With REOs on the decline, some REO agents may be looking for opportunities elsewhere; but Jarrett West is determined to stay the course in the REO market. He’s working within his existing network and adapting his business to meet his clients’ changing needs.
It’s not news that the REO market is on the decline. Foreclosures are down across the country, and many of the REOs that are out there are making their way to market in the form of bulk sales rather than being assigned individually to agents.
While many agents who served the booming REO market a few years ago may be looking to other markets for new business, Jarrett West of 1 Able Realty in Orlando, Florida, is determined to stay the course; and he is continuing to find success in the distressed market right within his existing network.
West maintains close contact with all of his current clients, and when necessary, he adapts to meet their needs.
“You have to stay in touch with what the asset managers are doing because this market is changing rapidly,” West says.
Adapting to Market Shifts and Changing Client Needs:
When one of West’s asset manager clients began to transition heavily into property management a few years ago, West expanded his staff and got new software so he could continue to serve his existing client in this new endeavor.
Similarly, when one of West’s clients began working with U.S. Department of Agriculture Rural Development (USDARD) loans, West jumped at the opportunity to meet this new need. As soon as he heard about the new client, he made sure the asset manager knew he had extensive past experience working with USDA loans. West knew these loans were originated based on geography, and he knew where to find them. He had all the resources aligned to meet his client’s new needs.
Readying for the Next Market Cycle
West believes the economy is positioned for another downturn in the next two or three years.
“We’re at the top of the market again, and the next cycle is going to come when the political winds change,” he says. “Another downturn is going to come in the next two or three years.”
With REO inventory low and many agents leaving the REO market to pursue other sectors, it is the opportune time to get noticed by asset managers and strengthen your connections with them, West says. When the market takes another turn, you’ll be there.
“If you’re an REO agent, you just have to maintain, and it will come back. In the meantime, look to current clients, anticipate their needs, and get in front of them,” West says.
West offers these tips for REO agents:
Things NOT To Do To Maintain Your REO Business:
- Work with full-time investors.— This runs contrary to most thinking. Just about all AMs have a mandate to sell to owner occupants first. If I work with full- time investors, then there may be a question of whether I am trying to get the houses to them. I do not want that to be a question.
- Partner with competing asset managers.—Government agencies such as HUD are stating that they allow partnering agreement AM contracts. Some real estate brokers in the industry think this gives them the green light to find AMs to partner with and bid against the interests of their current employer/ contract holder for their own personal gain. We do not take that approach. Resist this temptation! I will never partner with a QX AM and will sign any non-compete, non-disclosure agreement.
Things To Do To Maintain Your REO Business:
- Know your current AMs. How can you expand within your current network?—What portfolios are your clients servicing? Are they competing for any new contracts? Anticipate their needs and project your capabilities to them. Are they taking a new direction in the industry, such as property management; and can you expand to meet their needs?
- Be an industry leader.—Share your experience with others. For example, I am certified to teach education classes on the VA home loan HUD sales process. I also volunteer for an organization that currently has 16 teaching events each year for veterans.
- Find a niche.—My biggest success came from finding a niche and dedicating my time and energy to that specific market. Between 2010 and 2015, my once sold $64 million in HUD sales. By understanding the basics of your market and business cycles, you can be prepared to serve your market as it changes.
- Follow the trends.—When bulk sales started taking over the REO market, I chose to get involved rather than sit on the sidelines. I helped put together everything needed for a nonprofit company to bid on a bulk sale. We helped them solicit all the parties needed for the transaction: servicer, asset manager, rental management company, etc.
- Give back. Volunteer.—Something I feel is important, which has also been emphasized in the industry lately, is giving back to your community. I helped organize and develop a veterans’ organization with a stated mission, “Increasing sustainable homeownership, financial literacy education, VA loan awareness, and economic opportunity for the active-military and veteran communities.” The Veterans Association of Real Estate Professionals increases home- ownership by increasing awareness of the VA home loan within the real estate and mortgage professional community.