks in bad neighborhoods. She says (In California - where they are all taking a cut in pay) many peace officers will gladly accompany agents on occupancy checks for a small fee when they are off duty. Seems worth it to me! Especially after this experience.
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I too went to 5 star and yes it was crazy and yes I dont blame the asset managers for running away and hiding from realtors there. There were thousands of us there and these poor a.m.'s were fighting for their lives. I honestly felt bad for them. I talked to some of them only to just communicate I never once bothered them about business-I was too shocked and bothered by how they were being treated.I heard agents complaining about other agents in their area to asking what a bpo was. If you dont know what a bpo was you paid a lot of money for a conference to find out!However-the overall experience was a good one. I found the networking with other agents more helpful than anything but I did receive a few leads that paid for the conference and then some.Do I think you should attend-yes, if you plan to stay in reos. However, if this is just to past the time until the market goes up. I dont think I would...but I am a Reo lifer now and its just my opinion-
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Have you heard that banks will accept a certain amount of loss on their default real estate portfolios as a rule of thumb across the board?
Have you heard that all banks are willing to take 20% less than the listing price?.
Have you heard that all banks over price their listings because they know they are going to take a less on their properties?
If you believe any of these rumors, urban legends, or false hoods then, you have just been suckered.
Let me explain how banks determine their price when they go to list a home.
First, they order an appraisal as soon as a home goes into foreclosure or as soon as they receive the first offer on the home. In an effort to be clear, let me tell you what an appraisal is. An appraisal is an estimate of your homes Market Value by a professional.
It is important to understand the difference between Market Value and Price. Market Value as defined by the USPAP (Uniform Standard of Professional Appraisal Practices) says, "...a type of value, stated as an opinion, that presumes the transfer of a property (i.e., a right of ownership or a bundle of such rights), as of a certain date, under specific conditions set forth in the definition of the term identified by the appraiser as applicable in an appraisal." So, in other words, it's the opinion of a trained professional as to how much the property should sell for in a fair market.
So, I bet now you are wondering how these appraisers analyze a property in such an un-certain market as that we are in now, right? Well, that can be answered by the definition of Market Value used by the residential mortgage financing industry and it says, " ...the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale." So, in other words, adjustments for any reason, are made to the comparables sales price not the subject property.
Ok, I am sure this may be confusing but let me explain it this way.
You want to put an offer on 1000 Money Pitt Lane but the asking price is $150,000.00, which you think is too high because it's a foreclosure.
Well, the bank isn't going to care if it's a foreclosure, short sale or once belonged to one eyed, one horned flying purple people eaters because, they have comparables, from the appraisal, showing that similar homes that are true comparables, alike in almost (no property is ever the same due to it's uniqueness and immobility) every way sold for or above $150,000.00. So that offer of $115,000.00 you put in thinking that banks are taking less because that is what they do, is foolish and a waste of everyone's time.
Well, maybe the Appraiser was smoking some serious blow that day and you (as the buyer) know that the home just isn't worth $150,000.00 so you want to stand by your offer and have it submitted.
Truth is, the bank isn't just relying on the Appraiser to get the appraisal right. By the time you submitted your offer, they have accumulated approximate 2 appraisals, 1 from the previous homeowner and 1 upon foreclosure, and they have had a Realtor provide a BPO (Broker Price Opinion) monthly for the time before it hit the market and while it was on the market. My point here is, the bank is going to know the value of the home, the monthly average depreciation for the neighborhood and how long they are willing to wait for the "right" offer to come in the door. On average, per my friend at one of America's largest banks, they have 5 price analysis on a home before it is every put on the market so, they know, you can bet on it.
Ok, so now that I have explained that, can you see why thinking a bank doesn't know how much a home is worth is just silly.
Granted, banks are dumping some properties due to the large amounts of real property on their books however, that isn't because they have made some secret policy that they will accept a general loss on all their properties. In reality it's more about that specific home and how much loss they are willing to take and, that isn't something they are advertising.
So, if you come across a great deal, then most likely you were at the right place at the right time with a Realtor who was looking out for you versus, anything else.
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We have recently started seeing some commercial REO and distressed real estate in Las Vegas. Some of the inventory is from SBA or FDIC. Was wondering if anyone is focusing in that market like I am and if they have contacts or product for our investors.
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A recent unbelievable situation I was in has prompted me to write this blog. This is the account of that situation and should be enjoyed for it’s shear entertainment value. I am not bashing anyone, just telling a story. This story is true however, names have been changed to protect the innocent……if any exist.
