Ten Things That REO Asset Managers Hate! 8. Bad record keeping: “Sorry about that late utility bill reimbursement request”!

Many REO companies require the real estate agent to turn-on/off the utilities (water, electric, gas, etc.) for a vacant house before it goes on the market. This would mean that the agent will call or go down to the utility company and start or stop a service. The agent will pay, out of her own pocket, the initial service establishment fee and then the monthly bill until she sells the property. The agent then turns around and sends in a reimbursement request to the Asset Manager (AM) or the accounting department (via the platform the asset is on).

Pretty simple, unless the agent is unorganized or has poor accounting practices. Depending on the number of assets an agent is handling at one time, things can get out of hand in a hurry. Let’s just say, the real estate agent has 10 houses to sell and has to get services for all ten of the properties turn-on. The properties could be in different cities with different utility companies. The agent could have several REO companies or asset management companies that have different protocols to follow, including strict time-tables in which to submit reimbursement requests.

The solution of course is organization which means a superb asset management tool or software. Yes, it cost money to get a good asset management software tool, but the alternative is late or missed or even incorrect reimbursement requests. Often if you’re late with a request, they will deny the reimbursement, which means you eat the utility fee or bill. This practice will obviously hurt your profitability and if you take it out on the AM, then you can fray that relationship. Bottom line real estate agent, go out and pay the money for a good accounting tool and stay on top of your business!

A Good Time To Build A wall!

In between sitting for the California bar exam and waiting for the REO market to ramp up, I decided to resurrect an old craft! In my life before REO and luxury real estate, I ran a construction company in California which specialized in masonry block walls.

So, I decided to get the crew out (my kids) and build a wall around my house. Not quite done yet, but it is coming together nicely. It’s funny how some things you learn, stick. I had no problem laying block again, however I did have to put on gloves after wearing holes into my fingers, after the first day.

I do enjoy the physical work and the feeling of accomplishment one gets at the end of the day as you can see what you built. However, the worst part of the job was dealing with clients (not all of them). One tipped block at the bottom of the wall could me a loss profit on the job. Thus, I would never trade building walls for a living for what I do now (real estate). I love the real estate life and if I miss building walls, I can always go into the back yard and build one, that is, build one for myself without the hassle of a crazy client!

Ten Things That REO Asset Managers Hate! 7. Real Estate Agents who never answer their phone (or return calls).

Of course, today, the phone is not as important as it has been in the past with our modern technology (texts, email, etc.). However, there are times when the asset manager (AM) needs to talk with their agent and either they have something very specific to say, where the reply from the agent (along with the tone, steadiness of voice, inflections) or a rapid back-and-forth with the agent is really important. Here, an email or text will not work, the AM needs to hear you in real time. Agents that outsource most all their REO business and are regularly “out of pocket” or cannot be reached by the AM, are doing the asset management company a disservice.

While on a trip to Europe last year (that’s me in the above pic on the phone with a client as I was getting ready to tour the Thames river in London with my daughter), a panicked client “just had to talk with me”. The deal was falling through because of their financing, my buyer had lost confidence in the lender and was threatening to “walk”. After a few phone calls, the client was calmed and the lender and client reconciled, the deal closed nicely just weeks later. No, I did not want to take the call while getting ready to stream down the beautiful Thames river to gawk at the spectacular tower bridge and famous London bridge (🎵🎵London bridge is falling down, falling down, falling down🎵🎵). So, since I did not leave an agent in place to take care of my business before I left, it was on me to take calls and service my clients on vacation. However, next time I will make plans to leave things to a competent agent in my stead.

It is our job (real estate agent) to be there for the AM, that may mean taking a cell phone on vacation or assigning your properties to a competent agent while you are out of town. Just like any other business, we have clients and at times those clients really need us, they need to talk to us. Do your job agent and be accessible and reliable! By the way AM’s will love you for it and it is a great way to see your REO business grow.

Ten Things That REO Asset Managers Hate! 6. Low-ball Valuations

There is a natural tension between what a REO asset manager wants to sell the house for and what the REO agent wants to sell it for. The REO asset manager is charged with getting the highest possible price for the asset and the agent just wants to sell the property ASAP. The asset manager will get higher marks for getting more money on the house, but the agent will suffer if the house is priced to high and she cannot sell it. Every agent has a scorecard that the REO company assigns them and the higher the score for the agent the more listings they will receive. of course the opposite is true, if the agents cannot sell the properties, then the score will drop and less listings will be assigned to the agent. The agent will also be at risk of having current listings reassigned to another agent because they are having trouble moving the asset, yikes!

So the natural tendency is for the agent to price the property lower so they can move it alot faster and become a listing agent rockstar. But, AM’s know all about this strategy and if their boss see’s a continual underperformance in closing prices, the asset manager will face scrutiny. The solution, be honest and price the asset based on the market (your two BPO’s and a full appraisal) and then get out there and do your job (market the property like crazy). If the agent prices the property right (not to low or to high) everyone wins, the agent moves the asset in a reasonable time and the AM sells it for top dollar.