Episode 48 – How to get involved in the REO listing market

• SUMMARY:  Host: Bob Mangold, "The Listing Coach."
• Podcast: Episode 48 of the If You List, You’ll Last podcast.
• Focus: Getting involved in the REO (Real Estate Owned) listing market.
• Interviewees: Jerry Stapp and Robert White, both experts in the REO space, sharing insights about the process.

Introduction and Key Points:

• REO Overview: The podcast skips the mortgage market update and focuses on REO listings.
• Expert Insights: Jerry Stapp and Robert White have extensive REO experience, discussing the good, the bad, and the ugly of the REO market.
• Lead Generation Tip: A simple strategy for using HUD-owned homes for lead generation is shared at the end.

Introduction to Experts:

• Jerry: Managed brokers for one of the largest REO lenders with over 20 years of REO experience.
• Robert: Started in real estate in 1986, specializing in REO from an early stage, currently working with over 44 banks.

REO Market Realities:

• REO Myths: Not all REO brokers make huge profits; it’s hard work.
• Foreclosure Market: Foreclosure "floodgates" are not expected like 2008, but some areas may see higher activity than others.
• Consistent Waves: Foreclosures will likely come in waves rather than a tsunami.

Getting into the REO Space:

• Building Relationships: REO is relationship-based, requiring time and effort to build connections.
• Starting Steps:
  • Learn how to evaluate properties (BPOs, cash for keys).
  • Create a marketing strategy that showcases your experience and capabilities.
  • Apply to portals like ResNet, Equator, and Pyramid for BPOs and REO listings.

BPO (Broker Price Opinion) Importance:

• BPOs as a Key Entry Point: BPOs are critical for breaking into the REO space and demonstrating your competence to asset managers.
• Doing it Right: High-quality BPOs build your credibility with asset managers.

Logistics and Challenges in REO:

• Vendor Relationships: Strong relationships with vendors are necessary for managing REO properties.
• Receipts and Reimbursements: Always collect receipts and submit them on time to ensure reimbursement.

REO Listing Process:

• Step-by-Step:
  • Accept the listing and check property occupancy.
  • Report occupancy status quickly (within 24 hours) and handle BPO tasks accordingly.
  • Follow the REO task list strictly to maintain a high score with asset managers.

REO Compensation:

• Typical Fees: Expect 1% to 2.5% per side (listing and buying agent), with some fees going to asset management companies.
• BPO Pay: BPOs typically pay $50-$75, but the real value lies in the opportunity to build relationships.

Additional Lead Generation Tips:

• Use Bank-Owned Properties: Advertise REO listings as "bank-owned" to generate buyer leads.
• HUD Homes and Open Houses: Leverage HUD properties to hold open houses, promoting them with signs and advertising to attract leads.

Preparing for the REO Market:

• Marketing Materials: Create a professional resume and marketing plan that

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Visit our website to watch replays of our Wednesday "Elevate Business Briefings" at: www.RealEstateAssetAdvisors.org

Download a copy of my book, "If you list, you last!" at www.IfYouListYouLast.com

Transcript

Hey, welcome fellow listing agents. Bob Mangold, the listing coach here with episode 48. of the, If You List, You'll Ask podcast. As always, thanks for sharing and downloading and most importantly, listening. Today, we're gonna talk about how to get involved in the REO listing market. Now, in this episode, I'm going to interview two industry experts in the REO arena.

So the information that we're going to share with you is coming from real live people that have their boots on the ground right now. working in the REO market. And because of the length of this interview, I'm going to skip the mortgage market update for this week. And unfortunately, there's nothing good to report anyway.

So let's talk REO. Now, on this call, we're going to share a lot of valuable information you need to know before jumping into this listing niche. It's not for everybody. And at the very end, I shared a simple lead generation strategy for using HUD owned homes for lead generation. You don't even have to have the listing, and you can generate leads from it.

So make sure you listen all the way to the end. Just a reminder, make sure you join our Facebook group, the Real Estate Asset Advisors, so you can join in on the conversation, share your thoughts, comments. Or questions on any of the topics I discuss right here on the podcast. So grab a cup of coffee and settle in and let's roll on REO.

Today we're going to talk about REO. And it's one of the topics that tends to get a lot of attention,  but there's a lot of moving pieces to it. And, um, so what I'm going to do is I've got two gentlemen with me that  are experts at this. Um, both of them teach for, uh, EXP and the REO division, um, because they have so much experience.

So Jerry Stapp is with us. He worked for one of the largest, or actually, was it the largest REO lender  in the country? One of them, yes.  So actually running the brokers that got rid of all these properties and has been doing by, you know, he's got what 20 years experience in REO. And then we have Robert White, who's one of the top REO brokers in the country.

Um, and so they both have.  Intimate knowledge of how this process works and really what we wanted to do today folks We wanted to talk about the good the bad and the ugly of reo because everybody goes. Oh my gosh I want to get into it. Well, it's cool But there are some parts  that you should know about, because it's not all glamor, just in case you didn't know.

Everybody thought all the REO brokers were making a gazillion dollars. So, Angelus says it's work. So guys, if you have questions, I'm going to encourage you to put those in, and then I'll ask them as we're going through. So, Jero, why don't you just do a quick overview of what your experience is in doing this, and then same with you, Robert. 

So the first, the first go around REOs, we knee deep into it, you know, how you do DPOs, cash for keys, but just how to. Satisfy the asset managers to start spreading the word of your, of your talent, right? So all the little idiosyncrasies and I've been doing this for such a long time. So any questions you have for either of us, I think we can be able to answer that and get your feet wet and start learning how to do these. 

And Robert's got boots on the ground experience where he was actually doing it. Jerry managed. All the process and Robert actually worked the process. So we've got two guys that have a vast amount of experience. So Robert, why don't you tell them what, what you do or what you did? How's that? Absolutely. Uh, well, I'm grateful to be here.

So thanks for having me. I got into the real estate industry in 1986. My mother. Started as an REO broker back in the late 70s, early 80s with American Savings. They actually came into her office, which at the time was the number one center 21 in the country. So they came into her office, old school and said, who wants this REO?

