BrokerageIndustry News

REOs are risky business

Part 1: Pitfalls of bank-owned listings

Learn the New Luxury Playbook at Luxury Connect | October 18-19 at the Beverly Hills Hotel

Editor's note: This is Part 1 of a two-part series. Read Part 2. Bank-owned, foreclosed properties -- also known as REOs -- represent a huge opportunity for real estate agents and buyers alike, but can also pose a huge risk for your business. Chances are you have seen an REO training ad proclaiming: "I just received over 100 listings from XYZ lender." Before you decide to devote time and money to working with REOs, carefully consider the dark side of listing and selling REO properties. 1. You can get paid for doing a "BPO" Many trainers suggest that a good way to begin building an REO business is to provide a lender with "BPOs" (broker price opinions). BPOs are more complex than normal CMAs (competitive market analyses) and require agents to follow very specific guidelines. Lenders typically pay $50 to $80 for a BPO. Money pit: There are several issues you must address before providing a BPO to a lender. A number of states allow only licensed...