BUYER S REP TODAY S. page 4. page 7. REO Properties. What Buyer s Reps Should Know LOOK INSIDE... REBAC Offerings at REALTORS Conference & Expo

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TODAY S BUYER S REP A publication of the Real Estate Buyer s Agent Council, Inc.

Realty, Willoughby Hills, Ohio With over forty years in real estate, Edward Bugos experience has made him a nationally-recognized expert in short sales and foreclosures, niches he has worked in long

Also a successful ABR, Bugos is a member of the REBAC Hall of Fame and co-author of the Short Sales and Foreclosure course, as well as REO Properties: Responsibilities, Education, and Opportunities

1 TODAY S BUYER S REP A publication of the Real Estate Buyer s Agent Council, Inc. A wholly-owned subsidiary of the National Association of REALTORS June 2012 Volume XXI Number 6 REO Properties What Buyer s Reps Should Know By Edward Bugos, ABR, BPOR, SFR Coldwell Banker Hunter Realty, Willoughby Hills, Ohio With over forty years in real estate, Edward Bugos experience has made him a nationally-recognized expert in short sales and foreclosures, niches he has worked in long before the market shift of recent years. Also a successful ABR, Bugos is a member of the REBAC Hall of Fame and co-author of the Short Sales and Foreclosure course, as well as REO Properties: Responsibilities, Education, and Opportunities for Real Estate Professionals. With his business partner, he closes over 150 foreclosure and short-sale transactions annually. A sad fact of today s real estate market is that distressed properties are all too common in many parts of the country. Hundreds of thousands of home mortgages fall somewhere along the spectrum from underwater to delinquent to imminent foreclosure. Even in areas where prices may have bottomed out, substantial shadow inventories could be waiting to hit the market. The extent of the problem varies dramatically from state to state. Late-2012 estimates placed the supply of shadow inventory from a low of 4 months in Washington, to 65 months in New Jersey. While heartbreaking stories of economic hardship often accompany this situation, it s also true that any action that slows the foreclosure process causes shadow inventories to grow. For many buyer s reps, REOs may be an unavoidable fact of life. Without doubt, these transactions require more work than conventional ones. But if your buyerclient insists upon pursuing an REO sale, you have a fiduciary responsibility to represent their best interests. How will you do that? LOOK INSIDE... REBAC Offerings at REALTORS Conference & Expo page 4 New Consumer One- Sheet: Traditional versus REO Transactions page 7 Continued on page 3

MEMBERSHIP UPDATE WORTH QUOTING... When people talk, listen completely. Most people never listen. Ernest Hemingway Did you Miss the REO Webinar?

If you missed the live event, you can still view a recording of his presentation in the Members area of REBAC.net.

Final Call for REBAC Hall of Fame Nominations Nominees are now being accepted for the 2012 REBAC Hall of Fame, to be inducted during the Networking and Awards Reception held at the REALTORS

2 MEMBERSHIP UPDATE WORTH QUOTING... When people talk, listen completely. Most people never listen. Ernest Hemingway Did you Miss the REO Webinar? This month s featured contributor, Ed Bugos, ABR, BPOR, SFR and REBAC Hall of Fame member, also treated REBAC members to a special webinar on Troubleshooting the REO Transaction on May 22. If you missed the live event, you can still view a recording of his presentation in the Members area of REBAC.net. Don t miss out on this opportunity to learn from a 40+ year veteran with 20+ years of REO experience and thousands of REO sales under his belt. Final Call for REBAC Hall of Fame Nominations Nominees are now being accepted for the 2012 REBAC Hall of Fame, to be inducted during the Networking and Awards Reception held at the REALTORS Conference & Expo this November. You can nominate any active member, including yourself, who holds either the ABR or ABRM SM designation, and who meets all other related criteria. The deadline for nominations is June 29. Please go to REBAC.net/nomination.cfm to learn more and download a nomination form. New REO Properties Course If this month s issue of Today s Buyer s Rep has raised your interest in gaining an in-depth understanding of listing and purchasing bank-owned properties, consider registering for our newest course REO Properties: Responsibilities, Education, and Opportunities for Real Estate Professionals, which debuted at NAR s Midyear Meetings in Washington, D.C. This course helps students adapt their core real estate skills in order to more effectively list and sell REO properties and to guide home buyers and investors in making more informed purchasing decisions. Learn how to monitor REO activity in your market, establish productive contacts with asset managers and avoid common pitfalls. The new REO course also counts as an elective credit for the ABR designation. You can take REO Properties: Responsibilities, Education, and Opportunities for Real Estate Professionals on November 8, 2012, at the REALTORS Conference & Expo in Orlando. (See pages 4 and 5 for more details.) Additional offerings will be announced soon. Connect online with fellow ABR s for news, tips and referrals! REBAC.net 2 TBR June 2012

