Focusing on foreclosure and real estate-owned (REO) listing opportunities is another way for agents to get listings. After learning how to get listings for foreclosures and REOs, there is an abundance of opportunity for agents willing to do the work. To do so, you’ll need to learn additional skills, develop a deeper understanding of the market, and have consistent communication with mortgage lenders, asset management companies, and government agencies to procure foreclosure and REO listings.
Foreclosure listings are properties in which a lender or bank is attempting to recover the balance owed on the property due to the owner defaulting on payments. Real estate-owned listings, or REO listings, are properties owned by the lender (which could be a bank or mortgage lender, or even a government agency) after the attempt to sell during a foreclosure fails to meet the opening bid.
The slight difference between foreclosure listings and REO listings is that foreclosure listings are in the process of 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), and Federal Housing Administration (FHA). The approach to gaining either of these types of listings is similar because you are dealing with similar agencies that seize homes because of unpaid debts.
Here are seven ways for agents to get REO and foreclosure listings:
1. Know the Market
Understanding the real estate market is the key to working on foreclosure and REO listings. The housing market is constantly in flux. Varying trends can help you identify when there is an opportunity to obtain listings, and also give you the ability to pitch for these listings more effectively using data-driven information.
According to ATTOM Data Solutions, there is a distinct correlation between foreclosure filings and foreclosure rates. As filings increase, so do the rates of foreclosure, which indicates there are more opportunities for real estate agents to obtain listings through marketing and outreach efforts.
(Source: ATTOM Data Solutions)
The 2020 pandemic saw an all-time low for foreclosure rates, partially due to a government moratorium stopping most foreclosure activities. Although it seems like a daunting statistic that might discourage agents from approaching this niche, because of this momentary pause, there is a large backlog of properties that will be foreclosed on once the moratorium is over. This leaves a gap for agents to build the necessary relationships to get foreclosure listings once the moratorium ends and they become available.
2. Get Educated
In addition to market knowledge, continuing education about how to get foreclosure and REO listings can help real estate agents obtain and perform better on these listings. Most state real estate industry trade associations offer certifications and designations an agent can get to learn new specialties and gain relevant credentials.
These professional credentials can then be used in marketing, business cards, and email signatures, designating the agent as an expert resource to their clients as well as lenders and government agencies. For example, the National Association of REALTORS® (NAR) has a Short Sales and Foreclosure Resource® certification.
There is a variety of online real estate schools that offer continuing education courses that can fit perfectly into an agent’s busy schedule. Kaplan, for example, has foreclosure and REO-specific courses in most states to educate agents on the distressed marketplace, including how to connect with lenders, participate at auctions, and understand typical notices. Check out their website to learn more.
3. Utilize Lead Generation Websites
Once you’ve brushed up on the market and educated yourself on how to get foreclosure and REO listings, it’s time to generate leads. An agent’s sphere of influence can produce referrals for listing leads, but those who don’t yet have extensive connections can also use lead generation websites. While there are many lead generation websites that provide buyer and seller leads, such as BoldLeads, Zillow, and Real Geeks, some focus specifically on foreclosure and REO leads.
REDX is a lead generation company specializing in providing leads specific to foreclosures and expired listings. Their program identifies preforeclosure leads and provides the contact information of owners who are in the process of foreclosure. Once you’ve received the paid leads and begin prospecting, your market knowledge and education can be put to work navigating distressed homeowners through the foreclosure process.
4. Connect With Asset Management Companies
Asset management companies are hired by banks, lenders, and property investors to manage assets on their behalf. This typically includes maintaining the property, participating in the eviction, and handling the marketing and sale of the property. There are many asset management firms that specialize in foreclosures and REO properties with the objective of minimizing any loss to the lender or owner.
