Yeah, I know…it’s a bold statement (referring to the title), but I truly believe it to be true and almost obvious. If you take a good, hard look at the numbers, which speak larger volumes than anything else, it becomes clear that anyone in the REO biz will be hard at work this year.
Part of me can’t help but make mention right here about the individuals (REO agents, you know who you are) who complained about their loss of business by adding more REO agents over the last couple of years. Do you really think you could have handled this many REO’s? Come on.
OK, now that I got that off my chest, back to the facts. With 2009 projected to have the largest number of defaults and foreclosure filings in US history our nation stares at the largest dependency on accurate BPO’s than ever before. In Q2 ‘08 for instance, there were approximately 740K foreclosure filings (residential real estate only). If you consider that on average each of these properties needs a minimum of 1 BPO at approximately $50 each (a very conservative estimate) then you’re looking at $37,000,000 worth of BPO business that was distributed. Now if you add in the other 3 quarters this number jumps to $148,000,000 worth of BPO business that needed completed in 2008.
Now let’s look at REO listings. One thing to consider before accounting for the following numbers is that not every property closed, and not every closing was for the full amount listed. That’s why looking at ave sales price and number of closings paints a more accurate picture than ave list price and total listings.
Nonetheless, this should give us a pretty good idea of what’s out there since most properties will eventually close over time (which indicates that the REO agents need to view this business as long-term). Here are the numbers according to RealtyTrac in 08:
National Stats 2008:
New Foreclosure Filings: 3,177,429
Foreclosure Sales: 759,020
Ave Sales Price: $161,755
This information indicates that there was $12,277,580,100 in REO sales last year alone (Foreclosure Sales * Ave Sales Price). Were you complaining about a shortage in sales by any chance? Hmmm….Anyways, let’s move on. If you consider an arbitrary number for a commission average on the listing side of a transaction of 1.5% (a number to help compensate for expenses such as overhead, referral fees, memberships, etc.) then we’re looking at a total REO listing agent compensation on a national level of approximately $184,163,701.50 (Total REO sales price * 1.5%). That’s a lot of dough. And my prediction – it’s going to jump up even higher in 2009.
Some other facts worth noting are that interest rates have been reduced allowing for sales to increase, individual’s credit scores are on the mend after a couple years of taking a beating, listing prices have been coming closer to realistic prices after a few years of inflated list prices, and we have not yet received any indication that bail out money will be used for homeowners (which could prevent the number of foreclosure filings from jumping drastically).
Are you “in the know” of REO yet?
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