Realty Direct REO Secrets

REO Secrets: 

REO Secrets What REO agents (& their clients) don't want you to know © Copyright 2010-11, Realty Direct Naples. All Rights Reserved.

Background: 

Background Adrian Petrila: 500+ distress homes sold 15,000+ BPOs completed $1M GCI producer Preferred vendor for multiple REO companies Founder & CEO www.BPOGenius.com Member REO4Kids charity group Owner 3 Realty Direct brokerages Member CP Diamond mastermind

Listing REO Properties: 

Listing REO Properties Who in here wishes they listed REO properties? Why? How much money do you think REO agents make? If you had to chose between the 2 following REO businesses, which would you chose?

REO Businesses: 

REO Businesses Actual REO Business #1: ~50-75 listings carried, maintained & managed at any given time ~125 REO listings sold annually 9 fulltime staff ($250K annual payroll + health benefits, plus payroll taxes + insurance +++) GCI $577,012.66 Minus $527,662.66 in expenses Equals Net Profit of $49,350 (8.55%)

REO Businesses: 

REO Businesses Actual REO Business #2: 0 listings carried, maintained & managed at any given time ~50 REO properties sold annually 1 fulltime staff ($35K annual payroll) GCI $326,469.19 Minus $213,480.35 in expenses Equals Net Profit of $112,988.84 (34.61%)

REO Businesses: 

REO Businesses Which of these REO business would you like to have? REO Business #1 High volume & high GCI High expenses & high overhead High P.E.T.A (Pain In the A…) factor Low net profit & low reward

REO Businesses: 

REO Businesses Which of these REO business would you like to have? REO Business #2 Medium volume & commissions Medium expenses & overhead Low P.E.T.A (Pain In the A…) factor High reward, more than double net profit vs. REO business #1

REO Secret #1: 

REO Secret #1 If you want to make money in REO… …don't list REOs! High intensity business (60-80hrs/week) High cost of doing business (staff, offices, property management, insurance, etc.) Low profit margins, generally 7-12% REO agents wont tell you this – misery loves company 

REO Secret #1: 

REO Secret #1 If you want to make money in REO… …don't list REOs… …but sell REOs! Low intensity business (~40hrs/week) Low cost of doing business (minimal if any staff, offices, listing supplies, etc.) High profit margins, generally 35-50% or higher

REO Secret #1: 

REO Secret #1 Both of the REO businesses examples are real businesses that I operate with real numbers of our 2010 fiscal year Business #1 – REO listing department Business #2 – REO sales department (buyer sides) So what? How does this help you?

REO Secret #2: 

REO Secret #2 You can have an REO sales business without ever listing an REO! All the financial benefits Without any of the P.E.T.A. (staff, overhead, etc.)

REO Secret #2: 

REO Secret #2 You can have market REO listings without ever listing an REO! Free list of REOs HUD homes Free list of government owned (HUD) homes Specific homes on CL, postlets & print advertising REO listings ads for a specific area How?

Slide 13: 

Direct Response Advertising Effective Marketing : Talks to and about your prospects Gives prospects real benefits Gives prospects compelling reasons to call you to get more information Gives prospects a non-threatening way to get it

Slide 14: 

Direct Response Advertising 5 Things You Must Do : 1. ) Understand what benefits your prospects want & offer then in your ad (e.g. “ free list of bank owned homes ”, “free list HUD homes” or “ free list of REOs under $100K ”, “free list of luxury foreclosures”, etc.) 2. ) Communicate these benefits in an attention-grabbing, compelling and motivating manner (e.g. “ Public Notice ”, “Distress Sales”, “Motivated Seller”)

Slide 15: 

Direct Response Advertising 5 Things You Must Do : 3.) Make an offer that has universal appeal to your defined target; specific enough that it attracts your prospects, but not so specific it eliminates some of them (list of foreclosures vs. list of homes) 4.) Make a soft offer that is non-threatening for prospects to respond to (“ Free Report ”, “ Free list with pictures ”) 5.) Make it easy and non-threatening for your prospects to leave their name & contact info (i.e. 800 #s, websites & landing pages)

Slide 16: 

REO Classified & Display Ads Fly head-on into your prospect’s advertising radar : OK to look like an ad because the classified section is ALL advertising Enhance your ad with borders, icons, bolding, etc. to standout off the page from all other ads Do not make it look like an agent ad by making your name or company name more prominent than it has to be Use attention grabbing headlines

Slide 17: 

REO Classified & Display Ads Effective REO headlines should relate to : Geographic area Unique type of property Type of prospect

Slide 18: 

REO Classified & Display Ads Effective headlines relate to : Geographic area – you prospect more than likely has an idea of what area they want to move into. If your first words identify the area, they will stop to look at your ad: Olde Naples Naples Park Golden Gate Estates Pelican Marsh

Slide 19: 

REP Classified & Display Ads Effective headlines relate to : Unique types of REO properties – there are certain unique types of homes that have a special appeal to certain groups of prospects: Fixer Uppers & Handyman Specials Luxury Homes Waterfront (lake, bay, river, gulf, etc.) Golf Course Homes Homes on Acreage Homes with Pool

Slide 20: 

REO Classified & Display Ads Effective headlines relate to : Type of REO buyers – specific types of prospects will see themselves in your ads and they will respond if you call out to them: Luxury Buyers Move-up Buyers (may have a home to sell) 1 st Time Buyers Vacation/2 nd Home Buyers Investors

Slide 21: 