Every top producer at the company said, I don't want it. My mom's like, I'll take it. Well, fast forward. She's probably the number one Oreo broker in the country selling more Oreos than anybody. That's how I got in, uh, as her assistant, uh, fast forward to the early nineties, the old stay alive till 95. I like to call it the glue stick era.

If anybody was doing Oreos back in the day, we were typing up our BPOs. On a typewriter and many of those on this call maybe don't even know what a typewriter is, but we'd go to the property, we'd take a photo, we'd run to the one hour photo, wait for it to be developed, run back to the office, get our glue stick out, pop those photos, live photos.

On to the BPO and drive to FedEx, and they were 7, 8 inches thick fast forward to the early 2000s. June of  June of 05 had 40 assignments on my desk at 1 time. And the reason why I bring that up is because REO is a.  Wham, it just hammers you and you need to be prepared. You need to be ready. And it is truly, as we'll talk about, I'm sure today is not for everybody.

Uh, but it's, I was approved with over 44 banks. I scored 1 percent with Freddie Mac. And what that means, Bob is. If you score a 10, you're fired. And everything about the REO space is all about grading and scoring and how well you're doing on this transaction in terms of getting the price. Uh, so it's, it's super important.

So I'm, I'm grateful to be here. I love the REO space. Just so we're clear, I don't want anyone losing their home ever. However, There are people in the pre foreclosure market that need us, and there's people in the post foreclosures. The corporate sellers need us just like any other traditional seller. So, with enthusiasm, I'm here to help both sides.

So,  we hear a lot in the marketplace right now that, oh my god, the floodgate of foreclosures are going to happen. What do you guys, what are you guys opinion of that right now?  Well, you know, I know Robert and I have talked about this,  You know, I don't think we're going to see the floodgates like 08, 09, 010, but I definitely think we're going to, we're going to be getting some, um, certain states will be, I think, a little more than other states.

Um, so we'll just have to keep an eye on some of the things that are going on in the economy and the atmosphere, right? And see how it goes, right?  To Jerry's point, I think you're, yeah, it'd be very, uh, foolish of the asset management companies to just flood the market. It'll bring the values down and they won't be able to maximize.

So I think you're going to see a consistent set of waves, not a tsunami so much. They do need to, uh, clear out some, some, uh, Toxic assets, and they're doing that currently. Angela on this call has listings. I have listings. There's a lot of folks that have assignments currently. Nowhere near where it's going to be.

It's a different, different animal this time around.  Um, so I think that you're going to see a constant set of ways. And it's really all about positioning yourself as an agent to be a resource for these asset management companies. So that, that brings to mind, folks, if, if we go, hey, we're not expecting a floodgate right now, why should you even begin to get into it?

And so, I, I want to talk about the process. What does somebody do if they want to break into this so that you understand there's a process that you have to go through to build those relationships out in the REO community, so that takes a little bit of time. But Angela just said she's been assigned three this, just this week. 

So it's not that they're not out there folks. They're just not it's not 0809 again And I don't think we'll have that again to be quite honest with you I'm, not sure why people are losing their house in this environment when generally what we find they actually have equity So we don't know why they don't work with an agent to get out from underneath that but nonetheless they do so Guys, let's talk about what is somebody who's not experienced in aria?

What do they do now? How do they get into this? So jerry i'll let you go and then robert  Well, one of the, one of the things I see agents that they need to be doing now, whether it's an REO property or whether it's traditional, you know, how are they marketing themselves? Right? What is their, what is their marketing strategy?

Right? I see them. They, they get a traditional listing and I see some of the things they're doing on marketing or lack of. So really, yeah. Treating the listings you have now, because that, that's, that's your brand. I mean, so when an asset manager looks you up and sees all that kind of stuff, the stuff that you put in your resume actually matches what's on the market right now.

So having that robust marketing strategy. And then also just, you know, learning all the different tools, but I know Robert and I both agree on this, is agents need to know how to evaluate properties, right? Signing up, getting some BPOs done, like just getting a lot, a lot of, get, get, get that experience and, and, and start getting your certifications done.

All these things you could do now.  To help you when they start to come  so bpos robert you want to explain bpo for those that don't know  Absolutely, uh bpo is the broker price opinion and in my opinion, uh along with your resume And actually registering to let these banks and asset management companies know you exist because they're certainly not going to come looking for you I find that doing a bpo for the right companies.

No, there's a I want to make sure we're clear on that There's a lot of Uh, like companies out there just firing out a bunch of BPO's taking your name off of it and putting your information You can need to be doing BPO's broker price opinions for the right asset management companies and uh, servicers and hedge funds.

You need to be doing the right BPOs and that is your calling card. If you do a really good BPO, that's going to give the impression to the asset manager that the, hey, this is someone I can count on because at the end of the day, valuating a property is the big deal because that's their, their numbers are pretty much in stone, whereas a traditional seller is, hey, I'll get what I The market will bear, uh, these asset management companies, they're reporting up to a higher, you know, folks that are saying they don't care about anything else other than the numbers.

So doing a great BPO is the leverage that agents need to become a resource, not only for that asset management company, but for everybody that they know, because they will not keep you a secret. If you do a great job, they'll share it with your friends and family. So, or in their, in their industry. So BPOs are the number one tool in my opinion.

to leverage yourself to get REO listings.  And the other thing, too, folks, you do get paid for them. So I didn't say you're going to get rich from them, but you do get paid. Whether or not it validates the time that you spend is another story. But realistically, what it is, it's the combination to get into the safe.

Right. So my, my, the way that I view it anyway, even if you broke even on doing BPO's, but you went and put five or 10 really good relationships in place, trust me, that's a great day then. Okay. So how does somebody find out where to go to start doing BPO's? And what are the right companies? So I'm always careful to say the right companies. 

If you're asking me, I can, uh, I can certainly tell you that you start with the companies like ResNet. There are portals that, that work with asset management companies, like each, each portal, like ResNet and Equator and Pyramid. Those are the top three. that work with many different asset management companies.

So I think it's important to at least register for them first. And then you start doing the BPO work from the companies that they work with. Those typically are the ones that are going to lead to assignments. It's the ones that say, Hey, if you do this BPO, I'll pay you if you sign up for 395 and I'll start sending you BP orders.

