BPO to REO Advice

Stephen Taber was on the Help-U-Sell Broker Roundtable call yesterday.  His is a remarkable story.   Working in Phoenix – which is one of the epicenters of the housing crisis – Stephen starting doing BPOs about 3 years ago.  Because BPOs were just about the only thing happening in the market at the time, they basically became his cash flow.  He routinely did upwards of 40 BPOs a week.  Seriously.  This year he is heading towards 100 closed sides, all of it from his REO listings.  So there is truth in the notion that doing good solid BPOs and doing them quickly is one way to break into the REO market.

Stephen is really bright and seems to have boundless energy, which certainly contributes to his success.  But he also shared a couple of tips that bear repeating:

  • If you want to do BPOs, get a Blackberry.  Because Blackberry has its own proprietary email system, messages – like the request from an asset manager for a BPO – come through quicker.  Stephen tested this and found that he got a message on his Blackberry about one minute earlier than on any other device.  You know, if you’re trying to compete for BPOs, this is essential because the request goes out to lots of people and whoever responds first usually gets the deal.
  • When you do a BPO, really dig for the value.  Lenders and asset managers aren’t looking for a price you can turn in 3 days.  They’re looking for a 90 day price.  Stephen cited conversations with asset managers who told him he got the REO because his BPO was the only one that matched the value they saw in the marketplace – everyone else was much lower.  That doesn’t mean to inflate your BPO, it means work for the best value you can substantiate.  Lenders are wanting to get as close to fair market value as possible and expect to get it after a reasonable marketing period has occurred.

Great information!  AND I have to tell you that more than a couple of good Help-U-Sell brokers who also broke into the REO business have told me they intend to back away from it a bit.  REOs come with a whole set of challenges and often involve a substantial financial investment on the part of the broker.  Some in more diverse marketplaces are moving more toward short sales and equity sellers for a less complicated transaction.  BUT if yours is an REO market and you want to get that business, you can still break in.  Like so many other brokers doing REOs, Stephen is now too busy to do many BPOs so there’s a chance you can build the kind of reputation for speed and accuracy he used to get started.

Get FHA Listings

HUD recently announced the latest version of its REO disposition program.  It’s called Management and Marketing III (M&M III) and it seems to have some interesting new twists.

On June 1, HUD began contracting with Asset Managers who are charged with the responsibility of marketing REO properties within their geographic Homeownership Center (HOC).  Asset Managers must be licensed real estate professionals with expertise in the neighborhoods in which REO property is located.

Asset Managers are instructed to allow all brokers an equal opportunity to list and sell HUD-REO properties.

If you are interested in listing HUD-REOs, you must work through the Asset Manager.  A list of Asset Managers by geographic area is located HERE.

In order to participate in the M&M program, brokers must register for and receive a Name Address Identification number (NAID) before either listing or selling HUD-REO properties.  If you already have a NAID number you don’t need to apply for a new one.  Registration for a NAID number can be found HERE.

Centuries ago, when I sold real estate, HUD contracted with one broker in each area to manage their REO properties.  Any other broker could sell HUD homes and receive a full 5% commission.  In this new program, HUD homes are listed at up to 6% commission with the mandate that commissions be shared equally between listing and selling offices.

HUD currently has a lot of REO property to move and more are coming.  I think it’s well worth the time and effort to get the NAID number and contact your local Assett Manager.  Go get ’em.

(By the way, to search for HUD REO homes for sale, go to http://www.hudhomestore.com)

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