REO Classified & Display Ads Lastly, important : You Can’t Sell A House With an Ad AND You Can’t Sell THE House With the Ad So, don’t try to do this… …the ONLY reason to run a house ad is to get prospects to call you and sell them ANY house

Slide 22: 

REO Classified & Display Ads Examples : Can be run as inexpensive classified or display ads Can be used to prospect for REO buyers

Slide 23: 

Example REO Buyers Ads BANK OWNED CONDOS Receive a FREE list with pictures of Bank Owned Condos: www.TampaBankCondos.com Realty Direct Naples LUXURE BANK HOMES Free list with pictures of bank owned homes from $500,000 and up . www.NaplesLuxuryREOs.com Realty Direct Naples RENTERS Stop Paying Your Landlord’s Mortgage Own a Bank Owned Foreclosure for Less than You Pay in Rent www.NaplesWhyRent.com Realty Direct Naples BANK OWNED HOMES Distress Sales & Bank Foreclosures Receive a FREE list with pictures: www.TampaBankHomes.com Realty Direct Naples DISTRESS SALES Free List with Pictures of Bank Foreclosures and Distress Properties. www.NaplesDistressSale.com Realty Direct Naples BANK OWNED GOLF HOMES Free list with pictures of area homes for sales with golf course views : www.NaplesGolfREOs.com Realty Direct Naples

Slide 24: 

CraigsList.com FREE, FREE, FREE You can use the same ads as the classified & display ad examples You can post multiple ads per day You can use plain black & white text ads You can use colorful eye-catching ads You can use generic real estate ads You can use specific property ads Examples:

Marketing HUD Homes: 

Marketing HUD Homes OK to advertise properties that are on the market for sale to the general public on the Internet, but only at the listed price Buyer’s Brokers are NOT allowed to imply that they have an “exclusive right to sell” listing on any HUD-owned property All ads must use the proper terminology: “HUD Homes,” “HUD Owned” and “HUD Acquired” NEVER use the term “HUD Foreclosed” or “repo” Any advertisement must contain the familiar Equal Housing Opportunity logo

Marketing HUD Homes – FREE CraigsList Ads: 

Marketing HUD Homes – FREE CraigsList Ads

Marketing HUD Homes – Bandit Signs: 

Marketing HUD Homes – Bandit Signs

Marketing HUD Homes – Classified/Display Ads: 

Marketing HUD Homes – Classified/Display Ads PUBLIC NOTICE GOVERNMENT & HUD OWNED HOMES $77,000-300,000 with as little as $1,000 Down Payment. Receive a FREE list with pictures of all Naples Area HUD homes for sale: www.NaplesHUD.com Realty Direct Naples

Slide 35: 

HUD – Listing Tools www.Postlets.com Free, Free, Free! Creates HTML code for CL property ads Syndicates your property ad to multiple online classified websites (Google, Yahoo, Trulia, Oodle, Facebook, Twitter, etc.) Provides detailed report to local schools near your property Free…

Slide 39: 

REO Landing Pages Use unique URLs in your ads to track effectiveness Redirect the URL to your website or specific page on your website The landing page should mirror the message of the ad The landing page should be designed to capture the lead – not give away free info Website & Landing Page examples:

REO Secret #3 – The Offer: 

REO Secret #3 – The Offer In today’s low inventory high demand market your offer must stand out from the crowd Earnest Money Deposit (EMD) – the higher, the better, minimum of 1% of offer price Inspection/Due Diligence Period – the shorter, the better, maximum of 7 days Financing – cash is king, but if your buyer must finance, have a full pre-qualification with only minimal contingencies (executed contract, appraisal, etc.) Closing Date – the sooner, the better, no more than 30 days out

REO Secret #4 – “As-Is”: 

REO Secret #4 – “As-Is” Almost all REOs are sold “As-Is”, or so REO agents what you to believe Repairs are time consuming for REO agents They must to get 2-3 bids They must to coordinate contractors They must inspect and provide before & after pictures Repairs are costly for REO agents They must pay for the repairs out of pocked They must file for and wait 30-60 days to get reimbursed by the seller

REO Secret #4 – “As-Is”: 

REO Secret #4 – “As-Is” “As-Is” for financed deals If you have a cash buyer, the REO seller will not be inclined to make repairs If you have a financed buyer, the seller may have to make repairs to save your and any other financed deal FHA/VA have “lender required” repair stipulations to fund the loan FHA appraisals stay on file for 6 months – if they don’t make the repairs for your buyer, they will not be able to sell to any other FHA buyer without making the repairs for 6 months!

REO Secret #4 – “As-Is”: 

REO Secret #4 – “As-Is” “As-Is” for financed deals If they don’t make repairs for your buyer, they will have to: remarket the property wait for a new buyer increase their DOM (bad for the agent and asset manager’s score) Increase their carrying cost (each days costs ~$150) hope for a cash buyer who won’t pay as much as your financed buyer who can close as soon as the repairs are completed

REO Secrets – Summary: 

REO Secrets – Summary Listing REOs is a high effort, low profit margin business You can market and sell REOs even if you don’t have REO listings Your offer must appeal to the seller’s low hassle, quick closing & few contingencies sensibilities to set you apart from the competition “As-Is” is not always “As-Is”

Slide 50: 

Q&A For a copy of this entire presentation and the back script, please e-mail Derek Carlson: derek@RealtyDirect.com Materials are also available for download on the Realty Direct Tampa's intranet. Question and Answer Session