| It's
Time to Get to Know Lender REO
Departments Last
September I was speaking at a conference
hosted by one of the individual state
real estate associations. One of the
other speakers was the association's
chief real estate economist, and he said
the following to the audience: "Approximately
40% of the real estate agents licensed
in our state have never experienced a
down market throughout their careers.
They got their real estate licenses, got
into the business, and immediately felt
like a mosquito must feel in the middle
of a nudist colony...there was so much
opportunity they just didn't know where
to begin!" Well
that was seven months ago and real
estate markets in many areas are not
quite as on fire as they were at that
time. But in following-up on what the
man said, are you familiar at all with
the term "REO" and what it
means in our industry? (The way to
pronounce this term is by pronouncing
the individual letters themselves.) But
if you've never experienced a down
market in our industry, you may not be
familiar with the term. And if you've
been a veteran in our industry having
worked through one or more real estate
recessions in your area, the term may be
more familiar to you. A
lender's REO department is their
department that handles "real
estate owned" by the lender, and
more specifically real estate that has
been taken back by the lender due to
non-performing loans. But for quite a
number of years now these departments
have become irrelevant for many
commercial agents because foreclosures
and non-performing loans have been at
very low levels. But with the writing
I'm seeing on the wall, these
departments may become very busy again
in the months and years ahead of us. Foreclosures
are on the rise again in many areas and
this could be just the beginning of a
growing trend. I'm usually an optimistic
person, but in the 25-plus years that
I've been in our industry, both of the
times I've seen real estate
transitioning like this into a cooling
off period, it's gotten a lot worse
before it's gotten better. And when
adding what appear to be substantially
rising energy costs into the mix for
manufacturing, distribution, commuting,
heating, lighting, and air conditioning,
this doesn't make me feel any better
about where things may be headed in the
future. With
this in mind, do you now have active and
ongoing relationships with the decision
makers in the REO departments of the
major commercial real estate lenders in
your area? The reason I'm asking this
question is I think they're going to get
very active in having properties on
their hands that they'll need to sell in
the months and years ahead, and the
brokers who get these listings will be
the ones who have the best relationships
with them. Do
you even know who the key people are in
these departments? If not, it may be
well worth your time to find out now! Once
it becomes obvious to everyone that
these people have a lot of properties
they need to sell, every broker in the
world will be chasing them for their
listings. But if you show them you care
about them well in advance of this
broker stampede, and become the first
person to solidify yourself in a great
relationship with them, you'll be in a
great position to receive multiple
listings from these people if and when
they start getting properties on their
hands they need to sell. And as you
know, building relationships with people
that can lead to multiple transactions
in one year with them, can be much more
profitable than building relationships
with people who may do one transaction
every three to five years. So
find out who these people are who are in
charge of the REO departments of lenders
who have many commercial property loans
placed in your area. And if you don't
know who these lenders are, you may be
able to work with your title company and
find out which lenders currently have
the most loans placed on commercial
properties in your area. And
since it's been a long time since
lenders have had to handle
non-performing loans on commercial
properties in a big way, the people in
charge of the REO departments may be new
since the last real estate downturn in
your area. And if this is so, it
probably means they have no strong
relationships with other brokers in your
area right now, because up until now
they've had no reason to. This
translates into great opportunity for
you to begin building relationships with
these people immediately. So
begin the process of making this happen.
Start finding out who these people are,
then meet with them and ask them if
there's anything you can do to provide
them with important information on
what's happening with commercial real
estate in your area. Include
them on your mailing lists, send them
comps, take them to lunch, send them
your E-newsletters, and begin building
relationships with these people so it
can lead to solid business for you
before your competitors even know they
should be talking with them. 
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