HOW TO BECOME AN REO AGENT: THE SHADOW INVENTORY
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by: MattCBA
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The foreclosure crisis is incredible enough – already offering amazing opportunities for REO agents and brokers. But now there is finally some sunshine lighting up the so-called “shadow inventory” of foreclosure properties that have yet to be officially recorded or to become part of the massive amount of REO listings currently for sale all across America.
Real estate data and records company First American CoreLogic estimates this shadow inventory at 1.7 million homes as of the end of September 2009 – that’s 1.7 million more homes that should eventually find their way to become REO homes for sale (this report can be accessed at http://www.facorelogic.com/uploadedFiles/Newsroom/RES_in_the_News/FACL_Shadow_Inventory_121809.pdf ).
With 3 million official foreclosures already estimated to hit the REO listings in 2009, that means an incredible amount of potential profit for anyone interested in how to become an REO agent. The other astounding aspect of these numbers? Most experts think they’re too low.
In a blog posted at “The Wall Street Journal” online site on December 18th, 2009, analyst James R. Hagerty makes the point that First American expects that 68% of mortgages that are over 90 days late in payments won’t go into foreclosure. With today’s economy, that’s a huge assumption to make. Especially when another company, Lender Processing Services, estimates that 30% of the properties that have been in foreclosure for 12 months haven’t even hit the market yet. 30%!
Basically, that means there could be as many as 7 million potential REO homes that are still in this “shadow inventory.” Those are 7 million REO homes that will need agents and brokers who possess the proper training in dealing with REO properties.
Most people have heard of homeowners just walking away from their properties rather than go through the foreclosure process. Just to underscore the magnitude of the REO explosion, some banks are doing the exact same thing to their lenders, believe it or not. In San Francisco, the financial institution Morgan Stanley is giving back five office buildings it purchased a few years earlier from The Blackstone Group. It’s estimated the five buildings are now worth approximately half the value Morgan Stanley bought them for at the time.
2010 is going to be another huge year for REO sales, no matter how you look at the picture – and probably another record-breaker. REO homes also continue to be the hot real estate category that buyers are interested in, due to the value they provide.
The national trade association ASREOS, the American Society of REO Specialists, is an important resource for those wanting to enter this lucrative field – or for those already working in the REO industry.
In addition to providing invaluable REO training advice and essential tips on how to get REO listings, ASREOS, run by nationally-known REO expert Frank Patrick, offers its members the ability to post their online profile, searchable by zip code, which can be accessed by REO Sellers. ASREOS also features an exclusive database of financial institutions that control REO listings.
One of ASREOS’ most useful features is a members-only forum that allows REO professionals to trade inside secrets and tips to each other. Find out more by visiting www.ASREOS.com.
About the Author
Frank Patrick began his real estate career in 2000 after a 12-year stint in corporate America as a sales manager. As a new real estate agent Frank knew that he wanted to find a niche within the real estate industry. After months of research Frank decided to specialize in REO, an acronym for bank owned foreclosed homes. Frank quickly became one of the top REO agents in the nation averaging over 100 transactions per year for the last 8 years. In 2007 Frank’s production soared to over 214 sales. In 2004 Frank and his brother Scott Patrick started a property preservation company to offer maintenance and repair services to banks with foreclosed homes. Frank’s solid understanding of the REO industry and Scott’s 20+ years in the construction business was a recipe for success. This year their property preservation business is on track to gross over one million dollars in revenue. Today Frank manages his REO Real Estate Brokerage, REO Renegades an REO agent training business, his trade association The American Society of REO Specialists and is developing a national Franchise Property Preservation company, REO ResQ. For more information please visit http://www.REORESQ.com
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