How to Become an REO Agent

Back in late 2006, my business was slow and I was floundering. I needed income to support my family, and had no prospects in the pipeline. This is the story of how to become an REO agent.

I had the great fortune be have an office next to a good friend named Rammel Williams whose business in the REO sector was booming. So much so that he couldn’t keep up with the BPO’s (Broker Price Opinions) that his lender clients were requesting of him. So I asked if I could help take some of that load off his shoulders.

What he gave me was an opportunity. I was performing fee BPOs to make up an income that just wasn’t coming in at the time. The banks were paying anywhere from $50 – $75 per exterior BPO, and I could knock out 15 – 20 of them per day. Exterior BPOs consisted of driving to an address, seeing if there were any signs that it was occupied, then take pictures – one of the front, one of each side, and one street photo in each direction. Back then, those forms were one page forms – short and easy. I’d spend a couple of hours driving, taking photos of 20 houses, then come back to the office and whip out the BPOs for each. It was a full 8 hour day easily, but for my troubles I was bringing in $1,200 – $1,500 / day. And that got me through.

What followed was introductions to clients, and developing relationships with banks and asset management companies of my own. It wasn’t long before I was being assigned REO (real estate owned) assets and selling foreclosures for banks. By 2008, I was feasting on listings that just came to me automatically. It was a horrible time for the economy, but a great time for my business.

Eventually two things happened.

First – because of the gluttony of foreclosures, asset management companies were popping up left and right and agents were joining them en masse. That led to a natural competition between companies and agents that saw $75 BPOs suddenly only being worth $35 to the agents. And management platforms like RES.net and REOTRANS suddenly entered the fold to help all of these asset management companies manage the process. And course they charged fees – to the companies and the agents.

Before long, the asset management companies REQUIRED agents to maintain memberships to these platforms at ever increasing cost. So costs were going up, fee BPOs were coming down, and REO listing commissions were being driven down. When you add in the fact that listing agents at the time were responsible for maintaining utilities, performing lock changes, and ordering trash-outs at their cost with reimbursement windows growing, it eventually wasn’t worth the trouble.

Secondly, after the near collapse of our economy, the US government made changes to loan underwriting policies. And eventually, the huge volumes of foreclosure properties were dispositioned. In other words, the Listing spigot eventually ran dry.

A Lesson Learned

The single biggest lesson I learned from all of this though is to not have all of your eggs in one basket. I had been 99.5% focused on REO listings for so long, I had forgotten all about how to build business through prospecting and marketing. I don’t regret my time in REO, but I wish I had diversified my business a little.. no, a LOT more so I would have been prepared.

REO’s are Rebounding

It’s 15 years later now, and I’m starting to see an uptick in BPO requests and REO activity. It was bound to happen with the financial strain that COVID related shutdowns placed on American homeowners. I receive emails nearly daily asking for fee based exterior BPOs and Condition Checks, and have received three REO listings in the last two months.

And while I have zero interest in returning to that being my primary source of income, it occurred to me that there may be some agents that do. There may be some agents that would just like to pick up some additional income performing fee BPOs.

So here’s my list. At the height of my REO business, this list included nearly 300 companies that I was registered with. Maybe 50 of them sent me business. Probably no more than 10 sent me business constantly. The key is to register with as many as possible, then go out of your way learn who the asset managers are and build relationships. Offer to do fee BPO’s for FREE on a trial basis. Offer other services and benefits that may aid them in their jobs. Bust most of all, be consistent with your communication with them and ASK how you can make their lives easier. The hold the keys to REO gold.