Developing relationships with asset managers gives you opportunities to provide a broker price opinion (BPO), which can help you get available foreclosure and REO listings. BPOs provide an estimation of the price of the property based on its characteristics. Getting to the final pricing suggestion is fairly complex, similar to a comparative market analysis, which is commonplace for the traditional sales process. There are a few things to understand before finalizing and submitting a BPO:
- Costs: Potential costs associated with getting the property ready for sale
- Real estate market: Market trends that may affect pricing at the given moment
- Neighborhood: Current neighborhood quality and characteristics
- Comparables: Sold comparable properties in the area to estimate possible pricing
Besides connecting with asset management companies, agents can find opportunities to produce BPOs by working with a company that has deep connections with lenders, servicers, and investors, like Clear Capital. Clear Capital’s broker network provides agents with BPO opportunities that can help them get foreclosure and REO listings. It’s simple to sign up—the only information you need to provide is a photo, license information, and the area that you are interested in working in to get started.
5. Apply Directly With Government Agencies
Two agencies to consider when searching for foreclosure and REO listings are the Department of Housing and Urban Development (HUD) and Fannie Mae. HUD acquires properties related to Federal Housing Administration (FHA) mortgages that are unpaid, and Fannie Mae is a government-sponsored agency originally created to stimulate homeownership. While Fannie Mae does not originate loans, it purchases and guarantees mortgages on a secondary market.
The process of working with either of these agencies is fairly simple. For HUD, fill out the appropriate forms and submit them to your local HUD Homeownership Center to become a candidate to receive listings. Once you receive a HUD-issued name and identification number, you can market and submit applications on HUD homes.
Fannie Mae has a similar program that requires you to sign up to be a Fannie Mae Supplier and get an account on HomePath. When Fannie Mae is unable to meet the housing demands internally, they will distribute foreclosure leads to agents within the required location.
6. Apply Directly With Banks or Other Lenders
In the past, connecting with banks and lenders was a lucrative way to get foreclosure listings directly. With current foreclosure trends, most banks are outsourcing the work to asset management companies rather than working directly with real estate agents. However, we discovered that Wells Fargo re-opened their Premiere Asset Services program, allowing agents to apply to be a listing agent/broker. Similarly, many larger bank websites show which of their REO properties are available.
As another way to generate leads for your real estate business, you can offer to provide updated BPOs to local mortgage lenders to see if they would be willing to give you these types of listings. It is worthwhile to develop relationships with locally based banks and credit unions that may be more interested in working with a neighborhood expert on foreclosure and REO properties than larger nationwide lenders would be.
7. Align Yourself With a Mentor From Your Brokerage
Many successful real estate agents and brokerages focus on a niche, especially if they’re in a highly competitive market or there is a strong regional demand for a specific type of service. If you want to focus on this niche, it could be beneficial to join a brokerage that specializes in getting foreclosure and REO listings. These brokerages have the knowledge and resources to support your business while also helping it grow.
Aligning yourself with like-minded brokers further opens up opportunities for you to learn the process and participate in representing foreclosure and REO listings. Experienced brokers can share an impressive amount of knowledge and help you understand the nuances of these types of transactions. They can guide you through negotiations, show you how to generate additional leads, and help you continue to build your own book of business with foreclosure and REO listings.
Why Agents Should Focus on Foreclosure & REO Listings
As real estate agents identify niche markets and client types to focus on, in most cases they’ll pick one that is not only lucrative but also has less competition. Focusing on foreclosure and REO listings is less competitive because it requires extra work to obtain listings. However, once obtained, these listings don’t typically get reassigned to another listing agent, and the relationships developed can continue to produce leads going forward.
To get foreclosure and REO listings, it’s important that you understand the market and know the proper steps when dealing with lenders and government agencies. Unlike an average homeowner selling a property, mortgage lenders and government agencies have unique monetary objectives and oversight requirements that must be met.
Bottom Line
Agents who successfully learn how to get REO and foreclosure listings can create a steady stream of opportunities in high and low markets. In a down financial market, banks and lenders increase their foreclosure activities to recoup their money. On the other hand, when there’s an uptick in the housing market and prices, investors take advantage by purchasing bank-owned properties. Both scenarios contribute to the success of a foreclosure and REO listing agent.