Hiring REO Agents: What Asset Management Companies Look For
Finding the right agents to work for REO departments can often be a difficult task, especially as business continues to pick up for many asset managers across the country.
New hires must often go through extensive training, most notably for valuations, said Mike Ayoub, an REO specialist from Re/Max Team 2000 in Dearborn, Mich., which is a full-service asset management/disposition company.
Some banks prefer to use third party service companies to maintain the property - to rekey, take possession of the home, cut the grass, and do the trash out. If the bank doesn't go to a service company, an experienced contractor will be used.
The REO business is a constant learning experience, even for REO managers and agents, he observes. Every week managers and agents are trading information multiple times. They communicate about property valuations, BPOs, status reports on how to move properties that may have become stale listings.
Ed H. Park, an REO specialist with Re/Max Hancock Park in Los Angeles, has been working in the REO industry for 21 years. He is a firm believer in forming relationships with clients in order to get repeat clientele.
When it's time to recruit new staff, a lot of times he has to re-teach members of the REO department about appraisals. "We have one of the hardest areas of the United States when it comes to appraisals. My marketing area is right next to Beverly Hills and Hancock Park and you can't do a simple straight line," he said.
"You have to curve the appraisal and figure out if it's a drive-by and how much interior improvement has been done. On the full interior evaluation, since I have been rehabbing and building, we find out exactly how much has been spent on this. For one house, it was 4,000 square feet and sold for $1.5 million and an adjacent home sold for $3 million, because almost a $1 million was spent on interior. On average, a good estimate remodel includes taking the property down to the bare wood starts."
Unless an agent or broker knows how to appraise these types of properties, it's impossible for a new agent to understand this sometimes complicated process.
"You have to train them. It doesn't matter what you say on paper. What I do first besides teaching them the basic appraisal concepts, I tell them about construction. They must know construction in order to be an effective broker. They have to know how to spot things."
More REOS are trickling in for Mr. Park's company, which deals with local REOs, including 150 ZIP codes. "It takes about two or three years to make a new broker very good where I can trust their value. I am personally investing the money to staff-up now. When assignments come in, that's not the time to train somebody," he said.
He personally takes new members of the staff out on assignment with him for six months. "I make them do 500 or 1,000 BPOs before I let them lose personally - depending on if they are fast or slow learners.
In the current REO market, one of the biggest challenges asset managers face is one solution doesn't fit all. People like to ask about strategies for selling REO properties, but for many, that is determined on a case-by-case basis.
Every property is different. The marketing strategy is based on geography, value range and the investor, who is likely to buy and rent out the property.
"You have to identify who your buyer is," said Chad Neel, president and chief operating officer of Fidelity National Asset Management Solutions, a unit of Fidelity National Information Services Inc., Jacksonville, Fla.
"Is it a first-time buyer? A move up? Are you going to let them move in and do the repairs themselves? You have to make sure the carpet is clean and in good condition, that there is fresh paint, or the homebuyer will go to the house down the street. It's really about the profile on the property and buyer and development a strategy. That's the secret sauce is - it's all about good people."
REO departments are hiring "good people" rapidly because they need additional staff to be more efficient. And a good percentage of employees work from remote locations across the country.
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