I get this question on REO Rockstars calls a lot so let me share a bit of free insight on why REO agents and investors buying bank owned homes have their hopes of a golden finish blow out violently, like a speed skater who’s shoved into the boards, trying to squeeze out Apollo Ohno on the last turn before the finish line! Grab a pen and paper and take some notes my friend. This stuff is not for the faint-hearted but it doesn’t take 4 years of torturous training either-just a tiny little bit if focus. You can manage that can’t you? 
…Every day my office receives offers from these “would be” investors. Seems like everyone has taken some class, “learned from a friend”, or just plain walks blindly into the “investor” game. Now not to be critical of REAL investors here. We do business with PLENTY of super smart guys who make a very good living at this. But how do they do it? Well, it begins with the basics of knowing HOW to structure a deal that just makes sense. Contrary to what the “wanna be” guys seem to think, a great deal involves a heck of a lot more than looking at a few comps and speculating on a flip price. Bluntly, It is not the HOUSE that matters. It’s the PLAN. Smart investors, the guys who actually make a career out of this (and no, I’m not talking about some of these TV goofballs who make me cringe as they buy termite infested, water logged, structurally defunct houses and end up rebuilding from the foundation up-HACKS!), break the numbers down to the last penny, including the financing factors. First, they have to consider “where” they are going to get the non-occupant financing and more importantly “how” they are going to convince the hard money guy to fork over a chunk of change to finance the project.
You know, when you do a lot of volume in REO, you spend a lot of time looking at the big picture and you sometimes forget about the small improvements that could greatly impact the efficiency and morale of your team. Sit here for just a moment now and imagine that you are sitting in your office chair trying to get a little work done. As you stare at the words on your computer screen, words that look a lot like the ones you see on your screen now, black on a white background, you begin to feel yourself tuning in. The more you stare at these words and the the tasks they represent, the more you settle into your place and get so focused that you can almost feel your chest rise and fall with each breath you take. You are in your zone, to the point that you are feeling super energized and ready to accomplish the work of two or maybe even three people. Then all of a sudden…
Good morning all. Just a very quick post to remind everyone that you will NOT get away with slacking on utility connections. I realize that this may seem to be a post with a very obvious meaning but I have to tell you that this is probably one of the biggest hangups that AMs have to deal with. I would roughly guesstimate that at least HALF…yeah HALF of the REO properties that I visit DO NOT have utilities activated. I also know with absolute certainty that almost ALL Master Listing Agreements contain a special section regarding broker responsibilities, specifically, ACTIVATING UTILITIES. I was reminded of this sore subject by an email received from a client today,
So yesterday I failed…Well, actually my staff failed but that means that ultimately I was responsible. Whew….got the self blame out of the way. Is it supposed to feel good to take responsibility or is it just the right thing to do? Who knows and WHO CARES! Anyway, I get an email from my office manager telling me to call a particular selling broker, who was upset about how the negotiations were going on one of my listings. He really could not believe that his buyer’s offer was flat out “rejected” without a seller counter right in the middle of negotiations (very short negotiations I might add…his buyer was WAY low on price). Anyway, long and short of it was that did not “believe” that banks would just stop negotiating in mid-stream and force a buyer to either walk or counter their own counter. The guy actually believed that the bank was using his offer to shop other offers. He REALLY just didn’t “get it”! So how do you (and how do I NORMALLY) prevent this?
Hello again REO Rockstars! As many of you know, I have been a regular road warrior lately, going cross country for weeks at a time to get knee-deep in the trenches with the big shots of the REO world. Accept my apology for the delay in new posts, but trust me, you won’t think I owe you anything-nada-when you soak in all of the knowledge that I’ve gained to share with all of you in the next few months. In case you haven’t noticed, things are changing quite a bit in our industry. Banks are telling us of MONSTROUS foreclosure numbers that are looming like giant storm clouds ready to crash down on just about every major city in the country. While many people have been listening to the b.s. being spewed out by the media that “times are getting better”, I’m here to tell you that we’re merely in the eye of the foreclosure storm-and a TERRIFYING storm it’s gonna be…..that is, except for us REO guys!
Something REALLY cool happened with one of my clients this week that I thought I’d quickly share with you. Frankly, it started out as a serious “problem”. I have sold REOs for this firm for just about a year now and it’s always been, well let’s just say, “difficult”. I don’t mean that it’s been hard to sell their properties, but rather, it’s been very hard to get “in sync” with this client’s expectations. It always seemed that each AM had entirely different “rules” and “procedures” for handling properties than the next AM did-even properties from the SAME SUB-CLIENT.
