Get to Know the NRBA
Get to know who and what the NRBA really is with this brief inside look at just some of the information the NRBA regularly provides to our members, including private “members only” secrets about REO and running your real estate business more profitably.
This is the key summary of the webinar:
In this recent NRBA webinar, directors highlighted the organization's positive approach to REO properties. They focus on helping distressed homebuyers, providing credit counseling and support for re-entering homeownership. NRBA agents work to stabilize communities, collaborating with municipalities and police to protect properties. They prioritize retail buyers, especially new Americans and first-time buyers seeking to escape rising rents. Utilizing virtual tours and engaging social media are recommended for effective marketing. The NRBA emphasizes honesty, ethics, and collaboration, and joining requires demonstrating expertise and strong references. The webinar also covered current market trends, with a rising number of default filings. NRBA agents control 10% of transactions, showcasing their efficient deal-making. Overall, the NRBA offers valuable tools and support for brokers and agents in the REO industry.
These are quotes and extracts taken from the panel.
"The NRBA is trying to position REO as a positive experience. Could you talk about that philosophy and how you guys do that?"
Making it positive is a stretch. It's trying to make it as least harmful as damaging. That's really what this is. It's a bad situation. We're trying to help people out of it. The key to this is dealing with distressed home buyers, understanding these people are very upset and even more than upset, they're scared. Just a lot of them don't have any place to go. They don't know what to do. So a lot of our job that people don't understand is working with the occupants of these homes once they've been foreclosed upon and trying to help them relocate, get into another home, usually as a rental. But we also want to get them on the path back to home ownership again with credit counseling, getting them in touch with a HUD housing counselor. A lot of times they stay in the house because they have nowhere to go and can't afford it.
So a lot of us do first look programs, a lot of the clients participate in those, where we want to create new homeownership opportunities which benefit the neighborhood. It gives us stable neighborhoods, less crime. It helps people build equity and real wealth in some of these communities. That's really what we're about.
An REO property is really a pot of gold. It's a tremendous opportunity to stabilize the community, improve property values, and most of all promote home ownership. We really make a positive impact in the communities with these properties. We had a property on 120th and Yale, the city of Chicago; nobody mowed their lawn the entire block. The grass was very high with garbage all over. We took over a property, and we started making improvements to the property. We mow the lawn and guess what happened? Everybody throughout the block started mowing their lawn.
TIP: When you get in an REO property, introduce yourself to the neighbors
We deal with municipalities and cities. So when you get an REO property, we'll call up and say, "Hey, we have this property. If you need anything, call us."
What are the sort of things you guys do to protect from vandalism and squatters?
We'll call the police department and we'll say, "This is a property we have our signs out here." We'll let them know. We'll also welcome municipalities. We'll send a copy to judicial for sale for the closer team, and say, "We have this property, please keep an eye on it. Nobody's supposed to be in the property. This is a vacant property. Now what we want to do, we also do it in our VAs, we call the utility companies and we tell them we put the utilities in our name, and we give them passwords so nobody can change it.
We're improving the community, we're stabilizing the community and who's going to buy these homes? Owner occupants.
Michael Krein 00:14:44
Doing the right thing ethically and morally is also the most profitable thing at the same time for everyone. It really is win-win. The client gets a better return, the neighbors are happier, we have less litigation, less complaints. I mean, it's really about doing the right thing and everything else works.
But the most important thing is we're helping home buyers. We're helping people get into a home and we're helping the communities.
While we are transforming neighborhoods and repairing properties to some degree to sell to first time home buyers for our clients, we have inventory in a market that I believe is only going to be though estate's, divorces, and foreclosure sales.
So the target for the REOs is definitely retail buyers. We want to maximize profits for our clients. A lot of these being retail investors, hedge fund, and institutions, and GSEs. We want to maximize, our priority is to maximize our returns for the clients, but also getting home buyers into these homes that are going to not be investors. We always want to focus on retail buyers first. That's what brings up communities.
One of only two groups of buyers that will still purchase are new Americans. Those people have recently become citizens and their entire lifelong dream has been to own a home in America. They will buy regardless of interest rates.
