How Realtors Acquire REO Listings: The Comprehensive Guide

In the world of real estate, REO (Real Estate Owned) listings are unique properties that arise from bank foreclosures. Understanding how realtors acquire these listings is crucial for both buyers and sellers in the market. This guide will delve into the process, tips, and strategies used by realtors to secure REO listings.

What Are REO Listings?

REO listings, also known as Real Estate Owned properties, are those properties that banks have taken possession of through foreclosure. These homes do not sell at auction and are instead listed with real estate brokerages that the banks have pre-existing relationships with. Despite common misconceptions, these properties are typically listed on the MLS (Multiple Listing Service) and are publicly available for offers.

Why Do Realtors Acquire REO Listings?

Realtors acquire REO listings for a variety of reasons:

Reduction in Competition: Properties listed on the MLS often face intense competition, whereas REO listings have less competition. Urgency: Banks need to sell these properties quickly to recoup their losses. Potential Discounts: Despite popular belief, buyers can often negotiate the price, but they must be prepared to act quickly and decisively.

Acquiring REO Listings

Acquiring REO listings is a strategic process that involves several steps:

Research and Preparation

Before contacting any realtor or listing agent, thorough research is essential:

Identify the Property: Use county records to find out the owner of the property and confirm the bank that foreclosed on it. Contact Neighbors: Ask neighbors or previous homeowners to provide connections and insights into the property and the lender. Understand the Market Value: Determine the value of the property and what you are willing to offer. This involves estimating the cost of necessary repairs and other expenses.

Contacting the REO Listing Agent

Once you have done your research, it’s time to contact the REO listing agent:

REO Listing Agent Script

Hi [REO Listing Agent Name], this is [Your Name] – I’m calling about the house on [street address of property]. It’s my understanding that you are the REO Listing Agent and [Foreclosing Lender] has asked that I contact you directly. Is this a good time?

Great! First I want to let you know that I’ve seen the property and I really like it. Do you happen to know what the bank is asking for it? They usually say no because they don’t have the listing yet. If you do, be ready to act quickly.

Ok, I’m in the market for a property just like this. I have all cash and can close when the lender is ready and there are no other agents involved. So I would be working with you directly on this. Is that okay? They will say “yes” every time. They would like both sides of the commission.

When you get the listing agreement, would you mind calling me and allowing me to make an offer on it before it goes in the MLS? Great. To make this easy, I’ll send you an email with my contact information. What is your email address?

By doing this, you’re also getting my email address so you can follow up with me and you also have it for future reference if you come across another property with the same lender.

It's important to sound confident and make your offer appealing, such as an all-cash offer with no contingencies and the ability to close quickly within 2 to 3 weeks.

Eliminating Competition

One of the key strategies for acquiring an REO listing is to eliminate competition. This can be done by:

Narrowing down the list of potential listing agents through research and neighbor connections. Showing the listing agent that you have all cash and the ability to close quickly.

Conclusion

Acquiring REO listings is a strategic process that requires thorough research, a well-crafted approach, and patience. By understanding the process and following the tips outlined here, realtors can increase their chances of securing these unique and potentially profitable opportunities.