REO Properties: What Buyer s Reps Should Know Continued from page 1 How to Track Local REO Trends The All-Important Counseling Session During your initial buyer s counseling session, you should be

3 REO Properties: What Buyer s Reps Should Know Continued from page 1 How to Track Local REO Trends The All-Important Counseling Session During your initial buyer s counseling session, you should be asking if bank-owned properties or short sales are something your buyer would consider in their home search. For most buyers, you ll need to explain all the common terminology of distressed property transactions and provide realistic expectations of likely scenarios before they can really answer this question. For every buyer who comes to us, our first job is to uncover what that client is looking for. We can never assume! Thinking you know what s best for your buyers is the fastest way to get into trouble with them. Use the buyer s counseling session to sort out what the buyer does and doesn t want to see on their house hunting event. With regard to REO properties, some are in very good condition and might be considered by a buyer. But some need so much work a buyer will not be interested. Again, the counseling session is essential for talking through these decisions. Without it, you are making yourself legitimately vulnerable to a buyer s complaint that you didn t live up to your fiduciary responsibilities and show them all homes that met their needs. The Other Side of the Street Some agents feel that listing experience enhances their ability to be a good buyer s agent. The reason is a matter of perspective to be effective in any transaction, you have to be capable of understanding the other party s perspective. In conventional transactions, for example, most buyer s reps have a good sense of how to write an offer in a way that encourages a win-win scenario. You ve walked in the listing agent s shoes and know when a buyer is crossing the line, asking for an unreasonable price or placing too many contingencies on the sale. But in an REO sale, all those normal rules change. The seller is a lender represented by an asset manager who prizes a quick cash sale. Properties are sold as is. An agent s job begins with one or more occupancy checks. Steps must be taken to remove anyone living there and/or their personal property. Everything must be handled in a particular way, so you don t overstep your bounds or walk into a potentially dangerous situation. These factors and many more create a very different set of challenges for REO listing agents. Even if you ve sold an REO before, you can t presume to understand another listing agent s perspective. Every lender uses a different format and makes agents jump through a different set of hoops. Truly, there s a good reason REOs are called UN-conventional sales. Fortunately, when NAR s Center for Specialized REALTOR Education developed the new REO Properties course, they understood the importance of thoroughly explaining both sides of the transaction. The first time I taught this course, in the pilot stage, participants were repeatedly surprised to learn the level of involvement for REO listing agents. Seriously, you do that?! became the frequent reaction. Buyer s Reps: Rules for Success When it comes to REOs, listing agents are responsible for the dirty work. Even so, asset management companies often award buyer s reps with a larger portion of the commission or extend incentives and bonuses to attract buyer business. That doesn t mean that a buyer s rep s job is easy. To reach the closing table, it s likely that you ll still need to put in extra effort relative to conventional transactions. Some of my top recommendations: Don t be an order taker. Educate your buyers on REO properties, starting with the buyer counseling session. Time and time again, problems arise that could have been avoided if buyers had been adequately coached by their agent earlier in the process. I m just doing what my buyer wants is not a good excuse. Help your buyers fully understand what they re getting into. Read the property sheets. This may sound obvious, but everyone s job would go much smoother if buyer s reps took time for this simple step. Too often we field questions from agents that are clearly spelled out in the documentation. Do your due diligence. Buyers don t have much recourse in an REO transaction, making it extremely important to research the property Continued on page 6 Want to stay up-to-date on REO developments in your state, county and city? Explore the data offered by these sites: OCC Mortgage Metrics Report occ.treas.gov/publications LPS Mortgage Monitor lpsvcs.com Local Area Unemployment Statistics (LAUS) bls.gov/lau Home Price Monitor, Inflation Watch, Metro- Area Unemployment, State Employment Trends realtor.org/research Housing Price Index fhfa.gov Foreclosure Trends Report realtytrac.com/trendcenter Negative Equity by State, Shadow Inventory corelogic.com Index of Percent of Single- Family REO Properties Sold to Owner-Occupant Buyers newvistareo.com/indexes TBR June

