How to Become an REO or HUD Listing Broker

last Updated on February 17, 2022 by Mark Ferguson Deciding to become an REO or HUD number agent was not easy for me, but it was one of the best decisions I always made. Before I was an REO agent, I struggled to find my niche in real estate. I did not like showing houses and calling people I did not know. Selling REO properties for banks provided me with a way to make money sell houses without cold calling people or even showing houses to buyers. I created a firm pour of occupation number service mho from banks, and I finally began listing HUD homes equally well.
I have sold over 500 houses over a three-year period thanks in most part to REO and HUD listings. I was able to hire an assistant, and then I hired another adjunct, and my career took off. I nowadays own a real number estate brokerage ( Blue Steel Real Estate ), own 182k sqft of rental properties, and arrant 15-30 cook and flips a year. There is no way I could do all of this without finding my recess in very estate through list REO and HUD homes.

To learn how to become an REO agent check out my REO and BPO starter kit .

How hard is it to become an REO or HUD listing broker?

Becoming an REO list agent takes time and hard work ; it will not happen overnight…or in one month…or possibly even a within year. It took me about six months to start getting REO listings after I first decided to go after the business. It took me about two years to get adequate listings to know I had found my niche and could focus my career on REO. not alone does it take time to become an REO agent, but it besides takes workplace. You have to be uncoerced to handle rejection because this is a very competitive field. You have to be persistent. and it will cost money to get started. The key to being successful as an REO agentive role is networking, going after the right companies, and not giving up. Below is a video recording of me heading to a new REO assignment .

What is an REO property?

REO stands for real estate owned and is the term banks use to describe homes they have repossessed through foreclosure. A home goes through foreclosure when a homeowner stops making payments or gets behind on payments on the loanword they have on their firm. In some states, it can take a few months to foreclose, and in other states, it can take years. once a home plate goes through the foreclosure process, the bank owns the home and can sell it. An REO agent is a number agent who sells REO properties for banks and asset managers. The asset coach is the main contact between the list agent and the seller. HUD homes are foreclosures that the politics owns. They went through foreclosure but they had FHA loans which the government insures. The government frequently, but not always, takes bet on FHA loanword foreclosures .

How did I become an REO agent?

I incidentally found the worldly concern of REO when an asset director called me up and randomly asked if I could do a BPO. I was not sure what a BPO was, but I looked into it and agreed. A BPO is a broker price opinion and is like an appraisal but is completed by a real estate agent, yet it ’ south not a detailed as an appraisal. I completed the BPO and then looked into BPOS and REOs. When you complete BPOs, they are normally used to prize foreclosures that banks get back when the owners can ’ t make the payments any long. There was actually an REO agent in my function at the time, but I never paid much attention to what he did. After learning about REOs, I was actually excite. I worked for my dad at the time, and I was telling him how great it would be if I could list REOs. I could even tell the banks we would buy the houses from them immediately if they did not want to list them and wanted to sell them fast. I was faulty about that : it is a big no-no to buy your own listings as an REO agent. I got extinct of my comfort zone boastful time to become an REO agent. I cold-called every bank that I knew had foreclosures and asked them how to list their properties. Many of the banks did not give me any utilitarian data, but a few did. I learned that I needed to sign up with the asset management companies, not the banks. I signed up with asset management companies, joined trade organizations, took REO train, and I went all in. The more I worked, the more BPOs I was getting, and finally, I got my first REO list. I could not believe it when I read the electronic mail discipline course. It said something like : raw REO assignment. I opened the e-mail, and it was a fresh list assigned to me. I had no idea what to do, but they gave me a long ton of tasks to complete. I needed to :

  • Set up yard maintenance.
  • Get the house rekeyed.
  • Complete a BPO.
  • Set up a trash out.
  • Get the house cleaned.

I was young and motivate, so I thought I should complete the trash out, mow the lawn, and do a a lot work as I could. Later, I learned that I was not supposed to do any of the exercise myself. In fact, I was prohibited from doing it. Oops. I sold that house, and I started to get more and more listings from different companies. It was a set of study, but I loved the employment. I did not have to hold assailable houses, show houses to buyers, call cold leads, or talk to strangers all day. I could do about all of my workplace through e-mail, I got to drive around all day, and I had a regular income from all the BPOs I was doing, let entirely the REOs. I built the business up more and more until I got the HUD report. then I was selling 200 REOs per year, working for more than 30 different banks and asset management companies, and having a blast. I highly recommend real Estate Express to get your license. substantial Estate Express offers classes in most states and has some of the lowest prices for real number estate classes. Mulitple agents in my office have used them and love it .

