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[aguilar]

I came accross this article and thought I would pass it along.

More opportunities for agents to break into foreclosure markets

Becoming an REO agent through the back door

Okay so the average Realtor does not have to be overly concerned about competing with auction houses, yet. But Auction Houses are making a big splash in the foreclosure world. REO Agents and Brokers that "list and sell" bank owned property are now losing chunks of their inventories to Auction Houses. Foreclosure management companies are getting the directive from their clients (the lenders) to start turning their inventories quicker. And auctions are the direction they are headed.

It typically works like this:

REO Agent lists foreclosure on MLS for a total commission of between 5-6%. Until recently, they retained the listing until the property sold. Now banks and 3rd party management companies are pulling the listing from the REO Agent if it does not sell within 14-90 day period and selling through the Auction Houses.

- The GOOD news: is that generally the REO listing agent is given the opportunity to retain the property and continue to manage it until it is sold at auction;

- The BAD news: is their fee drops to 1%, IF the property sells at auction. How bad does this sound?
That is quite a hit to margins and is considered by the VAST majority of REO agents as unacceptable compensation. Hence, in great numbers, REO agents are declining to accept the responsibility of managing these properties.

- The UGLY: "Managing" the property until auction typically includes holding the
"pre-view" or "open" prior to the auction. Which is usually 3 full days or more.

- The SILVER lining: is the door that is opening for new agents to break into this market.
Banks and REO management companies are now scrambling to find qualified agents to
manage these properties through the auction. Subsequently they are ramping up their recruitment of new agents. And all the above is NOT as bad as it sounds.

The silver lining is as follows:

1) There is little to do from a management standpoint with these properties. Minor
items such as swap lock boxes, replace light bulbs etc. The largest commitment is providing staff to work the "open house" or "preview" so prospective bidders can view the property prior to auction.

2) Most if not all lenders and mgmt companies will allow a $70-$100 per day compensation for each open. And the open does not have to be held by a licensed agent.

3) The window between assignment and auction is relatively short, 60 days or
less. If it sells you get your 1 %. If it does not sell (now here is the biggie) chances are the lender will re-list on MLS and sell through tradition REO disposition model. The agent that is going to receive the listing will generally be the agent that committed to assisting during the management phase. And at this stage of a properties selling life cycle, the properties pricing should have been beaten up enough, so it is highly probable that pricing will be very aggressive and a quick sale will proceed.

4) If you represent the buyer that ultimately is the highest bidder, you earn an additional 1%. There is a very high likelihood that the ultimate purchaser will come through the open house. It’s up to you to nab them and assist them through the auction phase.

A requirement of all auction property bidders will be that winning bidders will close immediately following the auction….meaning the same day! Not a lot of opportunity for buyers remorse to set in!
All you really need to break into this market is a list of the major management companies around the country that are disposing of the vast majority of foreclosures and start applying. It is these companies that are working with the auction houses and it is they who recruit and hire new REO agents.

It certainly will not hurt to have a good understand of the REO model and what skill sets are expected. As questions here in this forum and we will be happy to help you.

[avoidforeclosur]

Wow Thats so wonderful thank you so much for sharing such a great stuff with us