Selling real-estate–owned (REO) properties can be a very lucrative niche. But, before you jump into this specialty with both feet, consider the amount of work involved. REAL Trends spoke with Andrew Kaplan, a real estate broker and principal of Kapital Real Estate in Milwaukee, who has a team of six full-time REO team members who are employees and eight buyers’ agents. “I’ve become a larger volume broker but the truth is that no bank is going to hand you a couple hundred properties anymore,” says Kaplan. “Now a days, you become a preferred broker and if they’re giving everyone else one listing, you may get two or three.”
Kaplan says that anyone interested in becoming an REO sales professional better hire a couple key players. “I was a one-man show, and then quickly hired a part-time bookkeeper. If you pay all the utility and repair bills on these properties and don’t get them submitted back to the bank, you’ll lose it all on reimbursements.” He says it’s vital to get your reimbursement under control, and then consider hiring a receptionist. “The next person I hired was someone to be in the office taking calls while I was out at properties,” says Kaplan. “Offers are being submitted and during business hours I was at properties. At night I was trying to process these offers but no one was available to negotiate the offers until the next day, so I hired a licensed assistant.”
As Kaplan secured new clients, he hired as needed, such as a runner to help with lockboxes, keys gone missing, etc. “Each new client is on a different system and wants different tasks done in a specific way. You have to be on top of that.”
He broke his business down by the numbers:
• We have about 100 active properties for sale and 250 in our total inventory, which includes REOs in different stages—prelisting, listing, pending, etc.
• We work with 25 different banks.
• Each day we log into at least 50 different websites where we manage information—billing, properties, offers, etc. When I sit down, I open up 20 windows on my computer, and go back and forth.
• Everyday we get about five new properties from clients and, the properties have to be checked that same day and a report must be written on those properties. Every new property gets a Broker Price Opinion (BPO). Depending on the classification of the property, some get a drive-by BPO, vacant properties get an internal BPO and those on the market for 60 to 90 days get an update BPO. We do about 10 to 15 reports a day. Each report takes at least 40 minutes.
• Each property gets a monthly status report. We do about 5 of those reports a day.
• Everyday we have closings and the orchestration is intense.
• I have contractors at 5 to 15 different addresses each day doing everything from bidding on repairs to re-keys, repairs and snow removal.
• I have 2 full time people in the field visiting 15 properties a day.
• We receive 10 to 20 offers to purchase a day. These offers have to be processed and checked before we submit them. They must be submitted within 24 hours of receiving the offer. Then, we have to counteroffer or negotiate the offers.
• We list into the MLS at least 10 properties per day.
• When it snows, I have to remove snow on about 100 of the properties we have, then process the invoices and get them to the clients. Clients give us about 5 days to get invoices to them, but we wait about 60 to 90 days for reimbursement. It costs us about $5,000 every time it snows. It snowed three times in January.
• Every month we process 150 gas/electric bills, 150 water bills, etc. We pay all utility bills and then bill the client for reimbursement.
• On any given day, we have at least 100 tasks being completed.
• We have contact with 150 people a day via email, in person and phone calls.
No matter what, says Kaplan, “You can plan as much as you want in this business, but nothing ever goes as planned. In fact, yesterday we had a property call from agent who said someone was in the house at that very moment stealing copper We got the police out there immediately an secured the house. No one was anticipating that!”
But, he says, the rewards are immense. “I’m able to strategically manage an overwhelming amount of tasks due within a short period of time and that makes me proud.”