The REALTORS Conference & Expo Join us in Orlando November 9 12, 2012 Discover the ABR Magic!

400 exhibitors showcasing new products, services and ideas Exclusive REBAC Member Events REBAC and SRES Networking and Awards Reception Saturday, November 10, from 6:15 8:15pm Always a highlight of

Right after the ABR -sponsored General Session, head to the REBAC and SRES Reception to help induct the newest members of the Hall of Fame!

4 The REALTORS Conference & Expo Join us in Orlando November 9 12, 2012 Discover the ABR Magic! F Special buyer representation sessions F Numerous REBAC course offerings (details on next page) F Exclusive REBAC networking opportunities F Knowledgeable speakers and exciting entertainment F Over 400 exhibitors showcasing new products, services and ideas Exclusive REBAC Member Events REBAC and SRES Networking and Awards Reception Saturday, November 10, from 6:15 8:15pm Always a highlight of the REALTORS Conference & Expo social scene, this year s Reception promises to be better than ever. Right after the ABR -sponsored General Session, head to the REBAC and SRES Reception to help induct the newest members of the Hall of Fame! To Register or Learn More For a complete roster of conference events, or to register, please visit REBAC.net/annual.cfm. For questions, contact REBAC at or REBAC@realtors.org. NAR/REBAC complies with the Americans with Disabilities Act. Anyone needing special assistance to participate should notify REBAC in advance at REBAC Orange Juice Sweepstakes! Be sure to select REBAC/SRES as your primary affiliation when you register, so you ll automatically be entered in our sweepstakes. Prizes are: Freshly Squeezed F One night s stay at the Rosen Plaza Hotel, REBAC s 2012 Conference & Expo Headquarters F 4 VIP tickets to the ABR -sponsored General Session with Afterburner, Inc. F Full Early Bird REALTORS Conference & Expo registration ($350 Value) F $200 gift certificate to the REBAC Print Shop No Pulp F 2 VIP tickets to the ABR -sponsored General Session with Afterburner, Inc. F Full Early Bird REALTORS Conference & Expo registration ($350 Value) Plus Calcium F 2 VIP tickets to the ABR -sponsored General Session with Afterburner, Inc. F Full Early Bird REALTORS Conference & Expo registration ($350 Value) Winning entries will be drawn October 15, Please note that REBAC reserves the right to substitute alternate prizes of equal value. Complete sweepstakes rules are available upon request to REBAC. 4 TBR June 2012

REBAC Course Offerings All courses will be held at the Rosen Plaza Hotel. Visit REBAC.net/annual.cfm for updated information regarding REBAC course offerings and the 2012 REALTORS Conference and Expo.

(All instructors must complete 1 oneday recertification workshop every 2 years.

