John Mayer's Real Estate Blog: Congress to break up REO "Listing Agent" Monopoly

Congress to break up REO "Listing Agent" Monopoly

I came across this very interesting article and thought I would share it with you. The sooner we level the REO playing field the better.

List, buy, sell


02-03-2009 - Congress to break up REO "Listing Agent" Monopoly

From national correspondent: Ms.Catarina Huntington

That's the headline Realtors can only hope for at this point in time. A more proportioned assignment of REO (bank foreclosures) listings would dramatically enhance the financial landscape for the struggling Realtor industry. However, as of January 2009, less than 1/3 of 1% of Realtors continue to maintain a stranglehold on REO markets, while the rest of the industry sinks in despair. For now, the "80-20 Rule" (20% of Realtors accounting for 80% of business) is a distant memory. "It seems like the new rule should be changed to the "80-1 Rule", where less than 1% of the agents are closing 80% of the deals" says Julie Tveit a real estate Broker for LaRue Realty in Minnesota.

An investigation into the facts surrounding the REO listing market is interesting....

2 million foreclosures up for grabs

Nationwide the "private club" (as they're called) of REO Agents currently monopolizes about 1.7 million active REO listings. In 2009, 2.0 million more properties will foreclose and according to a recent report by "Credit Suisse" the US market will be averaging 2 + million foreclosures over each of the next 4 years.

Estimates are that 150,000 Realtors nationwide, provided the pertinent education, would be very qualified listing agents of REO properties. There are no specific prerequisites to become an REO Agent. Qualified Realtors simply need to possess a willingness to enter the REO arena and be thoroughly educated on the unique aspects of listing bank owned foreclosures.

Hence, there are 150,000 active full time Realtors in the United States with 2 million foreclosure listings "up for grabs". If divided equally each Realtor would close 13 REO listings per year for the next 4 years.

REO Agents Dominate Market

Instead roughly 5800 Realtors Nationwide sold 1.6 million REO homes in 2008. That translates into an average of 22 closed listings per REO Agent per month. That certainly doesn't sound like a "spread the wealth" philosophy does it? My research indicates that the REO industry's current model provides for a single beneficiary: REO Listing Agents, and unfortunately this model comes at the expense of the lenders themselves, frustrated buyers and the tens of thousands of agents left out to dry.

The vast majority of REO Agents are overwhelmed with inventory and under staffed. Realtors "in the field" showing REO properties tell me that they understand this all to well. "I am to the point now, in working with buyers, that I have to pre-screen listing agents that have REO listings. If I know that the listing agent is going to be difficult to work with, on any level, then I pass that information along to my buyers. There are too many properties on the market to waste time with difficult transactions" say Ms. Tviet.

The systemic problem within the REO Agent "underground" appears to have a multitude of negative consequences which result in longer market times and lower sale prices, say numerous industry sources. Ms. Tviet, "It's just common sense, if your marketing is poor, your correspondence with other Realtors is marginal and you have a reputation as difficult to work with, it inevitably effects the lenders bottom line".

Private enterprise is fixed on changing the dynamic

In a brief telephone interview I conducted with Ms. Simona Miu a spokeswoman for the ForeclosureU.com a private educational institute established in 2005, Miu stated:

"ForeclosureU is committed to changing all of that in 2009. Stating that ForeclosureU.com is going "at the establishment head on". Miu says that ForeclosureU is launching a national advertising campaign in various targeted media outlets promoting the importance of their "Certified Foreclosure Specialist Designation and Training for Realtors".…."In 2009 our sole focus will be dedicated to educating and arming 25000 Realtors to earn their fair share and rights to the REO pie……Graduates of the "CFS" Training will receive everything required to meet their career goals and seize these emerging markets".

Miu went on to provide some of the ways ForeclosureU intends on accomplishing that challenging feat: "CFS" graduates are provided unprecedented (a) training on listing REO property but it doesn't stop there (b) "CFS" graduates are entered into the National Database of "CFS" agents (c) which will be facilitated by an aggressive print/electronic and Internet marketing campaign (promoting its "CFS" agents) targeting the entire default (REO) industry (d) In addition a proprietary list of "REO asset managers" and their direct contact information will be made available to all "CFS" graduates."

