When I decided to make the leap into the REO business model I studied it before I made the jump. The first thing I noticed was that my local market was dominated by a handful of big players. It seemed like 6 agents had about 80% of the bank foreclosure listings. My first reaction was pure jealousy but I immediately put the kibosh on that unproductive emotion and focused on what they were doing.

Success Leaves Tracks.

I like this guy. He seems like a cool wealthy uncle who is always good for some “walking around money” and some fatherly advice.

The concept is if you study what a hugely successful person did and just do what they did, your success is all but assured. I decided to look at what these local REO Kings and Queens were doing and figure out how I could duplicate their success. I asked myself questions like “How did they form relationships with the banks?” Why did the banks prefer to send the bulk of listings to just a few players when there are literally thousands of agents screaming for the business?” “How do I find out the information?”

The last question was the hardest one of all. Finding the information was the biggest obstacle. Call up your local REO King and ask him what you need to know in order to duplicate his success. Go ahead. Give it a whirl. Yea they’ll spill their guts to you no problem. The wall of secrecy around how to get REO listings is practically impenetrable.

The first thing I noticed was that the successful agents used leverage to their benefit. One of the problems with traditional real estate is that people only move about every 5 years. You work hard to develop a relationship and then you only get one deal from each relationship. When you cultivate relationships with the banks and in particular the asset managers you are able to leverage each relationship into multiple deals.

This heavy volume is both a blessing but also the curse that kills the careers of most new REO agents. You MUST leverage BPO’s, systems and people to deal with the heavier volume of work in order to manage the workflow. If you don’t use the leverage of others you will shoot yourself in the foot by dropping balls. This is why the asset managers prefer to work with a handful of agents. Your local REO king uses leverage to make sure that the work gets done with little or no dropped balls.

The REO business model is the most efficient business model in real estate. It lends itself to systems. While the relationships are important, they are nurtured by different criteria than traditional real estate. Asset managers don’t care about what kind of car you drive, where you live, how you look, or how smooth talking you are. Asset managers want predictable results. Results that can only be duplicated on each listing if you are leveraging systems and people. By giving predictable reliable results you leverage your relationships with the asset managers.

Asset managers know competence when they see it. They reward it. They chase after it. They are loyal to it. The competence of systems will make your asset managers look good to their superiors. Making your asset manager look good is your only goal. Take care of that and everything else will fall into place.