How to Get REO Listings from Banks [2021]

How to Get REO Listings Image

The coronavirus and the resulting economic disruption is leading toward significant REO listing opportunities for astute real estate agents. In this article, I’ll show you how brokers and agents can get REO listings efficiently and consistently.

Here’s what we’ll cover:
How Banks Acquire REO Property
How Real Estate Agents Benefit from REO Listings
How to Get REO Listings as a Real Estate Agent
REO Listing FAQs
The Best Way to Get Bank-Owned Property Listings

How Banks Acquire REO Property

As you probably know, when banks 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 the 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 lender’s available capital for lending. This scenario is a problem because lending, after all, is how banks make money.

Once a property becomes REO, banks start a clock or “sell” timeline, which forces the sale. Generally speaking, banks have five years to sell REO assets.

How Real Estate Agents Benefit from REO Listings

When the economy goes south, and foreclosures ramp up, realtors will find that acquiring REO listings can help them have more secure, regular revenue. 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 than wither and die.

Tips from a Seasoned REO Seller

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 servicers or Asset Management Companies (AMCs), and I’ve sold REO for tiny local banks. I have years of experience in gaining and maintaining seller relationships and finding REO listings. Additionally, as an auctioneer, I have foreclosed on a lot of properties.

I can tell you unequivocally that working with real people at local banks is a superior experience to the latter.

Working with real people who make local decisions is better than working with large servicers.

You’ll float fewer expenses and 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. That’s not you.

How To Get REO Listings As a Real Estate Agent

REO Listings

Most realtors are familiar with getting REO listings from special servicers or AMCs by signing up online and completing Broker Price Opinions (BPOs). I call this technique the “hope and pray method;” it’s inefficient and the least effective way to source REO listings.

However, savvy realtors acquire listings directly from their local community and regional banks. Continue reading to learn how.

Option 1: Sign Up With REO and BPO Management Companies

(Hope and Pray #1)

REO Subscription Service

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

These companies’ usual process is to send you BPO 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.

A few of the dozens of REO management companies include:

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 recurring 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 there 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

(Hope and Pray #2)

Agent Directories

There are numerous 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, though, will they actually sit down and search for 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: Search Bank REO Lists

Bank REO lists are worth checking out during the search for REO property. While these lists shouldn’t be your primary REO listing source, you may occasionally come across a good property (though, due to its visibility, you’ll likely face some competition and other hurdles). A few big banks to consider include:

However, reaching out to big banks is likely to be as “hope and pray” as the other methods listed above. Instead, focus on smaller, local banks. Reach out and connect with actual real people in your area.

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

The process isn’t complicated, but MOST realtors won’t go through the necessary steps to find local REO listings.

Option 4: Get REO Listings Directly From Banks

(The BankProspector 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.

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 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 5,000 banks and the same number of credit unions in the US.

Instead, focus on those lenders who have a pipeline. You can do this with our BankProspector software or by going to the FDIC and NCUA websites to research it yourself. I also teach you how in this free training webinar.

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.

Step 2: Identify the Decision Makers

The deals we’re talking about here get done between people.

You don’t simply log on and register yourself and hope. You’re going to identify decision-makers instead and then systematically approach them.

If you’re going to have a disciplined, systematic approach to getting REO listings, I suggest that you identify 100 to 200 qualified 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 PREPARED TO MAKE LISTING PRESENTATIONS

Listing Presentation

You’re selling to 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 precisely what they’ll get from your service, how you’re qualified, and why you’re different from the rest.

OFFER BPOS, OCCUPANCY CHECKS, AND PROFESSIONAL GUIDANCE

You should be prepared to give before you get.

You 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 likely 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.

REO Listing FAQS

How do I find bank-owned properties?

You can search for bank-owned properties on REO asset management websites like Homepath.com and Ocwen.com or REO property listing pages on bank websites. For a simpler, more effective process, though, you can source REO properties the DistressedPro way by establishing and maintaining regular communication with a network of bank contacts and traditional REO sellers. When properties become available, you’ll be one of the first REO buyers to know.

How do I get a free list of foreclosures in my area?

One master foreclosure list doesn’t exist, but you can build your own list by pulling REO listings from various sources, including:

  • Bank websites
  • Government sources like hud.gov
  • County websites
  • Foreclosure listing service like RealtyTrac.com
  • Craigslist and local newspaper classified ads
  • Real estate agents

Which bank has the most REO properties?

National banks like Wells Fargo, BMO Harris, and Bank of America have high REO property volumes. REO asset management companies also handle a lot of bank-owned properties.

The Best Way to Get Bank-Owned Property Listings

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

Successful REO Agent

Most agents have no idea how to find local REO listings. Submitting their info and completing a few BPOs is all they’ll ever do.

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

Take control of your REO listing search. BankProspector helps investors and agents find and connect 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 details.

From there, make contact, build a relationship, and keep doing that until you can’t take any more listings.

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