So, I am working this Short Sale as the Listing Agent and, as I normally do, 2 weeks out I check up with the Selling Agent and make sure everything is on track. As usually, I hear the, “Oh everything is fine” story however, due to my experience in these types of deals, I know better and follow up with my closing agent, Mrs. Super Closer. After speaking with Mrs. Super Closer, come to find out, thing are far from “fine”. The Closing Agent hasn’t received anything from the Buyer’s lender, aka The Package. In fact, she goes on to tell me that they have tried to reach them now for 3 days, ever since I faxed over to them the Release of Contingency, to no avail.
Obviously, I call the Selling Agent back and explain, “Everything isn’t fine” because we are 2 weeks out and my closing agent hasn’t heard anything from the buyer’s lender. Well, he doesn’t seem to have a clue as to what is going on and says, he will call me back when he knows more. I update the notes in my database and schedule a 2nd call back to the Selling Agent in 1 week.
1 week later and I call the Selling Agent back to check the status of the deal. He says “Oh everything is fine”. Well, after reading my notes I promptly call my closing agent, Mrs. Super Closer and she tells me, “The bank is still waiting on the appraisal”. Confused and dismayed I call the Selling Agent back and alert him to the status of his clients loan. He is lost and says he will have to call me back.
I give him only a couple hours and then I call him and ask for the status, he says, “Oh everything is fine”, almost a robotic response at this time. Knowing better I call Mrs. Super Closer and she proceeds to tell me that the buyer’s lender is requesting to extend the closing by a week because the holidays are upon us and they can’t get an appraiser out fast enough.
I immediately call the Selling Agent to brief him on the status of his client’s loan and once again, puzzled and confused he says to me that he will call me back.
At this point, I have no confidence in his abilities and I pull his buyer’s loan approval letter from my file. I call the loan officer and ask, what is going on. The loan officer confirms what Mrs. Super Closer told me and request we post pone closing for 1 week, maybe 2. I explain to the loan officer that this isn’t going to be a possibility and any delay must be approved by my client’s bank (keep in mind this is a short sale) and they aren’t going to budge….I know them well.
I call my client’s bank and as predicted, not a chance under heaven are they extending the closing. Truth is, everyone has known the closing date for more than 30 days now and they felt any delays were just going to cost them more in the long run so, close on the agreed upon date or don’t close at all.
I called the buyer’s lender back and explained the urgency of the situation. He explained that they were simply waiting on the appraisal and, they will not be able to send anyone out till after the holidays, past the closing date.
Well, I had to call my client to brief her that her home may not sell and I felt awful to make this call. I knew her situation and a closed short sale was going to start her family on a more secure financial future for the New Year. After calling her, she explained that a man, identified as an Appraiser came by over a week ago for an hour. I asked her if she had his card and sure enough, she did. I got the appraisers information and called my appointment desk
I verified the man’s identity and that he had a confirmed appointment to my clients house more than a week ago. Completely befuddled by this miraculous turn of event, I immediately call the buyer’s lender back and enlighten him to the fact, his appraiser was out there, more than a week ago and neither his bank, his client (the buyer) or the Selling Agent (the buyer’s agent) was aware that an appraisal has taken place.
Granted, maybe I should have known but, truth of the matter is, as a busy Listing Agent, I don’t have the time to keep up with every visitor to each and every home I list. I especially don’t have the time to ensure Selling Agents are driving their workflows and follow up with their clients as well as their vendors to ensure jobs are getting done.
So the banker calls the appraiser and calls me back directly, just as he said he would, 2 hours later. Come to find out, the appraiser did complete the appraisal, submitted it through his company and his processor didn’t hit the “submit” button in the computer to send it over to the bank. In other words, it all came down to someone not hitting the right button.
The banker tells me that we can close on the originally agreed upon date and it shouldn’t be a problem at all.
By the way, this all came to ahead on Friday afternoon, now it’s Saturday morning, I call Mrs. Super Closer and she tells me that, “Everything is fine” and from her, I know it is.
Saturday afternoon early evening rolls around and I get a call from the Selling Agent. He is begging me to ask my clients bank to extend the closing. I asked him why and he proceeds to tell me his buyer’s bank needs the extra time to get an appraisal done.
Knowing what I know, I tell the Selling Agent, no, the bank will not extend the closing and he best follow up with his client’s banker. Talk about clueless……lol
So, what is the lesson here….too many to name.
