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.
Keep a check on all the market is doing in your area. Please contact us with any questions you might have.
SOUTHERN CAROLINA REALTY INC. www.southerncarolinarealty.com
704-888-6699
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
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