Miu stated that ForeclosureU is filling the gapping holes left by local, state and national educational platforms that have failed Realtors miserably in providing current educational requirements.

Conclusion

If ForeclosureU and companies like them truly step up and provide Realtors the tools they need there is little doubt that, at least in this columnists opinion, Realtors can surely change the course of their careers and maybe even the course of the foreclosure debacle as a whole.

On a personal note, I am pulling for ForeclosureU and any innovative new business that has the capacity to help this beleaguered economy. Small business and product/service innovation is the only viable macro solution to this countries economic downward spiral. Realtors are a part of that solution. Getting our political leaders to understand this is a whole other conundrum.

Statistical data and additional content provided thanks to: Real Estate Trac, City Data Co, U.S. Association of Real Estate Agents, Foreclosure University, LaRue Realty, Zillow Blog




Comment balloon 8 commentsJohn Mayer • February 06 2009 03:17PM

Comments

John, great post, I always new that REO Agents dominated the market but I had no idea to what extent. Your right about the "wealth" not being spread and most REO agents being overwhelmed. Try getting an REO Agent on the phone or ask them about a property, they either don't call you back or if they do they know nothing about the home. They got the listing, slapped a lock box on it and that's it.

Thanks for the information

Posted by Christopher Bonta, Realtor, Integrity and Honesty (The Bean Group) over 10 years ago

Well its all true..but I don;t think anyone is going to do anything about it.  I signed the petition...you can see it here: www.petitiononline.com/lkjsdf/petition.html

I am also going to put my congressman on notice about this. 

I do not know anything about ForeclosureU.com but they better have a lot of money behind them to lace the pockets of our elected servants.

 

JG

Posted by Jake Gephart over 10 years ago

It's time to become vigilant.  Not only are a select few Brokers/Agents receiving REO Listings, but many of them are so arrogant that they boast on their websites that they are a primary source for obtaining them.

The reality is that the process in which Investors/Lenders delegate REO's remains to be 'business as usual'.  What is not being taken into consideration is how their vendors are disseminating the REO Listings - and this is magnified by the overwhelming volume of foreclosed properties.

Many of the established vendors have opened the flood-gates for Brokers and Agents to register and potnetially be placed on some rotation for assigned REO Listings; the only problem is that they may have hundreds and/or even thousands of registered broker vendors.  It's posted on one vendor site that they have 80,000+ registered brokers/agents.

Other 'so-called' vendors are trying to capitalize by charging fees to become a 'registered' vendor.  The best description for all of this can be summed up as VERY... Wild, Wild West.  Anything goes until such time as they are either stopped... or the country runs out of REO's!  

REO SPY is gearing up to expose the truths about the monopoly.  Visit the REO SPY blog that has recently been launched and spread the word:  http://reomonopoly.blogspot.com/

Also, look for our www.REOspy.com website to launch soon.

REO SPY

Posted by REO SPY over 10 years ago

Does congress really have the power to break up that monopoly

Posted by Konnie Mac McCarthy, Broker/Owner - VA & MD "Time To Get A Move On!" (MacNificent Properties, LLC) over 10 years ago

Umm, folks?

 

Considering that our beloved NAR has been the #1 provider of PAC money to the congress-critters every single year since its inception, we should probably not be griping too loudly or too publicly about money "in the pockets of our elected officials"

 

I'm just sayin'...

Posted by Ike Ahnoklast over 9 years ago

Umm, folks?

 

Considering that our beloved NAR has been the #1 provider of PAC money to the congress-critters every single year since its inception, we should probably not be griping too loudly or too publicly about money "in the pockets of our elected officials"

 

I'm just sayin'...

Posted by Ike Ahnoklast over 9 years ago

Hi Jhon,

Interesting post.

It is now 2011 and I don't see anything that looks like what you mentioned happening.

The closest thing is that FNMA and some others send out secret shoppers to check out the properties condition, the marketing and the agent response to inquiries.

Phil

Posted by Phil Leng, Phil Leng - Retired (Retired) over 8 years ago

The pillaging of the middle class by the industry will come back to haunt everyone. All of those middle class and retirees who are now underwater will simply default adding to the monopoly problem. They would have put that money back into the economy, and I don't see the industry fighting for them. When I sell my home, I won't buy another. I'll rent and put my money in gold.

Posted by AnneR over 8 years ago

Participate