Numerous FORCE agents discuss the ongoing impacts of decline properties brought on by foreclosures and strategies they use to sell certain homes. 

As foreclosure rates remain at or near historic lows, the number of available REO properties continue to trend lower as well, presenting many challenges for agents working in this space. 

ATTOM Data Solutions’ Year-End 2019 Foreclosure Market Report found that Florida and California combined for nearly 1.5 million REO properties over the last decade.  

Cities with a population greater than 200,000 that saw a year-over-year increase in REOs included Honolulu (up 34%); Myrtle Beach, South Carolina (up 28%); Florence, South Carolina (up 18%); Buffalo, New York (up 16%); and San Luis Obispo, California (up 9%).

Overall, REO activity has continued to drop significantly across the U.S. in the decade following the 2008 financial crisis. The nation saw 493,066 foreclosure filings in 2019, representing just 0.36% of all U.S. housing units, down from 0.47% in 2018.

Cris Sallmen of Berkshire Hathaway Home Services Chicago said the lack of inventory is causing many REO properties’ days on the market count to drop significantly. 

The Chicago market where Sallmen works—once a “phenomenal” REO market in years past, according to Sallmen—REO inventories have plummeted. 

She said once asset managers see a listing, “they are running over there as quickly as they can.”

Sallmen added that REO properties are on the market in her area, on average, less than 30 days. 

“Pricing and condition are the key factors,” she said. “If it’s priced like a regular home sale but in horrible condition, then, of course, it’s going to sit there and you continue to lower the price. If they’re well-priced … it’ll be moving a lot faster.”

Jane Eid, Broker, REMAX First Realty, said REO homes differ from regular sales because they attract more investors.  

“Investors can close on a home in well under 30 days, which can shorten DOM considerably,” Eid said. “On the flip side, if an REO home has major issues and the wrong price point, it can easily sit on the market for twice the average DOM.”

Most REO listings, Eid said, close within 30 to 60 days. 

Cyndie Stratiff with RE/MAX Select Realty said the difference in days on the market for REO properties compared to those for a standard sale is minimal, but it all depends on seller strategies. 

Some sellers price attractively, Stratiff explained, while others like to change the price point. She added that she is aware that asset managers need to “get these off their books,” but certain items—such as title issues—could become costly. 

Issues surrounding titles and fees aren’t common in regular sales, Stratiff said, with most of the issues surrounding REO properties occurring on the backend. 

“My job is to get the property under contract and closed ASAP,” Stratiff said. 

Sallmen said asset managers could spend hundreds of dollars daily when a property sits on the market. 

“They’re looking at insurance costs. They’re looking at taxes and the costs of utilities,” Sallmen said. 

One of the strategies used by Sallmen is what she calls a private network, where she pre-lists the property with some information and photos to generate some interest before it hits the market. 

“It creates some anticipation for that property that they know it is coming on the market, and they will have their buys lined up and ready to go,” she said. 

Denise Madan, Associate Broker with Keller Williams Miami Lakes, said it takes a special agent to excel at handling REO properties and understanding the pressures asset managers face every day. 

“You have to know how to communicate with them—it’s almost like a special shorthand you develop handing REO properties. Members of the FORCE understand this and are always willing to help a fellow member out,” Madan said. 

Madan said new properties usually generate attention after being listed. 

“By the time it hits the MLS, we usually have appointments set up,” Madan said. “For us, we believe if we haven’t received at least one offer within 30 days, we do a new value update for our client and make recommendations to tweak the price.” 

Eid added that, with the current housing shortage, if a property does not see activity or offers within the first 15 days, that’s a likely sign that pricing will be an issue. 

“Exposure of the listing is what will best help DOM rate,” Eid said. “Exposure can mean not only professional photographs and pushing the listing to all online marketing channels, but also exposure through price point. It is important to place your property’s asking price within a price bracket that will attract as many home buyers as possible to view the home in person.”

Sallmen said asset managers look at days on the market as a judge of the agents’ performance, noting that if you have properties “just sitting there,” you may need to revisit your strategy. 

“It’s good to do your due diligence and make sure you’re giving accurate information so that your days on the market rate is lower because that means a lot for them,” she said. “The longer they have to spend money on this property, you’re not sitting very favorably in their eyes.”