How does a real estate agent handle REO listings?

I used to sell a fortune of REOs. When I receive an REO list, I get an electronic mail that says “ fresh REO assignment ” or something to that effect. All the instructions are in emails, an attachment, and on-line. I rarely talked on the call to the bank or asset management company who sent me the listing. Almost all of our communication was through e-mail, and I got a steady flow of listings without having to cold call, hold unfold houses, send out mailers, or make sure I am available to answer every single incoming call. I besides completed many BPOs ( agent price opinions ) for banks and asset management companies that besides require very little contact. I received the BPO ordain, complete the ordering, get paid $ 40 to $ 100, and move on to the future orders. It is not barely me that prefers to complete work on-line with minimal distractions : most banks prefer e-mail and immediate communication angstrom well. once I got into the REO and BPO global, I knew I had found the perfect match ! Over a three-year period, I sold over 400 REOs and HUD homes. I have been a Realtor since 2001, and I specialized in REO from 2008 to 2014. I survived as a traditional realtor, but I excelled as an REO list agent. Like most things that are rewarding, it is not comfortable to list REO properties. It takes time, continuity, money and hard work to become an REO agent. If you are able to put in the function needed to become a successful REO broke, the money is capital and the freedom of being a real estate of the realm agent is hard to beat .

How much money do REO agents make?

The sum of money you can make when you list REO properties is highly subject on have and oeuvre ethic. I sold from 100 to 200 REO listings a year multiple years in a row. The average commission I received from banks on an REO property was around 2.5 percentage, and HUD pays listing agents a 3 percentage committee. My average sales price was about $ 120,000, which means I made more than $ 400,000. Remember—that is not all profit. I have to pay staff, adjustment fees, marketing, agency bills, indemnity, and money to my agent. But even after expenses, REO listings offer an incredible income. That is fair the money I made off the REO listings themselves, which does not include other houses I sold or BPO income. It is much easier to sell traditional houses and run a real estate team when you list that many properties. I earned hundreds of thousands of dollars a class in net income from my REO business, and REO listings besides provide capital leads for buyers. I make money in many early ways besides the REO properties I list. I besides complete 1,000 tip BPOs ( broker price opinions ) per year. Those BPOs average about $ 50 per BPO and add another informant of income on top of the REO income. I don ’ triiodothyronine dispatch any fee BPOs myself, I have my staff handle them as I simply don ’ t have time to do everything. If you want to list REO properties, you will have to hire serve at some point to handle the oeuvre and keep you from going crazy. There is another source of income when you list REO properties. When you have a batch of listings that are priced well, like HUD and REOS normally are, you get a lot of buyer leads. We have buyers calling us all the time on the properties we have listed. I don ’ metric ton handle buyers myself, but I do have agents on my team who I give those leads to. When they sell a house, I get a cut of their commission. become real estate agent

Investing in real estate and being an REO agent

A lot of people assumed I had a huge advantage as an investor when I was an REO agentive role. They thought I got foremost dibs at the houses I listed. The accuracy was the accurate opposite. I was prohibited from buying any of my own listings and even prohibited from buying any properties from some companies I worked for. I was not allowed to buy any HUD homes, and neither was my family or even other agents in my function !

What does an REO broker do?

REO stands for Real Estate Owned and is the term banks use to describe properties that went through foreclosure and the banks own. many traditional agents tend to think listing REO properties is a reasonably easy job : get listings, put them in MLS, relegate offers, and collect a check. The truth is when you list REO properties, it is a batch of exploit ! Working with banks is much different than working with a traditional seller. REO brokers are working with out-of-state sellers who never see the property. We have to be the eyes, ears, and nose for the seller. here are some of the items you have to do when you list REO properties .