5 REBAC Course Offerings All courses will be held at the Rosen Plaza Hotel. Visit REBAC.net/annual.cfm for updated information regarding REBAC course offerings and the 2012 REALTORS Conference and Expo. Instructor Re-certification Workshop Wednesday, November 7 Trainer: Lynn Madison, ABR, SFR Required for REBAC Instructors. (All instructors must complete 1 oneday recertification workshop every 2 years.) The morning session will concentrate on a review of course updates to help instructors keep their course sessions current, vital and viable. The afternoon session is to be determined. Registration fee: Complimentary for REBAC Instructors, but registration is required. Short Sales and Foreclosures: What Real Estate Professionals Need to Know Wednesday, November 7 Trainer: TBD For many real estate professionals, short sales and foreclosures represent the new traditional real estate transaction. Knowing how to maneuver the complexities of short sales as well as how to identify the distinct real estate opportunities in distressed properties are not merely good skills to have in today s market they are critical. Registration fee: $95 on or before October 12, 2012 and $115 thereafter. Broker Price Opinions (BPOs): The Agent s Role in the Valuation Process Thursday, November 8 Trainers: TBD Whether you are experienced at preparing broker price opinions or are new to the business, this new course from NAR will provide you with knowledge and skills to reduce your risk and increase your opportunities by creating professional and accurate BPOs. Registration fee: $75 on or before October 12, 2012 and $95 thereafter. REO Properties: Responsibilities, Education, and Opportunities for Real Estate Professionals Thursday, November 8 Trainers: TBD Take advantage of business opportunities presented by single family homes and small multifamily REO properties. Learn how to monitor REO activity in your market, make productive contacts with asset managers, follow through on transactions, and adapt your core real estate skills to list and sell REO properties as well as guide buyers home buyers and investors in making informed decisions and avoiding common pitfalls. Registration fee: $75 on or before October 12, 2012 and $95 thereafter. GREEN 300: Greening Your Real Estate Business Thursday, November 8 Trainers: TBD Now more than ever, current and future homeowners are motivated to understand green cost savings and health benefits. This course gives professionals the training they need to represent today s sellers and buyers. Green 300: Greening Your Real Estate Business is the third day of three required courses comprising the curriculum of NAR s Green Designation, the only designation of its kind recognized by the NATIONAL ASSOCIATION OF REALTORS. Registration fee: $75 on or before October 12, 2012 and $95 thereafter. TBR June

6 Continued from page 3 REO Properties: What Buyer s Reps Should Know condition and history. Look for outstanding violations, code issues, liens, back taxes, unpaid utility bills, homeowner association fees and anything else that could become a liability for your client. Also, make sure your buyer can use the property as they intend to. For example, if they re investing in a condo, check the owner/renter ratio and determine if there are any rental restrictions for investors. If your buyer wants to buy and live in a fixer-upper using FHA financing, make sure they understand and meet the criteria for the 203(k) rehab program. Stay on top of deadlines. A missed deadline can constitute a breach of contract and cause an asset manager to cancel the deal. For buyers, closing dates are firm. Problems can be avoided with good up-front planning. Consider everything that must be done and submit your offer with a feasible closing date. While an asset manager may grant one extension, they may also charge a per diem fee, perhaps $100 a day. Are You Up to the Task? Not everyone is cut out for the REO business. I like it, but in large part it s because I love challenges. Doing something that others say is impossible gives me great satisfaction. Plus, I feel like I can make a positive difference for banks and for buyers. The best advice I can give buyer s reps is to become thoroughly educated first. Once you really understand the ins and outs of these unique transactions, you ll be able to decide if you want to work with buyers interested in REOs. If not, your best decision may be to refer their business to a qualified agent. In either case, you re exhibiting the very best in buyer representation services by becoming fully informed and empowering buyers to meet their needs. If you haven t been fully educated in REOs, there is even more reason to refer this business to someone else. After all, it s much better to earn a referral fee than nothing if the transaction never closes...not to mention the risk of producing a very unhappy client, eager to complain to others or take action against you. Some agents opt to test the waters by conducting Broker Price Opinions (BPOs). Asset managers rely on BPOs from two or three real estate professionals, in addition to the listing agent s BPO, to decide whether to put a property on the market, walk away, repair it, leave it as-is, or whether to accept or counter an offer. BPOs may be updated periodically until the property sells. Learning how to conduct accurate BPOs can be a good way to get your foot in the door with REO asset managers. To learn more, I highly recommend two courses. REO Properties: Responsibilities, Education, and Opportunities for Real Estate Professionals initially debuted at NAR s Midyear Meetings. It will also be offered at the REALTORS Conference & Expo, November 9 12 in Orlando. (More details on pages 4 and 5.) For agents interested in Broker Price Opinions, enroll in BPOs: The Agent s Role in the Valuation Process. This course will also be offered in Orlando, or can be taken in various classroom settings and online. Visit training4re.com for details. New Consumer One-Sheet Use this handout to discuss REO considerations with buyer-clients. Print more copies and view other consumer one-sheets in the Members area of REBAC.net. 6 TBR June 2012

Traditional versus REO Transactions Defaulted properties are a sad fact of the real estate market. Mortgage foreclosures are a multiple-step process, presenting various buying opportunities.

