This is the way I do it in the Columbus, OH area. It might be different where you are but I can't see why
GETTING ON THE LIST
You can call and call, but without being on the list you may never get a deal. While it might sound simple, the person answering the phone does not put 2 and 2 together when you call. YOU need to ask them "OK, how do I get on the list". I know it sounds stupid, but........
These days, getting on the list is as easy as filling out an online application. To do this, you need to find the right lenders.
FINDING THE BUSINESS
1. Start with a Google Search. This will help you find loan servicers that have LISTS. You want to look up the following words:
- REO
- BPO
- Loan Servicing
- Loss Mitigation
- Loan Workouts
- Asset Recovery
2 Go to your own bank and ask the branch manager to help you find out what THEY do with the REO. I have one client that was blunt in telling me that he does business with customers of the bank FIRST and other potential vendors second. Many will subcontract this to Servicers and you will just need to get on their list. The head of consumer banking for your bank will probably be able to give you some contact info and possibly a reference.
SIDE NOTE: I also work as a state court receiver at the request of the lenders. When doing this, most of them strongly request that any recovered funds are placed into accounts that I open with their bank. This is known in the trade as BACK SCRATCHING. Don't lie to yourself. This is the way the world works. I think I did a blog on Receivership a while back if anyone wants more on that.
3.Find the Loan Workout Department within the banks you are prospecting. These are mostly going to be commercial loans, but they deal with residential property here too. As an example, many investors buy 2 or more residential properties at once using a commercial loan.
4. Seriously - Find a mentor. I learned a lot of this stuff with the assistance of a great guy named Tim Dudley. I stopped working directly with Tim in 1998 or so, but still talk to him every once in a while. We partnered a deal 2 years ago and both made a good amount of $$ on it.
5. Call me if you have questions. I can't possibly EVERYTHING on the internet????
YOU HAVE FOUND THE LIST PEOPLE
Once you have found them, you need to be prepared to fill out the registration forms to become a VENDOR for them.
To do this, you will need at least the following:
- Your License Number
- Your Brokers License Number
- License Expiration Dates
- E/O Policy Number & Expiration Date
- 1 - 5 REO / BPO References. This is one reason starting on a team is not a bad idea.
- Your zip code list. This is a list of the areas you will work, by zip. Some will allow you to just list a county. If they won't and you work the whole county, it is time to find all the zip codes for the county.
Requirements:
- You must have a digital camera
- You must use the internet
- You must watch your email (a lot)
It is good to have email on your phone or Blackberry, but not really required.
SIDE NOTE: To be on some of the lists, like Ocwen Financial or REO Trans, you must pay a monthly fee.
NOW YOU ARE ON THE LIST
The squeaky wheel gets the grease. Most REO servicers and workout guys have their preferential vendors. It is important to be in front of these decision makers all the time though. The preferred guy will screw up, the preferred guy might have too much inventory, the preferred guy might be out of town. If you just register and don't follow up, you will never get any business. I am registered with 50 ++ of these LISTS, but only work for a couple of the servicers. I don't follow up. The good thing is once you do a deal or two and do a good job, you become the preferred vendor and can get a ton of business.
BE CAREFUL OF THE "WALMART MISTAKE"
WALMART MISTAKE = You snag a big client and don't do work with anyone other than that one client. When they go away (and they will) you have no business. Small companies that hook up with WalMart tend to do this and then end up in trouble.
GET READY FOR ALL OF THE REPORTING
Do you have questions about distressed assets, receivership or bankruptcy sales, auctions? Email me at rfk@gryphonusa.com and I'll try to answer it in an upcoming post.
Richard F. Kruse is the President of Columbus, Ohio based Gryphon USA, Ltd. (www.gryphonusa.com). The Gryphon Organization includes Gryphon Asset Management providing receivership and consulting services in the distressed marketplace, United Country Gryphon Realty & Auction Group (www.ucohiorealty.com & www.ucohioauctions.com) providing real estate brokerage and auction services throughout Ohio and OnlineAuctionUSA.com (www.onlineauctionusa.com) providing commercial asset liquidations from the Midwest to East Coast.
United Country Gryphon Realty & Auction Career Opportunities Available. Call 614-885-0020 x 17
I am working on my first REO listing and wonder how realistic the bank is going to be when it comes down to the bottomline? I gave them a price range, they listed above it, received a pretty low offer but not unreasonable and now they won't come down into the range I had given. Do I really want to waste my time??
just keep doing monthly reports showing how much the house will sell for. Banks don't mind allowing a home to stay on the market for at least 90 days before they start to wheel and deal.
One thing you forgot to mention is to set aside an account for utilities and other out of pocket expenses the sellers will want you to spend....like trashouts, utilities, window boarding, etc, etc...
Phyllis - Jesse is right. You need to convince them of the market and the only way to do that is to have no offers, offers that are low, continued market reports and little action. A lot of times you get the right price at the start and sometimes you need to work them a little harder. Remember - The lenders are in a MUST SELL situation.
Jesse - I think that might have been in a different post. I did 4 that were each a little different and talked about the different steps.
R
Rich,
Thanks for putting up this series. I missed it intially.
I just received a call from an agent in Mass. wanting to know about how to get this business. I remembered that you said you were going to write a post on the topic so I looked you up an referred her here.
I really appreciate you sharing this.
Florin - Someone needs to care for it and move it to sale. Sometimes there is another company dealing with all of this stuff. Many times it is the listing agent. Why? That's just part of the deal. I don't do too much consumer work because I hate to work weekends and evenings. The tradeoff is that I need to hire a landscaper now and then. The good thing is that I get yard work done at my house for free !!!!
Carmen - I would consider anything done for a bank as qualifying.