The second group that we'll buy is first-time home buyers that are tired of paying rent. Rents are being jacked up all over the country. Evictions are through the roof, and a lot of these people are paying their rent, but the landlords are evicting them so they can raise the rents and rent it to somebody else at a higher rate.
And we've also encouraged all of our members because most of them own their offices to go get Spanish-speaking agents. About 40% to 45%, depending on the study you look at, of the home buyers going for the next five years will be Latino and Hispanic.
We work a lot with 203 K loans like we did in the past. Creative financing will work to get these retail buyers into the home. Now you notice a lot across the country, we're seeing first look HUD is doing first look to non-profits. They want retail buyers. Guys, this is where the market's headed.
You're changing somebody's life here, guys, you, you're bringing in a family. Maybe they got four or five people qualifying for the loan, getting a HUD voucher. Could you imagine they're drumming up, maybe they're 5, $10,000 to buy their first home and you hand them over the keys crying, that you got a referral for life from them.
If you want to write an offer on one of our properties, we welcome you and your buyer into our office. We will help you write the offer so that the bank will accept it. On occasion, ego gets in the way and doesn't let a buyer broker put their ego aside to be able to do that. And so the other alternative is a lot of our members will send a bullet pointed list of changes to try to help them get their offers accepted.
if you're not doing REO, you have to understand. You're basically a property manager and a contractor too. Selling the house is the easiest part of what we do. It's the other stuff that you don't see.
Carrying Costs is probably one of the hottest topics in the industry, and has and will always be, because it's all about money; money management, making money, bottom line. So I wanted to start real quick and define carrying costs. Some of the investor carrying costs, you have your taxes, your insurance, your utilities, HOA fees, maintenance fees, broker, you have your time, and that's kind of the hidden one, the time cost, your field service, your capital, and your staffing.
And then the third one is contract coordinating. Once that file's under contract, you don't go, "Okay, done. I'm out." But it's working with your title companies, working with your attorneys, working with the lenders to try to expedite that and get it closed as quickly as possible
What are some of the best practices you can talk about when it comes to working with buyer's agents?
We encourage our members to do a monthly training in their local market on how to sell REO properties. It helps answer a lot of the buyer's agent's questions. It helps them have a better understanding of how the REO process works. I don't know why it is, but "as is" is the most difficult term for people to accept in the entire human language. And so, it lets us be able to really stress the point to "as is", and then we try to be really friendly and really helpful.
Are you currently utilizing virtual tours on every listing?
It's interesting to see that almost 50% of our audience is utilizing virtual tours on every single listing, and about 47% is not utilizing them on every single listing.
We should be treating every single listing the same, whether it's $900,000 or it's $200,000, whether the property needs work or the property's a luxury home.
Who's using these virtual tours? All of our members are using them on every single listings. It's inexpensive, it's easy to use, and should. And most people know this, right? But most of the buyers are going online to view the home before they call you. About 92% of home buyers go online before they call you. And 87% of virtual tours have more views online than a home that does not have a virtual tour. So what does that say? You better put a virtual tour on that listing. Our clients expect it, and we should treat every property equally.
A virtual tour, you will get 87% more views. If you add a floor plan, you will also get two to three times more views. Clients expect 3D tours. And if you're going to do REO, understand that that client is going to be looking at your marketing. Don't think for one minute they don't google that property address what they assign to you. They're going to look at your marketing, and if you're not doing these things, they're going to go find somebody who will.
I really would encourage you to step back and take a look at your brand. What does your brand say about you? What does your brand say about your marketing? Why should someone hire you based off of your brand?
What are some ways that REO agents, and that you guys in particular, are working to assist investors reduce their liabilities, fines, and violations?
Kimberlee McClellan (00:42:21):
Yeah, so the most obvious answer to this question is escalate an item before it becomes a problem. We are the expert here, and we are the ones that are, day in and day out, looking at these properties. We know what's going to be a problem for one municipality that may not be a problem for another one. So the first one is just escalate the items before they become high.
