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A foreclosure or REO listing is the sale of a property that has been repossessed by its lender. In order to get your home on this list, you’ll have to work for it and show up at these listings like an attractive buyer with a competitive offer.
Foreclosure & REO listings are important factors in the real estate market. With this list of 7 ways, you can get access to these listings for free.
Another option for agents to gain listings is to concentrate on foreclosure and real estate-owned (REO) prospects. There are plenty of opportunities for agents ready to work after learning how to receive listings for foreclosures and REOs. To get foreclosure and REO listings, you’ll need to acquire new skills, have a better grasp of the industry, and maintain regular connections with mortgage lenders, asset management businesses, and government organizations.
Foreclosure listings are homes where the owner has defaulted on payments and the lender or bank is seeking to reclaim the amount owing on the property. After an effort to sell during a foreclosure fails to match the opening price, the lender (which might be a bank or mortgage lender, or even a government body) owns the property.
The only difference between foreclosure and REO listings is that foreclosure listings are being returned to the mortgage lender, whereas REO listings are already owned by the lender or a government agency such as the Department of Housing and Urban Development (HUD), Department of Veterans Affairs (VA), or Federal Housing Administration (FHA). Because you’re working with comparable entities who take property due to unpaid debts, the method to obtaining either of these sorts of listings is identical.
Agents may get REO and foreclosure listings in seven different ways:
1. Understand the Market
Working on foreclosure and REO listings requires a thorough understanding of the real estate market. The property market is always changing. Using data-driven information, you may detect when there is a chance to gain listings and pitch for these listings more effectively.
There is a clear link between foreclosure filings and foreclosure rates, according to ATTOM Data Solutions. As the number of foreclosure files rises, so do the rates of foreclosure, implying that real estate brokers will have a greater opportunity to get listings via marketing and outreach activities.
(Image courtesy of ATTOM Data Solutions)
Foreclosure rates reached an all-time low in the 2020 era, thanks in part to a government moratorium that halted most foreclosures. Although this may seem to be an intimidating number that may deter brokers from pursuing this specialty, there is a substantial backlog of homes that will be foreclosed on once the moratorium is lifted. This creates a void for agents to establish the required contacts in order to get foreclosure listings after the moratorium expires and they become accessible.
2. Educate yourself
Continuing education on how to gain foreclosure and REO listings, in addition to market expertise, may assist real estate agents to get and perform better on these listings. Most state real estate industry trade organizations provide certificates and designations that agents may use to achieve new expertise and credentials.
These qualifications may subsequently be utilized in marketing, business cards, and email signatures to establish the agent as an experienced resource for customers, lenders, and government authorities. A Short Sales and Foreclosure Resource® certification, for example, is offered by the National Association of REALTORS® (NAR).
There are many online real estate colleges that provide continuing education classes that fit into an agent’s hectic schedule. In most jurisdictions, Kaplan, for example, offers foreclosure and REO-specific courses to educate agents on the distressed market, including how to interact with lenders, participate in auctions, and interpret standard notifications.
3. Make use of websites that generate leads.
It’s time to create leads after brushing up on the market and learning how to acquire foreclosure and REO listings. Referrals for listing leads may come from an agent’s sphere of influence, but those who don’t yet have many contacts can utilize lead generating websites. While many lead generating websites, such as BoldLeads, Zillow, and Real Geeks, supply buyer and seller leads, others specialize in foreclosure and REO leads.
REDX is a lead generating firm that specializes in supplying foreclosure and expired listing leads. Their software finds pre-foreclosure leads and gives contact information for property owners who are in the process of losing their homes to foreclosure. Your market expertise and education may be put to work guiding troubled homeowners through the foreclosure process after you’ve gotten the purchased leads and started prospecting.
4. Make Contact With Asset Management Firms
Banks, lenders, and property investors use asset management businesses to manage their assets on their behalf. This usually entails maintaining the property, engaging in evictions, and arranging the property’s promotion and sale. Many asset management companies specialize in foreclosures and REO properties, with the goal of reducing the lender’s or owner’s loss.
