In response to a comment left on “The Life and Times of An REO Field Agent: Part 1“, I have concluded that it is important for me to delve into the Asset Manager/Listing Agent relationship that takes place when selling bank owned properties (You see? We’re here for our readers 😀 ).To better understand the life and times of an REO field agent, we must take a look into how real estate agents handle the initial property assignments, and then how they market those properties in accordance with the bank and asset manager’s guidelines.
As I covered in the previous blog, the banks who own the properties hire asset management companies to do just that: manage the enormous of amount of “troubled” assets or homes that they now own due to foreclosure. The asset managers are responsible for hiring real estate agents to prepare and sell the property. The following are typical of the procedures required of the real estate agents by the asset managers:
PRE MARKETING PROCEDURES:
Agent Approval: First, the agent must obviously get approved by the asset manager. This entails an application package that includes all tax information, insurance, licenses, etc..
New Assignment: When the asset manager receives a new property from the bank, they send notice to the agent asking to accept or reject the listing.
Reporting Occupancy: If accepted, the agent must report back on the number of units, the occupancy status, and a personal inspection of the property within 24 hours. A checklist of damages must be completed within two days. Finding REO’s that are occupied by renters and not the original owner can make it more difficult. Many renters are surprised to find out that their landlord was in foreclosure.
Evictions: Like I covered in the last blog, the agent must visit the property at least once a week to check on the status of occupancy until the eviction is complete.
Cash for Keys: The Agent is responsible for offering cash for keys to the occupants. Cory said he’s seen offers ranging from a couple thousand dollars to tens of thousands of dollars.
Initial Valuations: The listing agent must provide a Broker Price Opinion on the property which serves notice to the asset manager that the property is secured and ready to be marketed. This also provides the asset managers and the banks with their first glimpse of what the property should be listed for.
Now, in regards to the comment on the last blog, “Are there rules that govern how these homes are marketed or do they sometimes get sold by a Realtor to his investor without ever getting to market?”
The “rules” of how a property is to be marketed are outlined clearly in the listing agreement between the bank and the agent (and issued by the asset manager). The agreement includes a requirement to submit the MLS sheet, the marketing description, and photos to be placed on the MLS for asset manager approval.
Unfortunately, there are instances where a Realtor will weasel their way around and limit the marketing done on a property so that they can sell to their own client; Especially in California where dual agency is legal. This is why asset managers are responsible for keeping tabs on their agents, and banks on their asset managers. To a large extent, the agent must build up a trustworthy relationship with their asset managers because they will not hesitate to cease assigning tasks to the agent. To help ensure that the properties are being marketed and fully exposed to the public, agents are required to provide updated Broker Price Opinions which entail updated MLS listings. In addition, all offers submitted to the agent must be reported to the asset manager and they will respond to the offer within in one business day.
Lastly, regarding another part of the comment from last blog, “I drove by and looked at a bank owned home last week. My client wanted to make an offer but the Realtor said it had not been priced yet and we could not even get in the door.” As mentioned in the Pre-Marketing Procedures, there is a lot that goes into prepping the house for marketing, and often, a lot of the prepping entails providing all the information to the asset managers. Therefore, if that home hadn’t even been priced yet, that agent wouldn’t be able to submit offers to the asset manager.
Ohhhhhh, what a tangled web they weave. Asset management is quite the bureaucracy.
I’m happy to address any other questions for this blog topic or any others for that matter. As mentioned in the previous blog, stay tuned for the conclusion of The Life and Times of an REO Field Agent as we get a first hand glimpse at an eviction and the start of what turned out to be a super shitty day for that tenant.
The Life and times of an REO Agent: Part II! – By Andrew Brentan