So when you have a system in place that, once the property switches from occupied to vacant, it's triggering your code department to say, "Hey, VPR is needed. Call and get it registered touch. Base with the municipality."
Having those triggers in place, and the most important trigger in place is, "What do you do with the property when it becomes vacant?" And so, there's several systems. We'll dovetail that into the next question, but the next one is, you know have a problem, you immediately call the municipality and you share the vision with them, right? You understand, "This is a vacant home, this is what we expect of vacant homes. We're trying to get this home up to par. We want it to look like every other house on the street." And just share the vision and let them know you're on the same team with this particular home. So when there are bids, you want to be proactive with those bids. You want to ask the municipality, "Is there a certain vendor that you prefer that we can work with? We have our own set of vendors, but is there one that is a ease of doing business with with you?"
Mike mentioned it earlier, talk to the neighbors, they will be your eyes and ears for you. And if there is a problem with the property, the goal is to get the neighbor to call you before they call the city, and before they call the HOA, and before they start complaining. They will tell you if your landscaper didn't show up before you get there, they will tell you if the pool went green, they will tell you if there's kids swimming in it. The neighbors are your best friends, and they will help you preempt a lot of these things.
The other thing is, those neighbors are your best sales agents. Everybody has friends and family. Wouldn't it be great if they could live close by? Can't tell you how many times you've talked to the neighbors about watching the property for us, and that we're working with them, you know, "Let us know, we're going to take care of it," and I said, "By the way, how much is it? My sister's moving." You'd be amazed at how often you sell a property that way, by just stopping and talking to somebody for five minutes. That's what we mean about being involved in the community and the neighborhoods.
Some Favorite Productivity Tools:
- MindMaps. They are by far my most favorite thing in the world, and I can present a whole hour on mind maps
- RIO Genesis is free to NRBA members, it's included in your membership, and RIO Genesis does everything from offers, communications, and it triggers and tags.
- QuickBooks for our accounting.
- Equator is a viable platform. Lots of clients are on there. They're going to be making some development changes as well to improve the workflow process, but it's a key site to receive and accept REO assignments.
If you just started an REO and it's just you, yeah, that's a problem. The house catches fire and you're at your kid's baseball game, or you're at a wedding in California, client doesn't care. They want it taken care of immediately. So for us, we have teams, and Kimberlee just explained how to deal with it, but if not, you will have to make sure someone is always available 24 hours a day if there's a call on one of these properties or there's a problem. That's something we recommend, that if you don't have assistance, you have a partner.
Uses for AI
Leverage ChatGPT in several areas of your real estate business. One of the easiest things and first things that comes to mind that we as NRBA agents have been trained to do when it comes to leveraging ChatGPT is using data to improve our marketing. Right from the very MLS description. A lot of times, when we're dealing with properties that may need a HUD, for lack of a better term, we need to be creative and figure out how can we find the right words that are going to resonate with the viewer.
Each one of those platforms, your website, Facebook, whatever, Google, anything has its own algorithm on how its SEO should be put together. ChatGPT takes all that guesswork out for you. If you have a history in REO or a history in real estate, and you can tie in these key elements, been in business for X amount of time, you served this community, you are familiar with these resources, leverage ChatGPT to help you create the SEO for these particular sites.
If I am going to teach someone how to write an offer or I'm going to teach someone how to do something that's real estate related, I'm going to do it once, and I'm going to do it in the form of a video. But I'm going to leverage ChatGPT to give me the script. I'm going to leverage ChatGPT to help me identify some talking points, because I'm always in the driver's seat, so maybe I'll overlook something, but ChatGPT will say, "Hey, Chris, slow down. Here's some additional talking points that you may want to add into your video." And as I mentioned, I want that video to be found. So I can use ChatGPT to say, "Hey, optimize this for Facebook. Optimize this for YouTube. Optimize this so that it performs best on its platform.
Newsletters. I'm surprised how many people don't have a newsletter that goes out. And your REO properties, or your inventory in general, whether it's REO or not, is a prime opportunity to reach your audience through a newsletter. ChatGPT can do your newsletter. So we're so busy, and the majority of us are not marketers. I know I'm not a marketer, I know that I'm not a writer, I'm not a copywriter.
