How REO Agents Work
You are probably frustrated and annoyed that REO agents don't call back, and who can blame you? It's not just buyers who are treated this way. Many REO agents don't call buyer's agents, either.
How REO Agents Work
To understand why agents don't call back, let's look at how many REO agents operate. While the following is not true for every single REO agent, many of them adopt similar procedures. REO agents are often simply too busy to handle the volume of phone calls.
- REO agents take many bank-owned listings. The top-producing REO agents list anywhere from 50 to 300 or more foreclosures a year. For many, that equates to writing one listing a week at minimum to one or more listings per day.
- REO agents often pay a fee to the asset managers. Asset managers may receive up to one-third of the listing agent's commission in return for hiring that agent to work for the bank. This means the REO agent must produce volume to offset the discount in fee.
- REO agents are responsible for securing and/or fixing up the bank-owned home. The REO bank typically wants the locks changed on the home, so the REO agent hires a locksmith to rekey. In addition, some homes are flooded or repairs need to be done before the home is habitable. Agents contract out the winterizing and oversee the removal of debris.
Types of Phone Calls REO Agents Don't Answer
REO agents value their time. Every minute spent answering questions is a minute that could be used to take a new listing. There are only so many hours in a day. Here are types of calls REO agents receive:
- Is this bank-owned home still for sale? REO agents say they keep MLS up-to-date, and if a home is pending, MLS will reflect that status.
- How much will the bank accept? The REO agent has no idea of the bank's bottom line. Often it's the asset manager who speaks with the bank's management, not the REO agent.
- How can I write the highest and best offer? The REO agent works for the seller, not the buyer. Buyers are advised to check the comparable sales. Most REO agents will not disclose the price of competing offers.
- How long has this bank-owned home been on the market? That information is typically available in the MLS listing.
- How much will it cost to fix up the home? The REO agent has completed a visual inspection but is not a contractor and cannot give buyers an estimate.
- What types of repairs will the bank make? Banks generally sell foreclosures in "as is" condition and will make no repairs.
As you can see, it's almost pointless to call the REO agent and expect to get any answers. That's why foreclosure buyers may fare better by hiring a buyer's agent with experience in foreclosures to help them buy a bank-owned home.
Do your due diligence, write a clean REO offer and don't expect the REO agent to call you back unless your offer is accepted. At a minimum, though, REO agents should acknowledge receiving your offer. But beyond that, their duty is to the seller.