Establishing contacts with asset managers allows you to offer a broker price opinion (BPO), which may assist you in obtaining accessible foreclosure and REO listings. BPOs give a price estimate for a property based on its attributes. The technique of arriving at the final price recommendation is akin to a comparative market study, which is frequent in the conventional sales process. Before preparing and submitting a BPO, there are a few things to keep in mind:
- Costs: Expenses connected with preparing the property for sale.
- Market trends; may affect the price at any one time in the real estate market.
- Quality and attributes; of the current neighborhood
- Comparables: Look at recently sold similar houses in the region to get a sense of what you may be able to get for your money.
Working with a business like Clear Capital, which has strong contacts with lenders, servicers, and investors may help agents uncover possibilities to create BPOs in addition to interacting with asset management organizations. Clear Capital’s broker network offers BPO chances to agents that are looking for foreclosure and REO properties. Signing up is simple—all you need is a picture, your driver’s license number, and the location you want to work in to get started.
5. Submit a direct application to government agencies
The Department of Housing and Urban Development (HUD) and Fannie Mae are two entities to look into while looking for foreclosure and REO listings. Fannie Mae is a government-sponsored organization that was founded to encourage homeownership. HUD buys assets connected to delinquent Federal Housing Administration (FHA) mortgages. Fannie Mae does not make loans; instead, it buys and guarantees them on the secondary market.
Working with any of these organizations is an easy procedure. To become a candidate for HUD listings, complete the relevant documents and submit them to your local HUD Homeownership Center. You may advertise and submit applications on HUD properties if you have a HUD-issued name and identification number.
Fannie Mae offers a comparable product that needs you to register as a Fannie Mae Supplier and create a HomePath account. Fannie Mae will provide foreclosure leads to agents within the specified geography if they are unable to match housing demand internally.
6. Make Direct Applications to Banks or Other Lenders
Connecting with banks and lenders used to be a profitable method to acquire immediate access to foreclosure listings. Most banks are outsourcing foreclosure work to asset management businesses rather than dealing directly with real estate agents due to current foreclosure patterns. However, we noticed that Wells Fargo’s Premiere Asset Services program has reopened, enabling agents to apply to work as listing agents/brokers. Many major bank websites also display which of their REO homes are now available.
You may also offer to submit updated BPOs to local mortgage lenders to see if they would be ready to provide you with these sorts of listings as another approach to create leads for your real estate firm. It’s beneficial to cultivate connections with local banks and credit unions, since they may be more interested in collaborating with a local specialist on foreclosure and REO properties than bigger national lenders.
7. Establish a relationship with a mentor from your brokerage.
Many successful real estate agents and brokerages specialize in a certain specialty, particularly if they operate in a highly competitive market or if there is a significant regional demand for a particular service. Joining a brokerage that specializes in acquiring foreclosure and REO listings might be advantageous if you want to concentrate on this sector. These brokerages have the skills and resources to not only assist but also expand your company.
Aligning yourself with like-minded brokers will provide you with more opportunities to understand the process and assist in the representation of foreclosure and REO listings. Brokers with a lot of experience can give a lot of information and assist you to grasp the complexities of these sorts of deals. They can walk you through the process of negotiating, teach you how to create more leads, and assist you in continuing to grow your own book of business with foreclosure and REO listings.
Why Agents Should Focus on Foreclosure & REO Listings
When it comes to deciding which niche markets and client types to concentrate on, most real estate agents will choose one that is not only profitable but also has less competition. Focusing on foreclosure and REO listings is less competitive since obtaining listings involves more effort. However, once these listings are gained, they are seldom reallocated to another listing agent, and the connections formed may continue to provide leads in the future.
To get foreclosure and REO listings, you must first understand the market and be familiar with the necessary procedures for interacting with lenders and government authorities. Mortgage lenders and government entities, unlike the normal homeowner selling a house, have certain financial goals and monitoring standards that must be followed.
Conclusion
Agents who master the art of obtaining REO and foreclosure listings will be able to generate a consistent supply of possibilities in both high and low markets. Banks and lenders intensify their foreclosure actions in a depressed financial market to regain their funds. Investors, on the other hand, take advantage of an upsurge in the housing market and prices by acquiring bank-owned houses. Both of these conditions help a foreclosure and REO listing agent succeed.