I would stay aware from them. I would go for most of the, uh, The ones that are directed from the major brands like Equator, ResNet and Pyramid. Absolutely. Absolutely. And I can, you know, the average real estate agent right now, I mean, doesn't even know how to use, you know, Equator and Pyramid and ResNet.

And you can open up these accounts and start to get familiar with them. Get your bio, get your photo, get everything in there and start to learn these systems, right? That's really, really huge.  And what these asset managers are looking for, folks, are agents who do know how to use them. Right? So if you go, Hey, I don't know how to do it today.

Great. Then you've got to go in and learn how to do it so that you become comfortable with it because for good or bad,  when you screw up, you get a bad reputation quick. Very quick.  So do it the right way the first time. Don't do, um,  don't do bad CMAs and BPOs, but that's really what they are. Put time and effort, put, you know, neatness counts, right?

All these things, imagine this, a BPO to me is nothing more than a job interview.  You just don't know you're being interviewed.  They're paying attention to everything you do. They may ask you, um, why,  you know, to defend your value sometimes. Well, you need to be able to have an intelligent conversation with people.

These guys, you know, these asset managers can release literally millions and millions of dollars of inventory. They're not turning it over to somebody who doesn't know what they're doing. Does that make sense?  So you do have to educate yourself. Monica said those require subscriptions. They do. So folks, if you want to be in the REO game, you have to play where they're at,  right?

Because they have what you want, which is inventory. And so they do require subscriptions. They do require knowledge. And they do require your time and effort to go in and do these things. Okay. So we want to start out with doing BPOs. You do want to sign up and set up for those. I would say Equator is probably the most important one out of that.

Yes or no? I would say Equator and Resident are equally important because they have their book of business that send them The different asset management companies that use Equator. There's a group of asset management companies that use ResNet. So I think that if you're going to do any of them, you do Equator, ResNet, and Pyramid at the same time.

And I would personally, and to Monica's point,  sure, they're subscription based. You can get in and get a free profile, and that's what I would recommend. Is get a free profile with every company and then the ones that you feel like the Equators, the Resnets, and the Pyramids, those are the ones I would upgrade my membership to, probably not the others yet.

Um, so be careful. You can spend a lot of money on getting into REO with no success. So it's very important to really pay attention to that.  And I would say stay with the big, the big ones, folks. You'll hear the term or, you know, if you do get into it, BPO mills, BPO mills are the ones, hey, we'll pay you 20 bucks to do this.

And here's 30 of them or whatever. And all they're doing is literally like Robert said, they're taking your name off, slapping their name on, and  the, the, the REO asset managers never see your name.  So you do want to be careful. So my recommendation is stay with the big ones initially. Definitely get knowledge in it up front and go from there.

Okay. So the next step guys, they can start getting some BPO's.  What should they do next?  Well, in order to get a BPO in order to get, you know, equator and all this up and running, what, what I would do if I was them, I was, I would create a folder on their desktop. I would make sure they have their bio, their photo.

They need to get the company's, you know, insurance. They need to get their, their brokers, um, all that license information. You need to get all that information to apply. And then like what I would do is I would take the top, the top asset manager companies and I would make sure I had the certifications because some of them want their own certification from certain companies, right?

Um, and then I would just go in and I would start applying right and I would start and it's and it's to go through and apply to some of these companies it take it takes a while right and then once I do that then I would start I would go to some of these these events I would meet some of the some of the asset managers right and then also I would find like I would find the BPO that directly connect to them and I would try to do as many BPO's as I could right because evaluating evaluating to me is has been pretty easy over the past four years back.

You know, evaluating a property, giving a price, but what happens if the market levels or adjusts and you really got to nail that price of that broker's price opinion, right? So I would, I would try to do all of that and start making some, get paid to do some of these BPO's also for some of the expenses.

And then start talking to asset managers and go to these events because they're there I mean there was just a five star event and there's another one coming up, right? So go to the events get your system set up start doing bpos start applying to these asset managers And then start looking for some of your local servicers start applying for them to me a big one in my area is um, You know credit unions right are a big thing if you look at 0809010  credit unions weren't really, you know, servicing and doing a lot of loans.

If you go fast forward to today There are some huge credit unions that handle certain counties and those are a great way to get in and also introduce yourself  So robert what events should people be going to?  Well, I think jerry mentioned five star, which was just last week in Dallas. Angela, I think, was there to a lot of our team was there and it's always I've of the last 23, I've gone to maybe 21 of them.

Um, as you know, we're driving the country in the RV, so it's a little bit more difficult to just up and go to a conference. But I think five star put it on your list. That's and also go to D. S. News. To get updates on what the conferences are coming. I think Rio Mac, which is now called NADP, which is National Association of Default Professionals.

I run their Facebook group and I'm on a couple of different committees there. Those are the granddaddies of the REO space. You'll see a lot of copycats pop up. So be careful.  But I think those are the two main ones. If you're going to go to the conferences, which I think is. Absolutely  imperative to your growth, uh, five star and NADP, which, uh, NADP is, uh, this coming week.

I think they're, uh, in Boca Raton this week. So those are the two real big ones that I'd go to.  Boy, bad week for that in Boca. Yeah. Yeah.  You mentioned it, right? Wow.  So here's the thing, folks, I would tell you is, is, you know, Monica said there are subscriptions guys. Is it pretty safe to say that you have to invest money? 

To be in the REO side of the business.  I would say yes, but smart, be smart about it. Be, be, be smart about it. Right. I mean, there's agents that are investing in things that cost money, but they're not getting the free stuff done, right? They're not getting the practical stuff done. They're not getting their resume done.

They're not getting their, their photo in equator done. So all those little marketing items, and then. There's things they're putting on their resume that doesn't match what's on, what's online. So get, get those things done, right?  But this isn't something that you get into where it's free. And so we're going to get into, now we're going to get into the money part of it, right?

So let's talk about cash for keys. So, uh, Robert, just kind of run through it real quick and tell people what cash for keys is.  Absolutely. Cash for keys is a chance for the, uh, the new owner, which is the bank, to get the property and  As little banged up condition as possible. A lot of times it's taken adversely.

It's the previous owner is not real excited about what's going on. So they sometimes thrash the property. I've seen so many of my Oreos that have been the dumping ground for items that the previous occupant doesn't no longer want cars. furniture, trash. So we're, we're offering, the banks are offering cash for keys, relocation assistance, if you will, number one, to help along the process, but number two, and a very important number two is to preserve the asset.

