With the growing foreclosure crisis across the nation, there is a movement of real estate brokers and agents attempting to get their fair market share of the REO action (Real Estate Owned). Since the sell-thru ratios for Bank Owned real estate are selling at rates of 95% and retail rates being less than 30%, the motivation to transition to REO's is obvious: ‘Sell what is selling'. Most market centers across the nation have the bulk of the bank owned inventory listed with the same handful of REO brokers? Why is that, and more importantly, why is that beginning to transition?
In Minnesota for example, a handful of real estate brokers had the foresight and now possess great fortune in representing the majority of the bank owned inventory in the Twin Cities. Over the years, they have built strategic relationships with the key people who have entrusted their services to liquidate their bank-owned properties. More importantly, these REO brokers have managed their clients' assets in a perfectly organized and systematic fashion. A ‘Perfectly Managed' client! Think about this scenario for a moment: you're the client (bank or asset manager) and that same REO broker in a different state is going to ‘Perfectly Manage' all of your assets in a particular region. That same REO broker who manages all of your assets is the same person who meticulously communicates with you (the client) on every facet from securing the asset to property preservation. Why wouldn't you (the client) continue working with that same broker? Because the same handful of brokers have over extended case loads and handle hundreds of bank owned assets at the same time. One of the questions that the Banks do not seem to have time to ask, study or review is this: Are they getting the highest and best price in the shortest period of time with the marketing provided by their over extended REO Broker? If they studied and reviewed the marketing efforts associated with their assets what might they find on a regular basis across the nation? Perhaps it's a sign in the yard, an MLS posting with the minimum required information and only one photo (required by the MLS). As a bonus, they all seem to have the infamous descriptive public remarks that says "Needs work". That's the part that the client never sees or chooses to review. What does the client see? Obviously, the client is pleased from afar since their assets appear to be in good hands. The lines of communication are consistent and meticulous as ordered by the client in advance. They are ‘Perfectly Managed'. Imagine what the client might do if they could be a bug on the wall and witness how their assets are actually being marketed and serviced to the general public. If they randomly reviewed the marketing and consumer service provide by their REO Broker, would they continue to use them on future assets?
Try this shocking exercise in your marketplace and test these results for yourself.
•· Go on-line at any broker reciprocity site such as: Realtor.com. Then, conduct a basic search in any of your favorite zip codes that has a blend of average priced homes for sale. In that search determine the total number of homes for sale versus the number of listings with multiple photos.
Here is what was found in several market areas across the nation in a random case study. Over 76% of the average priced listings posted for sale have the minimum one photo. Why one photo? It's the required minimum or the listing broker receives a fine. Now, try that same exercise with only the Lender Mediated listings and watch that number approach the upper 90th percentile. At best that can be described as a pathetic effort in real estate marketing! Yes, someone will attempt to rationalize this. The majority of REO's are probably ‘Perfectly Managed' from the clients' perspective, yet they are so ‘Poorly Managed' in terms of the clients' ultimate goal which is: Sell and Close the asset for the highest and best net price in the shortest period of time. Without getting into the un-necessary bashing of REO brokers who appear to be printing money with what seems to be a minimum effort from the general public point of view; REO Brokers do take on a huge amount of risk and over-head with respect to property preservation and management costs. Setting risk aside, why do they stop at the marketing piece? How can they go to bed each evening and say they did the best they could to sell their assets for the highest and best price in the shortest amount of time? Instead, the majority of the inventory posted for sale are literally a challenge for the consumers to acquire for a variety of reasons all pointing back to the lack of marketing, service and accessibility. Furthermore, there is absolutely little or no buyer follow-up on the buyer inquiries associated with these Bank Owned assets. Try calling any of the bulk REO brokers. You'll likely get a pre-recorded message such as:
•· ‘If you're an asset manager or a bank press 1, if you're a property preservationist press 2, if you're an agent calling to check status press 3, if you're an agent wanting to submit an offer, READ THE SUPPLEMENTS BEFORE SUBMITTING ANY OFFERS. Finally, if you're a buyer making an inquiry on this property, you can press 4 and leave a message'.
Nobody ever gets back to them, because nobody really knows much about the asset. Usually an assistant uploaded the data from a previous listing, hired someone to re-key, secure and preserve the property and they post a BPO picture taken months prior to the assignment. These bulk REO Brokers understand the system very well. They know that if nobody buys the asset, the client/bank will continue to drop the price until people break down the door with purchase agreements. Almost sounds like a ‘self-serving Reverse Auctioneer'. Also sounds like their case loads are out of control, but they're not complaining!