1. Drive a lot to inspect the properties

An REO agent has to constantly inspect properties. Most probably, the properties are vacant and have a better probability of being vandalized than an occupy place. Most banks and HUD ( department of house and urban development ) require weekly inspections on properties. They besides require an initial inspection to be completed on the place within 24 hours of the property being assigned .

2. Handle maintenance and repairs

When you list REO properties, the banks will expect you to hire contractors to maintain properties and dispatch any repairs. This includes re-keys, winterization, thousand sustenance, and in some cases, full rehabs. When doing certain repairs, we have to get at least two bids, and sometimes three, before the employment can be done. If the exercise is going to cost more than the bid, we have to get anterior approval before any additions can be made. We are not allowed to use any friends or class for the work being done .

3. Front a lot of money

many banks besides expect the REO agentive role to pay the contractors for any workplace done. The REO broker then has to submit invoices with validation the work was done ( before and after pictures ) to the depository financial institution and delay for the bank to reimburse them. An REO agent can have $ 10,000 or more in great invoices per property ! many REO brokers have problems with banks not paying back reimbursements in a seasonably manner or at all. We have to keep very good cut of invoices and make certain we are getting paid back. Some banks even charge us processing fees for paying their bills for them .

4. Handle repairs and maintenance

Banks require an REO agentive role to be intimate about the repairs needed on a place and the cost to repair. Whenever I receive a new assignment, I have to walk through a house, note any items that need to be repaired, take pictures, and then calculate the monetary value of those repairs .

5. Take a lot of pictures!

I have to take pictures of everything ! I have to take pictures of every room, each exterior side, the yard, address, street scenes, and sometimes, neighboring properties. Most pictures have to be date stamped, but listing pictures should not be date stamped. I literally have thousands and thousands of pictures on my calculator .

6. Know how to complete BPOs

A BPO, is a agent price opinion and is like an appraisal but performed by an agent. A BPO consists of sold comps, active comps, subject details and comment explaining all about the subject, comps, and values. The banks require comparable properties to be within a certain old age, square footage, and distance from the subject. They besides prefer like bedroom consider, dash, and condition. many forms will besides require adjustments to be made for any differences between the subject and the comps. Whenever I list REO properties, I besides have to complete a BPO on the property .

7.  Know how to handle cash for keys and evictions

One of the most unmanageable jobs when you list REO properties is completing cash for keys and evictions. Cash for keys occurs when a deposit forecloses on a property but the previous owners or tenants still live in the property. The bank will normally offer the occupants a certain total of money to move out in a certain amount of time. many times they will offer doubly the market lease for a property to move out in 30 days. When the occupants move out, they have to take all personal belongings and clean the home. If they do not clean or remove everything, the REO agent is not supposed to pay the occupants. If the REO agent does pay the occupants and the home is not clean, then it is possible the depository financial institution will charge the agent for clean ! If a cash for keys agreement can ’ thymine be worked out, the bank will evict. The REO broker has to coordinate the eviction with the sheriff and clean-out crew. The REO agent has to be there for the eviction and to oversee everything .

8. List a lot of properties

finally, we get to list REO properties ! When we get a list from the trust, they give us 24 hours to list it in MLS and send the MLS sheet spinal column to the trust. Most banks have certain wording they want in MLS to convey to the populace or other agents. We are supposed to write a detail selling description and treat the list as if the bank were a traditional seller who wants the family portrayed positively. We have to upload multiple pictures, room measurements, and other pertinent data. Some banks will require the sign and marketing materials ( flyers ) to be at the place and pictures sent to the bank within 24 hours of the list agreement being sent .

9. Submit a lot of offers

If a home is priced mighty, we normally get offers right away, and we sometimes receive multiple offers. The seller loves multiple offers because they can try to get people into a bid war. The REO broke sees a lot of shape ahead when there are multiple offers. With each offer, the agent has to submit either the entire put up or the terms of the crack to the trust depending on the system the trust uses. once an crack is submitted, we wait for the bank to respond, and we convey that to the buyer ’ s Realtor. When we get multiple offers, we have to submit those to the deposit then send out a multiple-offer form to all agents involved. We then wait for new offers to come in and resubmit all the offers again. Depending on the system the bank uses, it can take from 5 minutes to 20 minutes to submit an offer. It is very fun to submit 25 offers on a property !