I’ve seen so many brokers (myself included) make massive leaps in their business by getting into the big companies FAST, while other brokers never seem to be able to make any real headway at all-even after literally YEARS of trying. The single BIG difference that I see in the guys who sprint to the front of the line is simply in the way that they are willing to find “back door” ways of approaching the “benchmark” firms like Fannie Mae. Now don’t get me wrong. It is not an easy feat and it is not done without some serious effort.
The more you truly understand Fannie Mae, the easier it becomes to understand why other financial institutions MUST follow their lead. There’s such a HUGE difference in the way that many banks, financial institutions and investors who own REO properties operate when it comes to disposing of assets. There’s those of them who are very content to simply assess the “as-is” values and to put them right up on the market, at a price that’s likely to “blow them out” to investors. There’s those who do the short list of “necessary” repairs and hope to gain a somewhat higher sales price. And then there’s Fannie Mae, the benchmark institution of the industry.
The REO business is really something that amazes me at times. I look around and I wonder “how does this guy (or girl) stay in business” ALL the time. I’m always visiting properties and seeing windows and doors unsecured, obvious vandalism occurring and not being noticed, unattended roof leaks…and on an on. It is very easy to see why Asset Managers get so upset with brokers who don’t pay attention to their properties. It seems as if brokers just say “well my clients are out of state so they’ll never know if I don’t visit my properties every month”….BS!
So, I got caught with my pants down and frankly I can’t believe it. Just goes to show you that even when we’re on top of our game there’s someone who’ll sneak something by you. My biggest nightmare…a bookkeeper who “took” me. Now I am NOT saying that she stole from me but I am saying that the books are a mess and I’m quite suspicious. Worse yet, she apparently has copied my QuickBooks file (with all of my data) onto a flash drive, took it with her and then deleted my master file from the server…..yikes!
Hey, nobody’s perfect. It happens. Suck it up. Don’t get me wrong. I NEVER endorse performance to such a pathetic level that gets you on the shit list but when it happens, you need to know how to bow out gracefully. Listen, sometimes the hardest thing to do is swallow your pride. Especially when you are unjustly accused or blamed. This DOES happen in REO by the way. There is a LOT of CYA (Covering Your Ass) going on and usually the lowest person on the totem pole gets the blame for screw ups. Yep, you guessed it…the good old broker who worked his tail off and then took them blame for someone else’s screwup. So how do you handle it?
Sometimes we get so caught up in building and marketing our businesses that we just sort of “overlook” what’s happening “in” our business. Now you all know what a huge proponent I am of working “on” your business rather than “in” it, and I truly don’t see the practice of stopping to look around at your own business once in a while as anything different. I have always kind of liked the idea of having a friend periodically call your business as a buyer and seeing how the call is handled. The results may scare you.
As you REO Rockstars already know, I am the the guy who you can always follow to cut right to the front of the line. With my little tricks and secret tactics it’s like I’m always on the preferred “guest list” when it comes to getting backstage with Asset Managers who are ready to give me properties. One solid way is to create a “fun” marketing piece that’s centered around holidays and/or special newsworthy events (how many of you missed the Super Bowl or Valentine’s Day or the Presidential election opportunities to put a twist on a marketing piece for something that’s ALREADY top of mind?). These “missed chances” are what separate the winners from the guys with their heads in their hands on the sidelines. Be sure to not miss our upcoming call on “3 Quick and Dirty Marketing Secrets” where I’ll talk about this in more detail AND I’ll reveal the other two easy-to-implement BIG IMPACT tricks. Members, DO NOT miss this one!
I am ALWAYS concerned about entering an REO property, even in nice neighborhoods. The fact is that so many foreclosures are popping up that squatters and lowlifes are figuring out how to capitalize on the vacant nature of REOs (one of MY properties was actually featured on the 5:00 news the other day. THIS vagrant LOSER had re-keyed the property and was renting it out to unsuspecting tenants who we had to throw out on the street (NOT a good situation). Would you feel better if you knew how to make a potentially dangerous squatter or disgruntled former owner or tenant leave the home before you entered or would you like to end up with an image of a scowling face looking back at you in your camera while you’re down in the unlit basement?