So we, we have little to no work to do when, when we get ready to market. So it's a great way for having a distressed, uh, Occupant now no longer the owner occupant to go to their next step to move on and give the property back to us so we can actually don't have to spend a lot of time and money on it  but it's just a it's just a It's a negotiation process.

Uh, it's between the eviction coordinator and the occupant. Our job as an agent is to run point to be introducing the occupant boots on the ground to the eviction coordinator. So they can coordinate a cash for keys, relocation assistance. I find that the properties through relocation means that the property has to be in working order.

It has to be in broom swept condition. Uh, I find the ones that don't want to do cash for keys is because they've Decided that wow, we've really thrashed this property. It's going to cost us way too much to clean it up So cash for keys is a good thing.  So he said that really diplomatically in case you guys didn't know it He said you're the point person That means you're the one knocking at the door making me offer folks so  That's the good bad the ugly part that he just said it really nicely They're not always excited, Bob to see you.

Just know that they're not, they're not, not all of them. Most of them are, are, uh, gonna take it out on you because you're the first actual life contact you've had about the situation. So, um, those are some things that we probably want to make sure your head's on a swivel, but that Sure, we'll talk about that later. 

Yeah. Gotta, you gotta show 'em the money, right? Show, show, show, show 'em the money, right? Mm-Hmm. , um, have that finesse, have some empathy. I mean. I mean, they're, they're, they, they lost their home, right? Or there's a renter in there that's losing their home one way or the other and just, you know, go there, try to have a good conversation with them, right?

And just show them the money, right? Um, cause they're going to need it. Um, so that's, that's my biggest thing as well. You know, I went and they didn't, didn't connect. Just, you know, talk to them, be persistent and show them the money.  So that leads to the next question. Where does the money come from guys? 

Well, it can come from two places, right? Um, so like, um, utility bills and cash for keys, sometimes you have to front that. I mean, a lot of times they, they have time to issue the CFK and they have time to issue the money to you and have a check ready for the date, but, you know, Sometimes you have to front it yourself, right?

And so, you gotta have, you gotta have that expenses ready to go, right?  So guys, bear in mind that,  again, if you're fronting that money, one of the things that you have to have, if you're gonna get into the REO space, is cash flow.  Right, because there's other expenses and we'll talk about them as we go through, but cash for keys could be the first expense.

So, like, Robert, why don't you walk through what some of the other expenses are, like, once you get the property, hey, they take the cash for keys, you just get assigned. What else is going to start to happen there that they need cash flow for? Oh, yeah, there's a lot of moving parts when it comes to REO. Um, for instance, some of it depends on how big the bank is.

Now, if it's a Freddie or Fannie, they typically,  But the, uh, sir, you know, the utilities in their name. But if you got a smaller mid level bank, they're going to say, Hey, Robert, go ahead and turn on the utilities in your name, submit an invoice, uh, when the bill comes and we'll get you reimbursed. And that's fine.

I'm okay with that. You're going to need some money. You're going to have an account set up specifically for the REO business that you're running. The more business you do, the more money you'll need. But most of them  do, do a utilities in their name. Which I like, but not all. A lot of them do the rekey,  but not all.

Sometimes I have to front it 75 to 100 bucks at a time, and then I get reimbursed. Well, if you have all these expenses out and you're getting reimbursed, you're going to need to have some cash flow that's coming in to set up your REO expenditures. And now, I've only done cash for keys for maybe a handful of different banks.

So it's the big expenses aren't going to be as prevalent as maybe the utilities and a lot of those nickel and dime stuff that add up,  but you will need some money to be a part of this. Not only with the initial services like utilities, trash out, um, very rarely will I be fronting money for major rehabs.

That's usually done between the marketing director and the, uh, the vendors directly.  But every now and then you might get a call from your asset manager that sent you 10, 15 deals a month and says, Hey, Robert, can you front the 10, 000? It takes to do the rehab. I'm going to tell them. Sure. Absolutely. Let's get that done because we're getting a lot of business.

So it makes sense. So you certainly, uh, Need to have some cashflow for sure. So which brings to mind now, Jerry's expertise in this was really the, the paper flow of this for what did you guys have Jerry, like 300 agents, something like that. Yeah, it was, it was, it was up there and I was, you know, I just, when Robert was talking, I just remember some of these things that, that we had to learn when we were, when we were doing this and you know, like, um, getting, getting the receipts for some of these vendors, right.

And not chasing them. So yeah, absolutely. Because you need to be reimbursed folks. And here's the thing, um, these providers, if they say you have 10 days to get me the information, Jer, how many days do you have to get those information? You want to get it in, you want to get it in earlier. So here's, here's a little tip.

I could tell every single one of you guys, and this tip is literally will save you thousands and thousands of dollars, right? Don't pay anybody without a receipt.  That's simple.  Okay. I mean, I mean, there's been times that my agent went and did a rekey and, and the guy asked, hey, can you go ahead and pay me now?

And I'll send you a receipt later. Don't don't just don't do it. Okay. Just get a receipt, get a receipt, get a receipt and then also let these vendors know that the longer you take  To ask for, um, to give me a receipt, the, the, the shorter, you might not be able to get paid. Right? So reimbursement, receipts, all of that, you need to be able to get reimbursed and stick to the timelines of the bank, of the asset manager, or otherwise you might not, you might not get paid back.

And here's the thing. Two things, Bob. Go ahead. Two things on time is late. So do it early. So if they're asking for a 48 hours, do it in 24. People always love to procrastinate and something always comes up. So if it's on time, you're late. So do it early. And the other thing is get relationships with your vendors.

If you're required,  let's say pay for the rekey or a trash out or a clean or any kind of vendor type of service. You need to have relationships in place that they understand the process of an REO. This is not a typical transaction. There's a reimbursement process. I would personally rather have my contractors wait until I've, they've submitted the invoice, submitted the  after photos.

