How to get REO Listings from Banks [2020]

The coronavirus and the resulting economic disruption is leading us toward significant REO listing opportunities for astute real estate agents.

How to Get REO Listings

In this article I’ll show you how to get REO listings if you’re an agent or a broker.

And, yes, I have the experience to speak from. I’ve been involved in more than $200MM in REO and other asset sales for lenders. I’ve listed REO for Ocwen and other Special Servicer’s or Asset Management Companies and I’ve sold REO for tiny little local banks.

Additionally, as an auctioneer, I have foreclosed on a lot of properties (don’t hate the player y’all, foreclosure is part of a healthy capitalist society, true story).

Most Agents Approach REO Listings the Lazy Way

Most realtors are familiar with getting REO listings from special services or asset management companies by way of signing up online and completing BPO’s. I call this the “hope and pray method”.

But the fact is that the more savvy realtors in this crisis will get listings directly from their local community and regional banks. In this article I’ll show you how.

As you probably know, when bank and credit unions, foreclose on their loans sometimes those assets are sold back to the bank through what’s called a “credit bid”. When a lender is the successful bidder at a foreclosure auction the property that they “book in” becomes REO or “OREO”. This term comes from lender’s quarterly reports and a line item for “Other Real Estate Owned” (shortened to REO).

Once a lender buys back a property at a foreclosure auction the asset begins to “weigh” on their books which reduces the lenders available capital for lending. This is a problem because lending, after all, is how banks make money.

Once a property becomes “REO” banks have a clock that starts running which forces the sale. Generally speaking, banks have 5 years so sell REO assets.

When the economy goes south and foreclosures ramp up (like, um now) realtors will find that securing REO listings can help them have more secure, regular revenue. In fact, if you can establish yourself as the go-to broker (agent) in your area for your local, community, and regional lenders your business may actually thrive during these times of crisis, rather that wither and die.

I’ve Sold a Lot of REO Personally

As I mentioned, I’ve listed and sold REO for both special servicers (aka REO asset management companies) as well as directly for banks.

I can tell you unequivocally that working with real people at local banks is a superior experience to the latter. You will find that working with real people who make local decisions is better than working with large servicers.

You’ll find that you will float fewer expenses and, finally, you’ll find that the real buyers and investors will come out of the woodwork to get to know you. In fact, after this crisis is well behind us, if you do this right, you will likely have a very highly qualified list of cash buyers and investors who look to you as the point person for the best deals in town.

Sadly (for those other guys), most real estate agents don’t understand how to connect with sellers, so they waste time and rarely make profitable deals. But not you.

How Do Real Estate Agents Get REO Listings?

Here’s what we’ll cover…

REO Listings

Certain lenders might refer to an REO as a non-performing asset or bank-owned property. In this post, we will refer to them as REO as that is the term most commonly used by the major banks and credit unions. Selling REO listings will offer you a great opportunity to profit if you know how to find and use the best REO listings to build your business.

To get started, take just a few minutes to contrast the methods that real estate agents use to find inventory with the proven, profitable BankProspector method.

Option 1: Sign Up With REO and BPO Management Companies

(Hope and Pray #1)

REO Subscription Service

There are a number of “special servicers” and “REO asset management companies” that you can contact for REO listings.

The usual process for these companies is that they send you “BPOs” (Broker Price Opinion) orders that you complete for anywhere from $40-$70. Once you complete enough of these you may be selected to list an REO but there’s no guarantee.

These are some examples of just a few out of dozens of REO management companies:

  • This service lists Fannie Mae properties.
  • Specializing in mobile homes.
  • One of the largest special servicers.

Advantages of Appealing to Servicers for REO Listings

The process, described above, is pretty simple.

  1. Sign up
  2. Hope to get some BPOs
  3. Do a good job on your BPOs
  4. Hope to get an REO listing

(You may have noticed something… the word is “hope”)

Disadvantages of Relying on Asset Management Companies for REO Listings

You have absolutely no control.

You can expect to spend a lot of time submitting BPOs for these properties. And know that you’ll face plenty of competition from other agents clambering for the so-called easy method to find REO listings.

But these are other reasons most real estate agents never gain much traction with this approach:

  • Since you have no direct communication with decision makers, you have no control over this process.
  • If you do manage to get an REO listing you should also expect to spend at least a few thousand dollars on repairs, out of your own pocket, and you’ll occasionally struggle to get reimbursed.
  • Since you haven’t actually invested in networking with decision makers, you’re unlikely to be able to influence the process

Option 2: Get Listed in REO Agent Directories

(and hope and pray)

Agent Directories

There are a number of REO listing agent directories out there where you can pay to have your profile and services listed publicly.