FYI: closing took place as originally agreed upon and the Selling Agent was none the wise to what actually took place.
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A fixture is Personal Property that has been so affixed to land or a building that by law, it becomes part of the real property. (Modern Real Estate Practice 17 Edition)
To help you understand this a bit better, let me give you some examples of what a "fixture" is.....
•1. Heating and cooling system.
•2. Kitchen cabinets.
•3. Built in entertainment cabinetry or built in electronic systems.
•4. Anything that has been added as a permanent part of the building is considered a fixture.
To help you determine if personal property is a fixture a simple test can be done to determine the intent, they are.......
•1. Method of Annexation: Was the Personal Property installed in such away that it was meant to be permanent. Just ask, "Can we remove the Personal Property without damaging the surrounding property?" If the answer is No, then most likely, it is a fixture and should be conveyed with the property.
•2. Adaptation to real estate: How is the Personal Property being used? A great example is your refrigerator. Many would consider this item as Personal Property however, that wouldn't be the case if the refrigerator was designed to un-questionably match the cabinets. In many high end homes, the appliances are styled in such a way that they hide and appear as part of the actual cabinets.
•3. Agreement: What did the parties involved agree to? What was stated in the Purchase and Sale Agreement as to what would and would not convey. If you ever have a question that something is or isn't a fixture.....it's always important to list it out in the Purchase and Sale Agreement if you want to ensure you get it.
The ultimate lesson here is Test 1 (Method of Annexation) and Test 2 (Adaptation to real estate) is subjective at best. I can say that with confidence because the truth of the matter is that courts have been very inconsistent with their rulings. Most of the time, they rely on Test 3 (Agreement), I can't stress how important it is, if you want it, you better include it in the Purchase and Sale Agreement.
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Posted by Steve Elmore on December 26, 2008 at 3:55pm
Hope everyone had a Merry Christmas! 2009 is right around the corner!! We should all hit the ground running - get in the game. As it has been said before, we can't control the market, but we can control our participation in the market that is there.Have a Great New Year!!
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I am sick and tired of hearing about all these companies who are wanting a Bailout, Rescue Bill or Bridge Loan. The big three auto makers come to mind.
For many requesting government funding, including the big 3, the basis of their ignorant argument is that, they are simply to big to fail. It would be disastrous to our national economy because they have so many vendors and business partners that could go under with them.
Granted, yes, many would perish to the economic devil of bankruptcy which is a reflection of their own poor decision making, ie….high legacy cost, poor quality, inability to compete effectively with it’s competition and lack of consumer confidence and lack of desire in their product but, what business could make money with these factors against them, just to name a few?
So, instead of proceeding with bankruptcy and restructuring so that they can come out lean, mean, fighting machines, they want to run to Uncle Sam for a Bailout, Rescue Bill or Bridge Loan, which by the way, they can’t get from a BANK because the banks are smart enough to look at them and say, “No way Jose”. This Bailout, Rescue Bill or Bridge Loan does nothing to make them restructure, it just keeps them floating so they can get through the economic storm.
Back to the argument at hand, “We are too big to fail, our failure would worsen the economic downturn the economy is going through.” Well, bah hum bug….I say. This is like putting a band aid on a compound fracture, only short of a reset….it isn’t going to work.
Now, with that being said, let’s talk about the largest part of the US economy that failed and never asked for a Bailout, Rescue Bill or Bridge Loan and that is the housing industry. I don’t remember some housing executive setting in front of a panel of Senators asking for money to help Realtors, builders, nail gun manufacturers, steel toe boot makers, office equipment retailers, and any and all other effected industries when the housing bubble busted.
No instead we got inquiry hearings as to why Fannie Mae and Freddie Mac failed. We got no relief….and, I mean no relief for struggling homeowners, we got a black eye and bad reputation for “allowing” this to happen. We are looked upon as the creator of our own demise yet, we are the largest, by far, part of this countries economy and yet, where is our Bailout, Rescue Bill or Bridge Loan? WHERE IS IT?
We didn’t get anything because we were too big to help!
So, I dare anyone to bring to me a educated argument as to why we should bailout the Big 3, or anyone else for that matter, before we start bailing out the homeowners and the housing industry. How many partner business’s failed or had to lay people off when we were struggling. Think of all the Home Builders, Home Inspectors, Home Appraisers, Home Lenders, Property Managers, Brokerages, Realtors, Plumbers, Electricians, Roofers, Construction Manufacturers, Office Supply companies and whoever else failed because we didn’t get a Bailout, Rescue Bill or Bridge Loan.