They've given me time to upload it to the bank, get reimbursed from the bank, and then they get compensated. That's what a, a great vendor relationship will, will allow you to do.  So for those of you guys asking about, hey, where do you go to get the BPOs and stuff? So we've put it into the chat box. So like Robert put in res.

net, equator. com, pyramidplatform. com and  reonetwork. com. So you can grab those out of the chat box. On top of it, but those are the good ones to Um keep in mind, but my point in bringing that topic up folks Was if they tell you 10 days, they don't pay you on day 11  You just made that mistake for most vendors.

Okay, or most of the the providers Each one is going to have a different number of days that they need you to do that with so don't think because Five of the 10 that you work with have a 10 day window. Well, guess what? The other ones might have a 7 day window, and you just thought, Oh, I had 10 days. Yeah, don't make that mistake.

Keep a little Excel spreadsheet, throw it in your Outlook calendar, whatever you have to do. Know what that time is, and make sure that when you submit it, you submit it with everything that they want. Yep. Because if you don't, and they got to come back, And you submitted it on the 10th day, and they come back on the 11th day, and you don't get it to them until the 12th day?

Sorry,  in most cases.  That also comes into what Robert was talking about. It also is the relationship that you have with that,  you know, with that asset manager too,  right? But the thing is, you just have to understand everything is about that scorecard. So, Robert, why don't you talk a little bit about that, because It's kind of like Yelp reviews, guys, the difference being you don't get to have anything except five star reviews. 

So it's a big deal.  So talk a little bit about that scorecard, Robert, and what they look at and how to make sure you maintain it.  Well, like I talked about when I first opened up that, uh, I've scored 1 percent with Freddie Mac, their, their, their scoring scale was one is the best 10 as you're fired. So, and they literally had report cards they send to you every week and then every month and every quarter.

And they, they want to make sure that you understand what your score card is.  So you can better yourself, but that's how they decide,  you know, like, like in a baseball game, who's got the highest batting average is going to top start the start off the game. So my point is every single thing we do from accepting the assignment, from doing the cash for keys, from doing the BPO, every single step, every task, that we're asked to do is scored upon.

You want to accept it right away and you want to handle the task right away. You do not want to wait because they literally will look at and go, wow, Jerry Stapp always scores very high. That's who I'm going to use in this area. Whereas, Hey, this agent, man, they just can't seem to get their BPOs right.

Their score is very low. I'm going to wait. If I become desperate, maybe I'll use them, but I'm only going to use the agents that really score well, and they literally score you, Bob, they score you one. Everything from how long it takes you to accept the assignment to how long it takes you to accept the BPO, how long it takes to complete the BPO.

So you're scored literally on everything. Super important.  And so just bear that in mind, folks, because it is, it's Yelp on steroids if you want to get deals. Now, if you don't care about getting assignments.  You know, then mess that up. But the, the key is to have systems in place for your paperwork, for, you know, checking your email agents are horrible about checking email.

Well, guess what?  If you're on the REO space, you better be checking your emails. You better have them forwarded to your phones, whatever it takes to be able to do that, because when they assign you a BPO, or they assign you an asset. You need to be there like ASAP and accept  and if not, you know, you might be doing all these BPO's and you're going, well, why am I not getting assignments? 

Because you're not scoring real well. You're taking 24 hours or 36 hours to accept a BPO.  They'd still have you do it because they maybe don't have somebody else in the market. But if you don't get a high enough score, they'll go find somebody else in the market.  So just bear that in mind.  Okay, so guys, let's walk through the like the process.

You get assigned a listing, right? So you did the B. P. O. You get assigned the listing. What happens from that point? So, Jerry, you're the you're the paperwork guy. What happens at that point? Well, let's let's take let's just say they're using equator, right? Um, and in equator their their their task is like in some of the other systems, there's task in those.

Those tasks have color codes on them, you know, green, yellow, red, right? When a task first comes out, it comes out as green, right? Um, and if you get a yellow task, then you got a bad grade, right? But the first task is going to be accept or reject, you know, the property, right? And then you, once you accept it, there might be like, you know, does it have an HOA?

Um, that kind of stuff. But then the next question they're going to ask you is, um, they're going to ask a task for you to go out and check occupancy, right? Um, and let's just say Robert and I were going to the angel game tonight. And you're one of our agents that got a property, um, assigned to you and you accepted it.

And, and it's around three o'clock in the afternoon and the game, we have to be at the game at five and you call Robert and I and say, Hey, you know what? Um, I don't know if I'm going to be able to go by and check occupancy tonight. I'll just, you know, I'll just go by in the morning tomorrow.  Right. And I was like, well, no, you need to go by and check it tonight and be late to the game.

Right. Right. And I said, and then I would tell them, well, if a traditional listing  ask you to go by and check to see if they turn the water off before leaving for the weekend, would you go by and do it? And they say, yes. So how is this any different? Right. And so you got to be Johnny on the spot. You got to grab it.

You got to do it and, um, satisfy the asset manager and get that task done early. So that would be the first big task is going to check occupancy and making sure when you put down that it's vacant, it really is vacant. I can't tell you how many times an agent. that, you know, would put down that it's vacant.

And then the freaky guy went out there and walked in on them eating, right? So just making sure that you know that it's vacant. It's not always that easy, but make sure that it's vacant or occupied. So those are the first couple tasks.  And then what happens after that, Robert?  Well, you know what? I can tell you real quick.

I want to add to Jerry's thing real quick.  Answer your phone because new relationships start off with a phone call. They, they'll call you once. And if you don't answer, they'll call the next person and you're, you're done. So pick up your phone. I know agents don't love to answer their phone. If you need to, what I'd recommend, if you're really bullish on the REO space, have your own phone from the, for the asset managers.

I call it my asset manager, family phone, because that's the phone I pick up no matter what, if my wife calls, I don't care what's going on in my life. That call gets answered just like an asset manager answer the phone. That's how they make the initial contact is by phone, not by email, not by text, by phone, text, actually literally calling you.

So that's important. But I think the biggest thing to what Jerry said is to remember is.  If they want you need to report back within 24 hours  if it's occupied or not. Now there's certain times you don't know if it's occupied or not. You can't quite tell they get to do a good job with pulling the shades.

You can't really see what's up. So it's you got a side on the air of caution that it's occupied until you know for sure it's vacant. Because like, like I said, we'll go in there and rekey a property and they're eating dinner. We don't want to have that situation, which happens. Um, because most of these people are ducking us.