ChatGPT can sometimes violate fair housing laws the way it writes things sometimes.
Read what you are given before you post it. I'm so surprised the amount of people. I'll just take it, copy it, paste it over to something else, and then they get a phone call that they're violating terms, right? But here's the other thing with ChatGPT, you have to understand how to work it and you can train ChatGPT. You can give it a persona. For my MLS descriptions, I've already programmed my persona within ChatGPT to understand what is fair housing and what to avoid. And of course I still have to take the time to read that content.
You still need to know your stuff. If you're just relying on ChatGPT to make you look and sound smart that's a problem. It's supposed to improve and enhance what your skillset.
(earlier referencing the tool MindMaps) Because the Mind Map is the database that you will go back to and reference over and over. So you can add those links and add that information you obtained through the AI in your Mind Map
On Social Media
I recently got a $900,000 listing because one of the spouses Googled me, looked me up on Instagram and found that I'm very active on my social media marketing. Before they sign that listing agreement, they will look you up to see if you are active in the community, do you do any business, and how are you going to market my home?
There are multiple ways to advertise your listings. Facebook, create a landing page, put that URL link use, utilize Instagram as well. Be more engaging and utilize some of the tools that Kimberlee mentioned, use ChatGPT to create some of that content. You could write out a little paragraph about what that listing is about, some of the features, things about the neighborhood, and then have ChatGPT help you write that description for you.
Regardless of the metrics, do it. Do it consistently. Where the metrics come in my opinion to really help you and help you stand out is when you are trying to show someone the value in your marketing.
And then the last part is, it's referred to as TOP, time on post. Any of these websites, social media platforms, they reward you for time on post, the amount of time a consumer can spend on a post. So what they don't want is they don't want a consumer to go elsewhere to get answers to their questions, right? So realtor.com, Zillow, you name it, the more information that we provide that answers the consumer's questions, meaning they're going to spend more time on that post, they're going to reward you for that, which, that's why you get 80, 70% more views, simply because these websites are giving you preferential treatment at that point.
You're going to get a lot of people in the foreseeable future who think REO is on the up and coming, and you're going to be in a position where you're going to have to spend $599 and we guarantee you, you're going to get in with this client, this client and this client. Don't fall for that. And I know a lot of people out there are and have already. And if you've done it, don't do it again. You should never have to pay for REO business with the exception of your subscriptions and you would should generally promote yourselves in your industry.
You're not going to get an REO assignment if you don't have the common sense courtesy and common sense competence to go there and make sure that your E&O didn't expire or your general liability or your broker license didn't expire.
Reach out to your clients, making sure you're solid and you're still in that specific status because we're in a world today where you're not going to get notified if you've been DMU.
Your future success as an REO agent is your ability to delegate tasks that you shouldn't be doing. I tell my salespeople in my office of 150 agents that you are a salesperson and you need to be working on building relationships and taking care of your clients. You shouldn't be sitting behind a computer inputting comps and BPOs or any of those kind of things. You should be building a business, building on your business and making sure that people you surround yourself with, you have the ability to delegate and lead.
Incentivize your staff, support your staff, make sure they realize that they're valued.
Be able to weather longer reimbursement timeframes if needed.
What you don't know as agents is what the client is into the property for. So don't say there's no ROI on repairing the house because you have zero idea what they're into the house for. They could have got an insurance claim for $150,000 and they want to repair the house. So don't say that there's no ROI on repairing the house because you, as smart as we think we all are, we've all done it. I've done it before. We all have done it. You don't know if there's an ROI, you don't know if they have a self-insurance program. You don't know any of those things. So I'll caution you with my final thought to the question, Don't assume that there's no ROI because the repairs are too much money, or the property needs to have a good, strong repaired value. You have no idea what their basis is on the property. So proceed with caution with your comments, especially in your BPOs.
Running Your Office
Hire your most important person first. You train that one person first. You show them what you have to do and you show them all aspects of your business. If somebody leaves, they can show everybody else how to do it. That's the biggest mistake people make is you don't have a good right hand that could take over your business if you have to go away or in the hospital or something crazy happens.