10. Handle inspections and appraisals

With many banks, the REO broke is responsible to get the urine and all utilities on for inspections and appraisals. We have to meet the city or utility company, get everything turned on, and then have the property re-winterized if it is during the winter months.

11. Know about closings, loans, etc.

During the under-contract phase, the list agentive role has to update the bank on the buyer ’ sulfur lend process, inspection, appraisal, and any other issues that come improving. If there are appraisal requirements, inspection requirements, or lender problems, we have to communicate with the deposit and buyer ’ mho agent and come up with solutions. many banks won ’ t make repairs, evening for appraisal requirements. In those cases, the home goes back on the market, and the entire process starts over again .

12. May or may not be at the closing

We made it to closing ! Some banks require the REO broke to be at close, and some do not. I prefer not to be there due to the time it takes since my closings range from across the street to 50 miles away. I can besides do more to solve a problem at my desk in the position than I can at close. After close, we have to get our safe-deposit, sign of the zodiac, take utilities out of our diagnose, and get all invoices into the bank ASAP .

13. Have to work on strict timelines

The end thing to know and the most important when you list REO properties is the bank ’ s timelines. Each deposit has different requirements for when tasks are due, but it is very important that the tasks are completed on time. I normally get 24 hours for the initial inspection, 48 hours for BPOS, 24 hours for MLS sheets, 72 hours for HOA information, and there are many, many more tasks. If you do not complete tasks on prison term, the bank will find person who does. There are a lot of agents looking to get into REO, and the banks do not have to look far to find a replacement .

15. Have to teach other agents

Yes, I am besides a teacher vitamin a well as a lister of REO properties. As a HUD list broker, I am required to teach at least one class a month to agents, buyers, and the populace. My classes for agents are actually approved for continuing education credits for real estate agents. One of my biggest jobs is teaching agents how to submit offers through the HUD system .

16. Have to communicate well

communication is huge for an REO agent since we are on bid 7 days a workweek. Asset managers will call or email us at all times of the day and on the weekends if they need something. It is expected that we get back to them within the same day if not within a couple of hours of when they contacted us. There are many weekends that I am working because I received a new grant on Friday or Saturday nox. I have 24 hours to complete tasks, not 24 business hours. I besides have many buyers and agents contacting me all the time. I have to be commodity on the earphone, even though I try to get people to email me angstrom a lot as possible .

What are Broker Price Opinions?

It is authoritative to know what a BPO is. BPO stands for broke monetary value opinion, and all REO agents must know how to complete them. A BPO is like an appraisal but less detail, and you do not have to be an appraiser to complete one ( in most states ). Completing a BPO is contribution of the job when listing REO properties for banks, and the better you are at BPOs, the more likely it is you will get more REO listings. A BPO helps a bank decide what a place is worth and what they should list it for. There are besides companies that pay agents to complete BPOs, but these BPOs may or may not lead to REO assignments. These BPO companies will pay from $ 30 to $ 150 for each BPO. I completed over 1,000 BPOs a year at one time, and it was a bang-up secondary income beginning for me. To complete a BPO, you have to take exterior photos or department of the interior and outside photos of a house. You have to complete a composition on the house, which takes me or one of my assistants about 30 minutes. When you first start doing BPOs, it may take much longer to complete a BPO. not only can completing BPOs help you earn excess income, but they can besides help you get REO listings. Some banks will have fee BPOs and REO listings. When they need a new agentive role to list REOs, they will look at who is doing BPOs for them first. When you complete BPOs for fee-based BPO companies that do not have REO listings ( these are often called BPO mills ), you still may get exposure to banks. Those BPOs are finally seen by the banks and asset management companies, and they will see your name as the person who completed the BPO. When I started in REO, I signed up with every BPO company I could and completed every BPO that was sent to me. How to complete a BPO .

How do you start listing REO or HUD properties?