More importantly……..THINK OF ALL THE HOMEOWNERS THAT ARE STILL WAITING.
Maybe if we put all the homeowners in private jets and send them up to Washington to stay in fancy swanky hotels and then dress them up in thousand dollar suits with exotic thousand dollar brief cases, then they might be able to get a Bailout, Rescue Bill or Bridge Loan.
Like I said earlier, maybe we are just too big to help.
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Well, as I said some months ago, if you haven’t gotten on the Titanium band wagon…well you may be missing out and now, that can’t be more truer than ever.
In a recent effort to make all their HRC (Housing Retention Consultant / Realtors) FDCPA (Fair Debt Collections Practice Act) compliant it was announced that Titanium is working on bringing on new banks and in conjunction, opening a REO center.
So, what does this mean to HRC’s?
Well, REO’s are soon to be flowing. For those of us that have worked with Titanium in the past and have developed a good relationship with them, I suspect we will reap the benefits of our hard work.
Once again, I can’t endorse this company enough. They have always represented themselves honestly and sincerely. So far, when they say they are going to do something, it has come true.
Not to mention, the customer service they offer is great and the people all seem to be on the same page.
If you are not with Titanium inc yet. I suggest you get on board ASAP! For more information on Titanium, call me or shoot me an email and I will hook you up or, just go to their website www.Titaniuminc.com and follow the instructions provided. By the way, don’t forget to let them know you are with REOPro, and if you want, you can drop my name…..lol (not that it will get you anywhere…..ROFLMAO)
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On a resume that is? I am now working on my second REO listing, but of course, want to increase my business with a more consistent flow of work/REO listings. What should a resume look like, specifically related to REOs? Any advise or a template would greatly be appreciated.Thanks!Kim
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I have been working with real estate investors for 5+ years. In the begining of my career my buyers were buying REO's, rehabing and renting them out. When I represent a buyer purchasing an REO property, I also arrange for the dye test and occupancy inspections that are required to get lien letters released for closing. I then get re-imbursed by the buyer at closing. I also offer to oversee the rehab process if the client needs this, (for a fee of course). I meet contractors, get bids in place and let my buyer make the final decision's. I've found with most new investors, the more you can point them in a direction to help them make educated decisions, the better they become with building their portfolio. I've developed many long term relationships with my investors and have been referred to others because of my attention to their bottom line. This may seem unusual to some that I am this involved, but it really does make for good relationships with your clients.
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I have noticed that most REO/Bank closings for Floridaare using title companies in South Florida and charge double or triple the customary charges.I am looking for a list of REO closing departments that we can contact to infrom them of our prices and services.Any advice or direction would be appreciatedBarry MillerThe Closing Agent, Inc.Barry@theclosingagent.com
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Posted by Dunia Partow on November 21, 2008 at 12:18pm
Thought I would share this info: Fannie Mae and Freddie Mac announced yesterday that they are suspending all foreclosures on mortgages that the two companies own.Both companies have ordered their national networks of mortgage servicers and foreclosure attorneys to halt all foreclosure sales and evictions involving occupied single-family properties. Freddie Mac is also including 2-4 unit occupancies as part of the suspension. The foreclosure moratoriums will take effect November 26 and go through January 9, 2009.
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Posted by Rick Fine on November 17, 2008 at 6:37pm
Well now, isn't that an attention-grabbing headline!I've been doing this for just under two years and woo-hoo, it is definitely the most interesting and financially rewarding experience I have ever had.I say financially rewarding from the context of commission volume, not hours vs dollars.If I used the hourly model, I think I could do better handing shopping carts to people at WalMart or punching buttons on a cash register with pictures of fast food on it...As the weather deteriorates, (In California that means temps plummeting into the low 60's), I have found more and more of my properties becoming the preferred shelter for the denizens of our streets.Now, as much as I can sympathize with their plight, their using the properties I am assigned by my clients can be problematic.I need to keep the property secure, clean and safe enough for prospective buyers and their agents to enter.I don't know about any of you out there, but the municipalities where I work got really upset when I used pepper spray like Febrese so I'm hoping I can glean from the experts of REOPRO alternatives that are:1. Preferably less-than-lethal2. Non-lawsuit friendly3. Do not involve electric shock, (Don't taze me bro!)4. And of course, CARBON NEUTRAL!(The last one is optional)Seriously speaking, I notice that as Thanksgiving and Christmas approaches more and more of the property assignments still have the occupants in them. How do you deal with throwing little Timmy with the wooden leg and his family out into the snow during the season of giving?For me, it leaves an unpleasant aftertaste that is unavoidable while I am still able to breathe.Does anyone have some advise on how to de-personalize the process during the holidays?Maybe if I looked upon the occupants as only occupants, that would help.I await your wise replies.