They're not wanting to, they know if they answer the door, that means they've got to move. Uh, so we need to just do our due diligence. I would recommend probably not going into the backyard, but definitely peek. We check, we check utilities to see if they're still on. Usually if utilities are on means it's potentially occupied.

A lot of times if power has been off for some time, that tells us that it's probably  more of a non owner, a non occupied property. But we need to report back in 24 hours period. You got to do it. I think personally, I do it in 12 cut over, take those time frames and cut them in half. That's a good, good rule of thumb. 

But once we have figured out if it's occupied, we need to gather the information. We need to make sure we go to the property. There's lots of different steps. If you want me to expand on how to determine occupancy, I'll certainly do that. But you want to make sure it's occupied. If it is, you need to gather the information for whoever's in the property and you forward that to the eviction coordinators to negotiate the cash for keys relocation assistance.

If it's not occupied, that'll trigger a BPO right away. If it is occupied, you more than likely won't have a BPO quite yet. So there's just certain steps. If it's occupied, you go this direction. If it's vacant, you go this direction.  Cool. One, one question. What about the auto acceptance companies? Unless you're on an email within seconds of the BPO coming out, most of the time the auto system has snatched it.

I was just reading that and those are typically your, your BPO mills that do that. I'm sure Equator and ResNet sends out their generic stuff and you don't accept it quickly. Um, REO is relationship based. Hey Robert, I have a BPO for you in San Diego. Can you do it? Those are the BPO's that I do. The BPO mill where I have to accept it and accept it and accept it, those are typically the ones I stay away from.

Those aren't relationship based. Those are more just blasting out based. So I don't typically waste any time with these, the ones that are gone like that. So you'll, you'll identify who's who after a while. And you know, folks, that's another reason you want to go to these events.  It's about building that relationship.

You know if you try and call a an asset manager on the phone the likelihood you get them probably not great But if you're at these five star events and the rest of them, you're actually getting face to face with these people You actually get to put you know a face to the name and things like that where you do build that relationship  And so I can't encourage enough if you're serious about doing it That you do have to be involved in it.

And you do have to go to those events because that's where you get the relationships. So you're not messing around with these BPO mills because what, what her question was, like Robert said, if you're in there with, Hey, they're gone within seconds, just a BPO mill. Probably better to just stay away from it.

Go build the relationships. Just like in regular residential real estate, that's what happens. Okay? So, let's talk about compensation on these, because everybody goes, Oh my God, you're getting 10 or 15 of these a month. Not in this environment, but, you know, back in the day.  Are you guys getting 3 percent on all of those? 

You go first, Robert. I'll go second.  Typically, I do have some REO assignments currently. I have multiple REOs in different phases. I have a few in pre foreclosure, so it's occupied. I have a couple that are just getting ready to market. I have one that's currently in pending. But most every bank has their own way of doing things.

I find that Freddie, Fannie Direct, They go right to the source to you, the agent, whereas maybe like through Equator ResNet, they go through an asset management company. So it's kind of a pass through. I'm finding that most of those relationships offer a full 5%, 2. 5, 2. 5, and 1 percent going to the asset management company.

That is. Typical. I do find some companies that maybe charge a little bit more. So you'll get 2 percent as a listing agent and two and a half as the buyer agent. But the last time I checked  2 percent on five, here's five new listings. That's a good day at the office. I mean, if you look at it, the income opportunities in REO, can I expand on that just real quick, Bob?

Yeah, please. Income opportunities in REO, you've got the BPO, which you're not going to certainly retire anytime soon, but what it's doing is it's getting you the momentum to be a resource for the asset management company. So you can make anywhere between 50 and 75, depending on if it's interior or exterior.

But if you make the BPO shine, that's your calling card. That's your, Hey, Robert does a really good job. He's he's in a different file. This guy is the guy go to guy. So the BPO is you can make a little bit of money, but it's more important that you're building your business when you get the REO assignment.

Sure. You're going to make your commission  and it's, but the thing with REOs, unlike a traditional seller, they don't go, well, you know what? I think I'm going to wait. Until the market gets better. No, these are your assignments need to get off the books. So every one of these listings need to close and they're going to foster new listings, uh, because you have so many signs out.

There was one time my mother, brother, and I had a thousand signs.  in San Diego during the REO, back in the REO time. So we're getting a bunch of short sale business, a bunch of traditional business. So it fosters so much more opportunity, but to your specific point, every asset manager understands that we all need to be compensated to do a good job.

I think it's important, but I find that most of them  Take 1 percent off the top, the asset management company, and the, and give us two, two and a half. I've had some, Bob, some, not very many, some where I'm getting 1%, but it's a, it's a bulk thing. They look at the big picture. So it's, it's a business decision.

And, uh,  it's, it's, it's a great way to, to help those corporate sellers for sure.  So, and here's a, cause Robert brought up at one time, he had a thousand signs out. One of the biggest mistakes I find folks in the REO space make  is that They sell the listing  and they don't do anything to capture the new buyer  into their database, right?

So if Robert's got a thousand properties that he sold, just know this folks, 900 of the thousand, their agent will never stay in touch with them again. It's just the nature of the real estate business, the way it is. I would get those people into drip systems, inherit them as your own,  and start to market to that database.

Because what I found, After the, the REO market,  uh, you know, from the 08 09 boom, once it came back down to normal, well, a lot of these REO agents forgot how to be residential agents. And they didn't capitalize on the databases that they could have built  Or the leads that they could have generated from those ario assets  Because nothing gets traffic like the word bank owned  So if you have an ario listing I would go get the black and yellow corp last signs that say bank owned  And you're going to get leads from that.

And I'd have that as I put it into MLS, as I post that in Craigslist and Facebook marketplace, bank owned will get you more deals than anything else out there or more leads than anything else out there.  And I got a lot of agents who go, yeah, but a lot of those are just investors. And I go, Oh my God, you mean investors?

Like the one who buy properties, fix them up and then flip them. You probably wouldn't want to work with somebody who's flipping five, 10, 15 homes a year. Now, would you?  So there's a bigger picture to this that that allows you not just the REO business. But to take that well beyond and set yourself up for the future.