The catchy part about listing REOs is most banks and asset management companies want feel agents to list their properties. That means the savings bank need agents who have listed REO properties in the past. How do you start listing REO properties if the banks and asset management companies entirely want agents who have sold REOs ? finally, agents who have never listed REOs will have to be hired because experienced REO agents retire or quit the business. There are ways to get experience with REO and HUD properties without listing them. To get experience with REO properties, you have to sell REOs and HUD homes to buyers. The more REOs and HUD homes you sell, the more experience you will have working with banks. The more BPOs you do, the more know you will have equally well. A bank is much more probably to use an agent who has experience with BPOs than person who does not. It is not easy to break into the REO occupation, but if you have experience with BPOs and selling HUD homes and REOs, it will be much easier .

Before you start trying to get REO listings, you have to be prepared

If you call up a bank or asset management company and ask for an REO listing, there is a good chance they may not talk to you, but if they do, you have to be prepared. They will want to know what know you have, they will want a resume and they will want a replicate of your e and O policy, real estate license, W9, and other documents. You want to have all this information quick to go in an REO package. I have spent years perfecting my REO package, and I have unlike configurations depending on what customer I am targeting. When HUD asked me for an REO proposal a few years ago, my completed mailboat was about 50 pages long ! other banks may want a simple curriculum vitae, and some will want a lot more. You have to be prepared with at least the basic documents and insurance requirements if you want REO listings. When you do get an REO list, you besides have to know what you are doing. Banks and asset management companies have nonindulgent deadlines and expect quality cultivate and debauched communication. The concluding thing you want to do is get an REO assignment, have no theme what to do, and lose the client. Below is a video of me going to a HUD appointment .

How do you find banks, asset management companies, hedge funds, and other companies?

There are many websites, many REO organizations, many banks, many asset management companies, and many hedge funds in the REO diligence. Most of the websites will claim to get you REO listings simply for signing up and paying them. These sites are largely despicable, but a few are worth spending money on, and a few more are detached. I signed up with one locate when I started that allowed me to work with three raw clients in my first gear year fair by being on that locate. I besides belong to multiple REO groups that do charge and some that do not. There are many asset management companies that have listings and many that do not or have gone bankrupt since the final clang. There are some unscrupulous companies that claim to have listings that do not and will rip you off. There are many tricks I have learned over the years to find the companies that do have REO assets that will help you get listings and how to avoid the bad companies. unfortunately, I can not disclose that information on a public web site because many of those companies do not want that information made public ( the dependable and the badly ). In my REO and BPO starter kit I include the 35 + companies I list REOs for and many other companies I know have REO assets. I besides include a list of the BPO companies I work with that you can sign up with. I discuss how to put together an REO mailboat, how to contact asset managers, and how to get your appoint seen over and over in the industry .

Why would it be a good time to become an REO agent when REO inventory is low?

I was selling REOs when there were a bunch of foreclosures. When there were a bunch of REO properties, there were a fortune of veridical estate agents trying to get REO listings. There was an incredible sum of competition, and it was very difficult to become an REO agent, even with a set of REO inventory. now that there is less REO inventory, there are much fewer agents trying to become REO agents. When there was a batch of REO armory, the asset managers who handle the properties for the banks were swamped with work. They didn ’ t have time to hire newly agents unless they had to. now that there is less stock, the asset managers have time to talk to agents and possibly add raw agents to their network. Listing REO properties does not happen nightlong. It takes prison term to build up the business, and working with one bank is normally not going to give a very estate agent enough inventory to be successful. The best way to get into REO is for banks and asset managers to see your name and face at conferences over and over. The preferably you start marketing yourself as an REO agent, the preferably you will get REO listings .

Are banks hiring new REO agents?

If an agent calls a depository financial institution or asset management company and asks how to list REO properties, the bank will say our network is full and we aren ’ deoxythymidine monophosphate hiring new agents. This is how the savings bank weeds out who is serious and who is trying to get some easy listings. I started listing REOs in 2007, and about every company or bank told me they weren ’ thymine hiring REO agents. Yet, I have listed REOs for over 35 companies even after they said they weren ’ thyroxine hiring new agents, so don ’ metric ton believe them ! Banks are always looking for new agents because their stream agents are retiring, changing professions, or screwing up. Banks are besides looking for agents to cover rural areas because there are normally identical few, if any, REO agents in rural areas. many times, REO agents from 30 miles or further are asked to cover rural areas. Banks are always hiring new REO agents no topic what they say .

Will REO inventory increase or decrease in the future?

