As the number of foreclosures in the United States rises, so does the demand for REO (Real Estate Owned) agents. Anyone with a real estate license can work as a REO agent, but this does not guarantee that doors will open. It’s a competitive field, and it’s very much a “who you know” branch of the real estate industry.
REO agents work with properties that have been foreclosed on banks. In effect, they help banks with three tasks: appraising foreclosed properties, maintaining those properties until they are sold, and finally selling them. Due to the plethora of responsibilities, banks prefer to work with REO agents they know and trust.
So the question isn’t so much how to become a REO agent as it is how to make money as one in a volatile market. In most cases, banks and agents communicate directly or through a “notice of default list,” which lists all of the bank or lender’s properties that are in danger of foreclosure. Anyone interested in becoming a REO agent should be able to establish a relationship with a bank or lender that will send them business.
Of course, there will be some unpleasantness in the job. An REO agent usually attends sheriff’s evictions and is in charge of dealing with the trash and other items left behind the previous owners. Frequently, the agent is required to pay the outstanding utility bills before receiving reimbursement, which can take up to 90 days. The REO agent is responsible for maintaining the property until it is sold, filling out a BPO (Broker Price Opinion) form to determine an asking price, listing the property, and scheduling showings.
To become a REO agent, you must learn to work in a constantly changing environment. When there are a lot of foreclosures in a neighborhood, deciding on a price for one of them can be difficult. A bank or other commercial lender will be eager to get rid of a foreclosed property because it is sucking up money rather than producing, unlike a traditional real estate transaction for a homeowner who will likely have a more leisurely time frame in mind. For the bank and the agent, a REO property is in limbo.
Someone who demonstrates expertise in this housing niche is likely to receive as much business as they can handle. However, REO agents must be careful not to take on more foreclosure properties than they can afford to keep up with, or they risk running out of cash. As a result, many REO agents use the 90-day note as one of their primary tools for their own use.