Hey, Bob, to your point,  uh, you got to figure that most REO assignments,  I'm averaging about 21 days from the time we are able to put a sign in the yard, that's when it's vacant. You don't want to put a sign in the yard when it's occupied. As soon as it's vacant, we put a sign in the yard that says in case of emergency, please contact.

But we're also letting the buyer public know that We've got a property coming up. So we've got a 21 day exclusivity window to build up all that buyers, all those buyers that I mean, only one's going to get the home. Talk about building your database. I mean, you're getting a lot of folks reaching out to you.

Tell us about your property 123 Main Street. We don't have a price yet. We'll certainly let you know. We'll add you to our list as soon as it's available.  So you're building up your database huge for your buyer agents. Right, so a lot of you probably, you know, at least in your mind, you're struggling to get a buyer agency agreement signed, right?

Well guys, what if you could talk to people and say, Hey, you know, I do a lot of work with banks and asset managers. Um,  what I do is I let my clients know about those generally about 21 days in advance. So I know you told me, Hey, all you have to do, you don't need an agent. You're going to save that commission.

You're going to just go to Zillow.  What you don't realize is that 21 days before a property hits the market. That's when the best deal's there, and only my clients know about those.  Another way to help establish why somebody hires you. Make sense?  So there's all kinds of benefits from this, aside from just the REO side of the business.

If that makes sense.  And then if you do open houses with those bank owned, oh my gosh.  Yeah, so. It's a bonanza. Let me just, I'll tell you what I tell agents now, and I tell agents even way back in the heyday, right? When an agent calls me now, or they call me way back in the heyday, well, Joey, I want to get, I want to get into the REOs. 

Okay, well, let me pull up your pipeline. Let me see how many listings you did this year. And they say, well, I did four. Okay. Um, let's talk about the marketing that you did for those four, right? Did you leverage it for more business? Did you, did you do the right pricing? Did you have the right strategy? Did you get massive buyer?

Did you advertise the sellers in the area most likely to move to come to your open house? Did you do all of that?  Oh no, but I'll do that. And I'll do that. If I get an REO assignment. Well,  well, if you're not doing it now.  What makes you think you're going to do it when you get an REO assignment, right? So, you know, do it now, be, continue to be hunters when you get an assignment, right?

And then leverage it for more business. Robert and I are still. Getting buyers and sellers off of listings that we sold over a year ago, over two years ago, we're still getting leads off of that business in our CRM and our database, in our Facebook referrals, all of that we're continuing to get now, so continue to be hunters.

Um, whatever type of listing that you're doing, leverage, leverage, leverage, and use today's current technology to increase your business even more on every single listing.  And Angela just said, me too.  By the way, for you guys that hear me talk about the open houses that we do, Jerry and his daughter are the ones who hold our record for 1, 224 attendees in an open house.

Insane.  And if I can expand on what Jerry just said, Bob.  The, the, about setting yourself up for like, for instance, if you only had four listings and you're wanting to get into the REO space, I'll do once I get the REO, I think the best way to get positioned for the REO space is working with the notice of default, the notice of trustee homeowners in our area. 

You're number one, you're, you're doing a great deed for somebody in your community and helping them write the ship, get many of them don't want to sell. But when they realize, wow, maybe I do need to sell and you've helped them out, they're going to come to you. So that's listings now, but what it does, it lets, you know, it introduces you to the process.

You get to talk to these banks. You get to talk to the last mitigation departments. You get to talk to the folks in pre foreclosure And many times those are the same folks that you deal with on the reo side. So pre foreclosure is an agent right now Go get those pre foreclosure listings, go help those people, and then it transitions you into the REO space.

So, that's super important. And the other thing I would tell you folks, it's part of your resume, that package in the beginning.  Think of it as a listing presentation, if you will, for an asset manager. Like, you need to lay out what marketing systems you have. Hey, here's why I'm going to get you the highest price.

Because,  Robert, Jerry, what do these guys get paid bonuses on?  Closing on time first, closing within the month.  Yeah. There's a lot of incentives.  The more money they get for the house, the more bonus money the asset manager gets. So you're going to want to appeal to them with your marketing systems and your strategies, telling them what you do,  right?

Like if you had a, let's say a thousand person database  that would be so easy to get of people waiting for new listings. Right? Go run a couple of ads in Craigslist and Facebook Marketplace completely free.  Just saying something like, hey, if you want access to bank owned properties 21 days before they hit the market,  go here.

Now you take and show that ad with the database that you have.  Let's see, Mr. Mrs. Asset Manager, here's the list of people I have waiting to be notified about new properties coming. Do  you think that'll set you apart from the competition?  When they're looking at, hey, who am I going to go after?  You know, what is it that you're going to do to market that property?

How are you going to handle the open house? What's your track record with an open house? So like Jerry and Robert, they actually have video. We videotape every one of our open houses. So when people go, Jerry, you're full of crap. You can't get 1200 people at an open house. He goes, really? Watch this.  Well, do you think that would be a great set of videos to send to an asset manager? 

So we're intentional about the things that we do to go after the business. You simply need a marketing plan, a strategy, a listing presentation, however you want to refer to it. You have to prepare that. And then. By all means, folks, you should make it look professional.  Not a Word document that's a checklist.

Go hire somebody on Canva to make it look nice for you  because that's your business card for these asset managers.  Does that make sense?  All right, cool. So,  Angela, I'm gonna just unmute you. I think I can unmute you.  Anything that we've missed? Actually, I can't.  Anything that we missed that you can think of?

Angela's obviously got a lot of experience in there. I think she's still here. She is Bob. She cannot mute herself.  Okay, cool So what questions do you guys have?  Is reo something for everybody probably not  but it's a great business  You just have to commit to it. It's a niche right and like right now robert How many listings roughly call it a month on average are you getting? 

Uh, you know, right now it's not as busy as I'd like, but I'm getting two to three, uh, increase a month, whether it be in the very beginning stages. Hey, Robert, can you do a BPO? We have a property coming to hey, this is now get the tenant out and we can go to market. So it's anywhere between two or three increase per month.

Okay, Jerry, how about you? Very, very low for now. It's about, it's about the same because you were in California. It's about the same. Yeah. So, but guess what guys, this is the time that you want to do that.  Like I'll be, I'll at least give you my opinion anyway, Robert and Jerry can chime in on it.  You don't want to be a brand new REO agent and have, have some asset manager assign you 10, 10 properties.