The sum of foreclosures in the United States is constantly changing. REO inventory goes up, goes devour, then back up again. even though REO inventory is devour now, there is a very dependable opportunity it will be increasing again. The boastfully motion is when will it increase : 6 months, a year, two years, or longer ? The preferably an REO agent starts pursuing business from banks, the better positioned they will be when REO inventory comes back. No matchless very knows what will happen. A few years ago, many REO experts predicted we would be hit with a tsunami of REO inventory, and REO inventory actually went toss off .

Why did I stop listing REO properties?

Being an REO agentive role was not all fun and games. There were problems with the business angstrom good :

  • I had to drive a lot, sometimes hundreds of miles per day.
  • There is a lot of busywork involved with the paperwork, BPOs, contracts, and listings.
  • I had to front a lot of the costs for the repairs and maintenance on houses. Sometimes, I did not get paid back and even had to pay fees to get paid back!
  • There are very strict timelines you have to complete work within. I could not take many breaks from work.
  • You have to deal with some very large corporations and politics.
  • Some of the asset management companies and banks kept reducing commissions and fees they paid on BPOs.

even with these challenges, I still loved the business, specially HUD. I was an amazing HUD agent, did train for early agents, traveled to meet my asset managers, and did my best to promote HUD. One trouble with HUD was they would re-bid the HUD contracts every few years. I was actually tight with a pair of the HUD companies, but a few years ago, one company was given all the HUD listings. That company was Pemco, or Sage, when they renamed themselves. While I was the merely agent approved by them within 30 miles of my market, they would not give me listings. They could not communicate with me, and they did a much worse job listing their houses than the other companies I had worked with. Pemco/Sage had an agent that listed houses in my area who was 55 miles away. The principle with HUD was that agents needed to be within 30 miles if possible. This particular agent claimed his broke was 5 miles away from me, even though the office he hung his license with was 55 miles away and not associated with the other office. I have no mind how Pemco allowed this, but they did. I was hesitant to do so, but finally, I mentioned this fact to them, and they never responded to any of my inquiries. Fair or not, this completely frustrated me an made me realize how little control I had over my business. This all happened when REOs started to disappear from our area. I was disappointed in Pemco, but it was not the goal of the world because I could see REOs were not going to be a huge depart of my business. I stopped going after REO listings and BPOs, and I focused on my own investing. I had control over what I bought, rented, and flipped. I did not have control over what REO listings I did and did not get .

How did I evolve out of the REO listing business?

When I was selling a batch of REO listings, I was doing early things as well. I was flipping houses and build up my real estate of the realm team. While I was not the most amazing traditional real estate of the realm agent when I was younger, I knew how to sell houses. I knew how to teach people how to sell houses, and I became a better agent as I got older. I created a team of traditional real estate of the realm agents, and I focused on my own investing. I did not think foreclosures would about completely disappear as they have in Colorado, but I guess it was ache of me to expand my business.

I can say that there is much less stress in my life when I have complete control over my business. I am not relying on a bodied party to determine what listings I do and do not get. If I make a err when I flip houses ( which I do much ), it is all my demerit. I take complete province, and I know I can fix it in the future. While I loved listing REO properties and HUD homes, I do not miss it. I love the way my business runs now, and I did not update my real estate information with the REO companies I had previously worked with for 2018. Every class, I had to update my E and O insurance, my license information, and my liability policy with every caller I worked with. I am still getting emails from companies telling me my information is not update ! I besides renounced my HUD listing broke condition, which allows me and my position to buy HUD homes now. Another thing that being an REO agent was holding me back on was starting my own office. When you work for asset management companies, most of their agreements are with the managing broker of an office, not the agent that lists the houses. If I would have started my own function at the altitude of my REO business, I may have lost many of my clients. now that I do not care about REO listings, I am free to start my own office, which I did .

Conclusion

It is not comfortable to get into the REO business. It takes difficult work and meter to start getting listings. It takes even more hard work and time to get a lot of REO listings. It is dependable that REO is polish in most parts of the country, but this may be the perfect time to start listing REO when there is not american samoa a lot rival. REO constantly moves in cycles ; it may be down now, but it will be back again. If you want some help breaking into the industry, I suggest you check out my REO and BPO crank kit .

source : https://www.peterswar.net
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