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Being an REO agent you learn that there are a lot of out of pocket expenses that you must front for the bank- utilities, repairs, inspections, cfk, HOAs and even some liens. At any given time you could be out of pocket thousands of dollars. If you are a high volume REO agent, it is best to hire someone to focus on organizing the bills, inputting them correctly into each companies system and getting the reimbursements back from the bank. This could save you thousands of dollars and time that you could spend selling the property!When hiring a bookkeeper, you can post a job via craigslist, an accounting temp agency or even a referral from your CPA. The latter two choices are preferred ways of choosing a candidate. Look at other ads from employers to get ideas for a good WANT ad and be as detailed as you can to eliminate unrelated resumes. You can check going rates for bookkeepers with craigslist, the temp agency and your bookkeeper. Remember, bookkeepers don't have to work full time. Many are more than willing to work 2-3 days or even a couple hours a week.What do you look for in the resume? Look for experience for at least 2 years in the field. Also, make sure the candidate is familiar with your accounting system. If you don't have one in place, an experienced candidate can recommend an accounting system- excel and quickbooks are more popular programs. The candidate you choose will be able to set them up for you. Definitely check their references by calling their previous employers through your own resources. The phone numbers they provide for their references are more than likely friends who will them give great references. Because the hired will have access to your bank accounts, it is also recommended that you do a background check on the person.Once you have them in place, make sure you have some checks and balances to ensure there is no leakage of funds. Sign all the checks yourself, don't give them access to direct funds or passwords for access, have another person or yourself do deposits, deposit all checks separately so that you can itemize each one's deposit receipt with each bill it is related to, and lastly review your accounting reports frequently. I cannot emphasize that you must have some knowledge of your accounting system. You never know when you need to change bookkeepers, handle the books yourself, change passwords in an instant or just know the passwords when they are absent.Here's to truly making a commission on the REOs and not a net of all your expenses you paid!!
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BPO Training.docThought the group might find this helpful. Attached is a message I recieved from IAS. The same has been said from a few different suppliers that I'm currently working with. Anyway, more importantly for those doing BPO's you might find the attachment training doc helpful. With that being said I plan on being busy for the rest of this month so you may not hear from me for a while but please feel free to shoot me an email.Good afternoon,Attached above is a copy of new requirements that all of our clients will need to have on the bpo's from here on out. The clients have returned to IAS with some feedback on how they would like the bpo's to be done in the future. There are some things on there that we already do, and there are some new things that we will need to be focusing on in the future.Page 3 and 4 are especially important to focus on when looking at the comparables. A major problem we are having with the bpo's is that the market data is not being justified. When comps provided cannot be provided within guidelines (which is in many cases), we have to make sure that we are explaining to the client exactly why. The client needs statements of facts, not opinions. On pages 3 and 4 are the new guidelines as to what needs to be in your bpo if there are more than 2 comps outside of the neighborhood. Also, when we refer to a "subdivision" or "inside the box", we are looking at the map. That is the very first thing we look at when reviewing a bpo. Any streets that are highlighted darker than the others, surrounding the subject is what we call "inside the box". For all properties that are located in suburban or urban areas, comps need to be inside the box. If you cannot find comps inside the box or within other required parameters, the procedures are listed on pages 3 and 4.I am sending this to all of my agents who I work with on a consistent basis because I want to make sure we are all on the same page. I want to give you the information the client is giving us in hopes to prevent the bpo's from being sent back and to save time on both my side and yours. If there are any questions what so ever regarding any information on the attachment above, please feel free to call me or email me. I am here for any questions you may have! This month, we are expecting more volume than we have ever done in a month before (it will probably hit mid month), and I want to get all these issues squared away before we are all swamped with other things!!
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I am a full time real estate agent in Pittsburgh PA and work with several real estate investors, both in Pittsburgh and in from other areas. Pittsburgh is a great place to invest in real estate because you can get properties at .50 - .60 cents on the dollar. I want to find out where to start the process of tracking down dircet contact information for asset managers who need their properties off the books. Any help would be greatly appreciated.Donna M. Pellegrino
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