And you don't know what to do.  Like that would be the kiss of death.  And so now the, one of the reasons that we wanted to do this was to give people time to start to do that research. And there are classes that you can go to. There are certifications that you can get.  Right? This is not an EXP promo, but at EXP, Robert Gerrier on that committee, Robert's the head trainer of that for REO certification.

There are places you can go to learn  this stuff. You can go to Equator. You can go to these events. Trust me, guys. They have this thing. It's called YouTube. Any of you guys ever heard of that one? That thing called YouTube?  It's the greatest training portal for anything  on the planet.  And when I say anything, I'm not kidding, anything. 

But trust me, there's all kinds of information in there. Go and learn those things. But, this is actually a really good time to start getting yourself warmed up. Learning how to do BPO's. Same idea guys, you don't want to go in there and all of a sudden you get assigned 50 BPO's. I promise you, your life would be difficult at that moment. 

Are there certain geographic areas that tend to get harder or faster than others? Um, yes.  So, you know, Terry, like in Arizona, back in 08, 09, Arizona, Florida, Vegas. California, we were the top dogs. Pretty much look at where you have massive migration,  which is still the Texas, Arizona, Florida, whatever.

They're going to have a higher incidence of that than others, but it doesn't mean that it doesn't go on anywhere else. It's just higher incidence of.  Um, so yeah,  you know your bigger markets, Detroit usually has a lot Chicago, a good amount. So a lot of your big cities definitely do,  but there are plenty of small towns that have the same thing.

They're not as big of listings or whatever. Um, Yvonne, who's not on here. She's in a more of a rural place in Oklahoma. She probably gets a couple listings a month on average. Now those couple listings a month are 50, 000,  but she does get them.  And so, geographically, just where you see migration patterns, that's where it's at. 

But this is the time to kind of get into that. That's why we wanted to do that. Angela, was there anything else we should have been talking about that we didn't? I think you can unmute yourself.  Yeah, um, you know, I would say find out who assigns the HUD properties in your area Who's got the HUD contract in your area?

And have a really strong resume prepared To apply for HUD I get assignments through pemco limited right now Uh, and i'm in washington state So that's 6s area find out what your area is get a strong resume and have that ready for when they reassign  Because that's every three years and that's coming up pretty soon. 

Yeah. Imagine getting all the HUD homes again, not a million of them right now, but imagine getting all the HUD homes in a market. I'm a HUD broker in San Diego. And, uh, we use, uh, we go through 18 realty. They, they have the HUD contract for California and many other states. It's a great account to have. Um, but I would definitely recommend that take this time before the REOs do get here, take this time to.

Prepare yourself, build your resume, go out there and like I mentioned, work with the NOSTA default, NOSTA trustees, work in the distress space, have that on your resume, go to the different resources like Five Star and NADP and really get plugged in. So you know what's happening, pay attention to the default space as it relates to your personal market, track the NOD's and NOT's to see how many there are coming, so you know exactly what's going on, so you understand the lingo, because an asset manager, when they call you and say, you know, tell me about your REO experience and you go, well, I have a REO, they're, they're going to know, you don't know what you're talking about.

Um, so just little things like that. Really dive in, emerge yourself. I'm not saying clear your calendar and that's all you're doing, but spend an hour or two a week and just put on your REO hat and get, get emerged in that process so you speak the language because it is a certainly a different language.

Um, so that's what I would suggest. And I would go to DSnews. com. And sign up for their daily dose. And I can put it in the chat box, but that'll tell you all the stuff that's going on as it relates to the loss mitigation space. Uh, and that's really where you need to be, in my opinion, first.  Alright, so one last question, and Angela, Robert, it doesn't matter which one of you guys know.

Could I go do an open house on a HUD? I'd have to call the listing agent and get them to okay that, right? Yeah, absolutely. So here's the thing, guys. Go get a hundred yellow and black CORPLAS signs. printed, bank owned, open house.  You need business,  you go put a hundred signs out  that say bank owned. You promote that on Craigslist and Facebook Marketplace so that's free. 

You'll have more business than you know what to do with. Now you better be prepared to talk to them about why buy a house through you and things of that nature. Chances are great they may or may not buy that house that you're in, but you better be able to talk to them about why they should buy a house through you.

So when I hear agents say, oh I'm struggling for leads, guys it's as simple as that. Um, you can go to signs on the cheap dot com. I I don't know jared. Do you remember even what they charge anymore? You could get a hundred of them  220 bucks shipped and then just get the eight stakes from amazon  And so at the end of the day guys, it's that simple to do business in real estate So if you're struggling with that stuff right now Hey, I don't want to get into REO and I don't want to mess around with that.

Great. Go get, go get a hundred signs. Jerry, we didn't get 1200 people to an open house by putting out three signs. Did we? No, we didn't. We really started about a week before the open house and the marketing, the advertising, good old fashioned postcard invites to most likely to move all of that stuff we did.

And it wasn't bank owned. So I'm just telling you guys the word bank owned. is gold in the real estate marketing space. Has always been, always will be. So if you need business, start reaching out to those HUD home listings, call the agent, make sure they're cool with it. I can't imagine a reason that they wouldn't be  and start doing that.

You'll have all the business that you can handle that. I can promise you my first home first house that I ever sold was a HUD home where I did that.  They have a what's called the good neighbor next door program and you don't need the listing agents approval for that. You can go into the HUD home store and and pull up the information on the good neighbor next door.

It gives them firefighters, paramedics, nurses, police, you know, all of them go to good neighbor next door and you can promote that on all your social media saying.  They literally give those buyers a 50 percent off list price. For example, if the home is worth 500, it's listed for 500, they'll sell it to the good neighbor next door participant for 250, 000.

So talk about building your buyer database for fire, police, and all those folks. It's a fantastic way to go.  Yeah. I sold one of those Robert to an LAPD Home in Rialto, he got left 50 percent off and he was he was loving it years later, right?  So imagine they walk into your open house and say hey, are you interested in buying a home at a half at half price?

And then explain i'm sorry, you're not do you know any fireman teacher or whatever, right? So learn a little bit about it you last Go get some bye guys