The Smaller Banks.


It is very rare that an independent REO contractor firm will find an “in” with the larger contsruction lending institutions these days. Usually work is siphoned through the asset management companies like Safeguard, FAS, etc. I have shared on many occasions the distaste I have for these companies who monopolize the market with poor service.

You might chalk this up to me being jealous of their success — if success is measured strictly in terms of profit you might be right. But, success for an REO contractor comes from leaving a long string of conveyable assets and establishing long-term relationships with their clients. When the real estate firms who are forced to outsource their preservation work to these agencies wish they didn’t have to do so, it says something about a lack of success to me.

What I am finding in my tireless reaching for new clients is that there is a time for calling the larger banks for business. They call it “soliciting” which dissolves the idea of partnership and any effort to build one. You just have to spend some time trying to get business from them. There is always a chance that they will take you on as a secondary source to provide second bids. Then, if your bid is better and your work is better you create trust over time. Some would say it’s a waste of time trying to work with the larger banks because they’re already “taken”. This is ridiculous. The woman who is now your bride was probably “taken” at the time you showed interest in her. But, you liked her so much you either took her away from the other guy or you charmed her socks off. You build trust. That is the idea with “soliciting” the larger banks.

Then, there is a time when you turn your attention to the smaller banks — not a term I’m sure that flatters them. These institutions are forming REO departments and honestly they handle mostly a handful in volume at a time. These are the people who you can form relationships with and grow as they grow. This is what excites me in the REO industry — we are all learning as we go because the market is shifting so quickly. Rather than being so competitive with all the knuckleheads out there, it really is a smart thing to learn from each other.

Of course it is more profitable to work directly with banks, who originate the loans and then purchase the property back at foreclosure. They are the payment source for the REO work. It is worth your time to find a list of smaller banks in the nearest metropolitan area, or like me in other states, who will give you a shot. I have done this on many occasions and have been lucky enough to pick up some great clients.

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