Here's a novel idea! Shouldn't the Bank have all their assets marketed at the same level as that prestigious house in that prestigious neighborhood? That one client/bank assigns the REO Broker numerous listings ranging from $10,000 assets to Upper Bracket assets. Regardless of list price, ‘IT'S STILL THE SAME CLIENT!' One satisfied client can generate Millions in annual inventory for the over loaded bulk REO Brokers. Shouldn't the Brokers market and service each asset in the same manner as any ‘prestigious client'? They should attempt to get that client the highest and best price in the shortest period of time. Approximately 75% of the REO inventory is virtually invisible to the on-line buyers and supported with little to no consumer follow-up via internet or phone. What might be happening to the assets Stock Price? Does anybody care?
Let's go back to the opening statement regarding the movement of brokers and agents into the REO market share. For those who are transitioning into the REO market share, let's ensure that paradigm shift includes better training and service to the end users. This will enhance the housing stock and improve consumer confidence overall. Otherwise, this growing foreclosure crisis will continue to be a ‘Self-Serving Reverse Auction' whereby only the industry players get to play. Regardless whether the hired Broker cares about the Banks' bottom line, the Banks are the client in this case and more REO Brokers need to market these assets with their best efforts and better marketing tools. Over 50% of the REO buyers in Minnesota are first time home buyers. Many simply overlook the majority of listings online that have only one photo. In fact, many may overlook the ones without virtual tours.
Each and every agent on an REO team in a Minneapolis office includes the following marketing efforts regardless of the assets list price: maximum number of MLS photos, bilingual video and audio tours, live phone access, support and follow-up, and descriptive remarks for consumers to qualify the property online such as:
- "Charming bungalow on a tree lined street, level fenced yard. Great opportunity for a buyer seeking sweat equity. Needs cosmetic updating and some repair. Ideal opportunity for a bargain hunter or handy buyers"
With that being said, first time home buyers and/or investors can literally qualify the property online to make informed decisions allowing them a more confident position to pursue the asset. Nothing frustrates agents and buyers more when they take their precious time to show or preview REO's only to set one foot into the home and immediately walk right back out the door. The home was instantly qualified or should we say, un-qualified in one physical glance and yet, that should have all been done on-line. Frustrations escalate for buyers and buyer agents. Inventory sits on the market for extended periods, and the ‘reverse auction' process continues to impact housing stock and the entire real estate marketplace. Banks are losing more than they should with the conventional REO marketing and service associated with these bulk REO Brokers. This foreclosure crisis might be "self serving industry" from the consumers' perspective if you think about it.
Real estate Brokers should take pride at how they market and service REO's. Frank D'Angelo, a REO Broker in Minneapolis, MN is finding that fully marketing and engaging consumers with their exclusive bilingual videos and audio tours better qualifies their REO listings with qualified buyers. Also, D'Angelo's trained agents and team concept regarding buyer and co-broker agent support enhances the entire process and closing rates. D'Angelo says, "We're obtaining quicker purchase agreements on REO listings, which in turn, translates into a better bottom line for the client in the shortest period of time".
More importantly, D'Angelo continues to train his associates to better service, market and educate the consumers who are the necessary end users in this situation. He welcomes the opportunity to work with and encourages more new REO brokers to get involved and continue that same mission of service. Simply by doing a better job at what REO Brokers are hired to do will improve the real estate stock across the nation. D'Angelo says, "I enjoy calling agents and brokers who have taken on new REO listings and congratulate them when they actually market the inventory for the consumers and ultimately for their client. Something is in the water! A shift is happening in the REO market. It makes our job so much easier previewing, qualifying assets and working with co-operating REO Brokers who actually market their clients' assets using the best possible tools available to them".
D'Angelo sees this shift is happening in the Minneapolis/Saint Paul area and believes it will also happen across the nation.
Contact Information:
Frank D'Angelo, REO Broker/SRS
EXIT Realty Executives
REO Website: http://www.MNReoEXIT.com
Bilingual Virtual Tours: http://www.BankOwnedEXIT.com
(763) 548-1444 (Single Number Reach)
The Bulk of the Nation's Bank Owned Homes: Perfectly Managed or are they Managed Perfectly? Which is it?
Frank D'Angelo Minneapolis MN Broker/Owner
At a time when many real estate companies are cutting back or barely hanging on, 
It's still doom and gloom at some real estate companies, but not at 
A niche marketer picks up traffic from an underserved and needy marketplace-you know the economic fundamentals of supply and demand. Ready, willing, and able customers aren't hiding under rocks they are scouring the net and asking for referrals from their Sphere of Influence. The question is will you be top of mind?
not the looky-loos. You can FIND a niche in any size community and let's be honest, normally you will service more than one town.
Niche markets change. If the rate of homeowners delinquent on their payments in your area is 1 of 4, then short sales are not a niche but rather a general study that you need.