If you think you're going to get into this business and have $5,000 in an account and think you can get through trash outs, repairs, maid service, you're kidding yourself. Have that several hundred thousand dollars available, the line of credit on your house, because you will be tasked with a responsibility to advance an $80,000 repair check for your client. And if you don't, they'll find somebody else.
You need to do more than repair a house, spend $80,000 and then go take iPhone pictures with it. You have to make sure that you're in a position where you're showing that property like it's yours and marketing it like it's yours. I always recommend to my clients that we should repair the REO. Should the client decide that they're going to repair the REO. Should the client decide that they're going to repair the REO, great that's on them, or they don't. That's on them too. But that is good for our neighborhoods, it's good for our reputation. It's helping the GSEs with the First Look program, which we're going to see a lot more of. If you want to be in this business and you want to be in this business a long time, we tell our members that be ready to prepare because the days of putting it on a lockbox, throwing a sign and waiting for the phone to ring to sell it to your investors is going to flip it and make $80,000 are over.
Joining the NRBA
You can join with an agent's license. We do have regular agents as well. It is $10 a day. It's $300 a month. So go to Starbucks or join us, up to you, which you think will do more for your career. That's how we look at it.
You can apply at the website, It's NRBA.com. Please understand, we like to see a minimum of five references. That means you've worked for five different clients. Just because you worked for Hannie or for Fannie, and just because you listed to HUD does not mean you can handle a private equity group or a hedge fund property. They'll all run differently. We guarantee the clients a level of expertise, that our members are the very best, and if there's a problem, one of us will step in. We need to see a broad range of REO clients and experience before you can join a group. Let's be clear about that. An actual REO client who assigned you an asset, not the lender that you give all your buyer leads to.
A company that only does BPOs and evaluations is known as a BPO mill. Not a big deal. What you have to remember is you do all the BPOs and that BPO is an advertisement. That BPO, regardless whether it's a bill or not, is going to end up on somebody's desk who makes a decision. You make that BPO look spectacular, better than anybody else's. You have tons of comments, all this information. It's like handing that person a business card. So the quality of those BPOs is everything. If you do enough of them, you will start getting listings.
We do not guarantee anyone anything. We've said that from day one with the NRBA. We're a training support group. We don't promise you listings. We only guarantee something if we'll teach you stuff and give you information. Anybody who guarantees you anything is lying to you. Nobody can guarantee you anything. The clients don't know what they have coming in next week. The asset managers only know once it shows up. So nobody can guarantee you anything here.
As cutthroat as this industry is, we don't associate ourselves with people who are that cutthroat. We associate ourselves with individuals who care deeply about each other, the organization and the most important thing is doing what's right for our clients. And that's a big point of emphasis if you're looking to get into this organization. Make sure you're ready to embody the right thing, do the right thing, and associate yourself with a group of people who are honest, ethical, and hardworking.
If you're not a good member and you're not doing the right thing, or we find out you're dishonest in any way, shape, or form, we are going to ask you to leave. We are going to terminate you and you don't exist. We will not tolerate it. We told you to protect the brand. We also don't tolerate people who are just out for themselves and aren't willing to help everybody else. That's why we're a private group.
The Current Market
For the first six months of the (2023) year, we've just seen 185,000 default filings. That's way up. It's increasing by about 3% a month. We should see about 400,000 foreclosure starts this year.
Because good REO brokers are about 0.1% of the realtor population, but we control about 10% of the transactions. That's what nobody realizes. Your typical agent, to explain the difference, you'll spend 10% of your time working and 90% of your time prospecting. We are the exact opposite. We spend 90% of our time doing deals and about 10% of our time on marketing. That's why we do the volume that we do. And if you're not interested in doing at least a hundred transactions a year, you probably don't belong in our group, because kind of what we shoot for as a starting point.
First rule when you look at default numbers is believe none of what you hear and about half of what you see. What you have is reporting and non-reporting entities, as far as default rates and things like that. At any given time, it's not that the numbers you're seeing published doing correct, they're just not the entire picture.