With other agents calling directly on decision makers for their listings do you really think they’re going to sit down and google and find you and just start sending you business? Probably not.

I’m not saying “don’t get listed in REO agent directories”. I’m just saying that the efficacy of this approach is suspect and, once again, leaves you in a place where you have no ability to affect the outcome.

Here’s one directory I know of but this link is NOT an endorsement.

Option 3: Get REO Listings Directly From Banks

(The BankProspector Way)

“This is the way…”

Instead of hoping for somebody to call you why not take control over your business?

Build your own pipeline and network for REO listings.

Reach out and connect with actual real people in your area.

When you take the time to contact and serve these institutional sellers, you’ll benefit from the repeat business, well priced listings, and throngs of qualified buyers.

This isn’t complicated but MOST realtors will not do the work to get local REO listings.

Step 1: Start by Finding Banks and Other Lenders With REOs

Identify your local, community, and regional banks and credit unions with REO or with a a pipeline of non-performing loans.

In almost any area, you should find at least a handful of local lenders that fit your criteria. Since lenders typically list multiple properties, you really only need a few good contacts.

I’d suggest that FIVE to TEN good banks are all you need to have a full book of business.

How to Find Local Lenders Selling REO – the Hard Way

You can just go to your phone book and start calling lenders but that doesn’t make a lot of sense since there are well over 5000 banks and the same number of credit unions in the US.

Instead what you should do is focus on those lenders who have pipeline. You can do this with our software or by going to the FDIC and NCUA websites and doing the research yourself. In fact I teach you how in this free streaming web class.

With BankProspector, we’ve solved the problem of finding lenders with REO listings. You can see the portfolio details and contacts for every bank and credit union in the country that holds REOs.

I suggest you start by identifying 100 to 200 qualified lenders in your area.

Step 2: Identify the Decision Makers

The deals were talking about here get done between people.

You don’t simply logon and register yourself and hope. You’re going to instead identify decision makers and then approach them in a systematic way.

If you’re going to have a disciplined systematic approach to getting REO listings then I suggest that you identify 100 to 200 lenders and then find 1 to 3 contacts per lender.

I go into much more depth in our training but suffice it to say that different size lenders make “buying decisions” or in this case listing decisions differently.

Some banks will be large enough to have a committee with other lenders you’ll work directly with the top brass and still others will have independent departments or even just a single REO manager who can make a decision over coffee with you.

Grab decision maker names and phone numbers from the BankProspector software or do your own contact research.

Step 3: Add Your Prospects to a Well-Defined Prospecting System

Now that you have listings and seller contact information, you can add them directly into your prospecting system.

Personally, I recommend modeling Gary Keller’s Millionaire Real Estate Agent.

Be Prepare to Make Listing Presentations

Listing Presentation

You’re selling into a sophisticated client who could be responsible for sending you a lot of deals and making you a lot of money over time.

Act like it.

Prepare a listing presentation so that you can explain exactly what they’ll get from your service, how you’re qualified, and why you’re different than all the other guys (and gals).

Offer BPOs , Occupancy Checks, and Professional Guidance

You should be prepared to give before you get.

You’ll might need to offer BPOs to get your foot in the door and begin building your relationships.

Don’t be afraid to drive by a few properties and give plenty of pricing and market advice before you start getting listings.

This is the “know, like, and trust” phase.

Efforts that you expend to get those first few listings will be likely to result in lots of repeat business as you establish a solid relationship with local banks and credit unions. As you build your brand, you should find it easier to prospect for sellers and may even find that sellers start asking for you.


Successful REO Agent

Asset Management Companies and agent directories may appear attractive because they seem easy to work with and, over time, you might get listings.

But doesn’t it make sense to drive the process and results instead of just hoping you’re chosen at random?

Most agents have no idea how to find their own local REO listings and blithely submitting their info is all they’ll ever do, maybe a few BPOs.

But not you, you can take control.

BankProspector helps solves these problems of finding and connecting with decision makers at the right banks and credit unions. We provide detailed information about lenders including decision maker contact information and distressed asset portfolio info.

From there your job is to make contact, make a relationship, and keep doing that while until you can’t take any more listings. That’s the part you’re really good at anyway though, isn’t it?

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