7 Traditional versus REO Transactions Defaulted properties are a sad fact of the real estate market. Mortgage foreclosures are a multiple-step process, presenting various buying opportunities. When a foreclosure sale is not successful, the lender assumes ownership and the property is now called real estate owned, or simply REO. If you are interested in purchasing an REO property, it s important to understand several distinctions between REOs and traditional transactions, outlined below: Traditional Transaction Seller - is a homeowner or investor who wants the right price, favorable terms and timely closing. REO Transaction Seller - is a lender, represented by an asset management company, that wants a quick sale at or above a bottomline price. Listing Agent - chosen by the seller. Occupancy - the seller vacates the property on or before closing. Property Condition - sale-ready condition, possibly including upgrades to enhance its value; cash or credit at closing for repairs. Contingencies - are negotiable and may include a property inspection, the sale of current home, mortgage approval, or final walk through. Offers - the buyer offers a sales contract, along with earnest money. The seller can accept, reject or counteroffer. Listing Agent - assigned by the asset manager. Occupancy - the property may be vacant, abandoned, or in foreclosure limbo; eviction of former owner/tenants may be needed. Property Condition - varies greatly. May be at risk for vandalism and damage; possible price reduction to offset repairs. Contingencies - property is offered as-is, where-is. An inspection and final walk through are allowed. Offers - the buyer s sales contract must include proof of funds or pre-approval. The seller can accept, reject, counter, ask for highest and best offer, or make the offer subject to upper management approval. Negotiations - include price, terms, closing date and contingencies. Goal is to create a win-win for the buyer and seller. Disclosures - government-mandated disclosures along with a seller s disclosure. Closing - is negotiable; seller may agree to extend. Buyer can specify title company. Negotiations - only includes price and closing date. Buyer is looking for a bargain; seller wants a bottom-line price and loss mitigation. Disclosures - government-mandated disclosures. No seller s disclosure, unless defects were found in prior inspections. Closing - firm closing date, with per diem charged for late closing. Seller specifies title company. Each of these factors has important implications for buyers. Before proceeding, ask your Accredited Buyer s Representative to help you understand your options and decide whether an REO purchase is right for you. The Accredited Buyer s Representative (ABR ) designation is awarded by the Real Estate Buyer s Agent Council (REBAC), a subsidiary of the National Association of REALTORS (NAR). To learn more about REBAC and access various home buyer resources, please visit REBAC.net.

8 TODAY S BUYER S REP June 2012 Volume XXI Number 6 Plan Now for the 2012 National Conference! It s not too soon to make your plans for the annual REALTORS Conference & Expo, November 9 12 in Orlando, Florida. Registration already opened on May 3. See pages 4 5 for details on REBAC s educational offerings. When you register, be sure to indicate REBAC/SRES as your primary affiliation. Why? First, you ll help REBAC receive a larger royalty, which helps finance REBAC programs and events at no cost to members. Additionally, you ll be automatically entered in our REBAC Orange Juice Sweepstakes and be eligible to win prizes that include complimentary conference registrations, free hotel accommodations, gift certificates for the REBAC Print Shop, and more. Learn more at REBAC.net/annual.cfm. Real Estate Buyer s Agent Council, Inc. 430 North Michigan Avenue Chicago, IL REBAC@realtors.org

BUYER S REP TODAY S. Dear Buyer: What Do I Do for You? page 3. page 4. page 5. page 6. page 7 LOOK INSIDE... Help Arrange Financing

BUYER S REP TODAY S. Dear Buyer: What Do I Do for You? page 3. page 4. page 5. page 6. page 7 LOOK INSIDE... Help Arrange Financing TODAY S BUYER S REP A publication of the Real Estate Buyer s Agent Council, Inc. A wholly-owned subsidiary of the National Association of REALTORS October 2017 Volume XXVI Number 10 Dear Buyer: What Do