In a previous post I walked you through how to bid on a Real Estate Owned (REO) property on behalf of a buyer. This time I’ll walk you through how to get an REO listing – the documents you’ll need and the steps to take when you make a listing presentation to a lender.

In preparation for your presentation to the lender, you should have the following seven presentation materials assembled:

1. Sample Broker Price Opinion (BPO) on one or two of the lender’s properties in their REO inventory.
2. BPO Cover Letter which will outline your intent in meeting with the lender.
3. REO Marketing Patterned Interview which you should have answers to but if there are any unanswered questions on the interview, you will need to get them answered at the beginning of the presentation.
4. Rate of Absorption on the subject property or properties in the lender’s REO inventory.
5. Sample Progress Report which should also be filled out with the three key items addressed in the report.
6. REO Risk Management Explanation which you will use to explain to the lender on how you intend to handle the transactions.
7. Lender’s Offer Guideline/Review Guide which will be used by you and the lender to set the boundaries on the goals for their properties on such areas as price and terms.

Now, let’s review the seven steps of the basic listing presentation to all sellers.

1.  Establish & Reestablish Rapport: While a meeting with a lender will be more formal than a typical seller, it will still be important to create an atmosphere of comfort and openness with the representative. Even in this more formal environment, the best way to achieve this is to get the person talking about themselves. Use the questions on your REO Marketing Patterned Interview.

2.  Establish Control: To ensure that the conversation will stay on track it is always best to use the communication skill of “Setting the Agenda” before you begin your formal presentation. It might go as follows: “I know that you may have some questions on such areas as suggested prices and terms, and we are going to address those in detail. In fact, you’re the one making the decisions on these issues. What I’m here to do is to provide the information you will need to make these decisions. So is it okay with you if I provide this information first and then you let me know where you stand on these issues afterward? Thank You.”

3.  Sell Yourself & Your Company: The old rule about “Selling the Sizzle, not the Steak” is very important here. Like any other seller you must be able to demonstrate to the lender how they will BENEFIT and HOW WHAT YOU HAVE TO OFFER WILL MAKE THIS REPRESENTATIVE LOOK GOOD TO THEIR SUPERIORS. Let’s once again review the lender’s probable most critical concerns and how you would address them.

• Recovery of Maximum Amount: Here you might use your REO Marketing Plan to show them that your plan is designed to provide the property maximum exposure that will ensure the highest possible price. The “Lender’s Offer Guideline/Review Guide” will also address the parameters on negotiating the price and terms.
• Minimum Marketing Time: Again your REO Marketing Plan will address how you will not only use this plan to maximize the price with quality exposure but also how it will help minimize the time on the market. You will want to also show the lender some facts about the market including the average days on the market and the Rate of Absorption .
• Selecting the Most Qualified Agent: You will want to be careful here about not appearing to egotistical here but at the same time, you will need to explain your qualifications to the lender. NOTE: IF YOU’RE RELATIVELY NEW TO THE BUSINESS, YOU WILL NEED TO HIGHLIGHT THE QUALIFICATIONS OF YOUR BROKER AND COMPANY.
• Validating Their Decisions with their Superiors: As you are leaving them complete copies of all of the materials that you are presenting to them, let them know that if anyone else in their organization has questions about this proposal that you will be more than happy to answer them and perhaps, leave them an extra copy of your presentation to help them address this should it arise. In their mind you are helping them “Cover Their Assets”.
• Being Informed: A Marketing Activity Report is the key here to let them know that you will be sending them bi-weekly reports such as the one you’re showing them and the reason you do this is that the market is changing very frequently and dramatically. Let them know that you will be following up with them after you send them each report. Also, ask them if there is anyone else in their organization that they would like for you to “copy” on this report.
• Coordinating Offers & Transactions: Here you would use the “Lenders Offer Guideline/Review Guide” to show them how you would provide a summary of each offer that is submitted. While it is important that every offer be thoroughly reviewed, you will also how you can help make this process easier and less stressful for them with this sheet. You will also want to demonstrate to them how you like to coordinate with the third parties in the transaction including the title/escrow officers, loan processors, home warranty representatives, inspectors, and the other parties.
• Minimizing Risks: Here you would use “The Lender Risk Management Guide” to show them the process you employ to minimize both lenders and your risk in handling these sometimes complex transactions.
• Minimizing Inconvenience: Here again your Marketing Activity Report will be very important in demonstrating to them that by they being informed and how you believe in handling a problem before it becomes a problem, they have the best assurance of minimizing the inconveniences that are certain to surface in these transactions.

4.  Deal with Price & Terms: Here again, you would confirm the details of the prices and terms at which the properties would be offered on the market. Again you will want to use the materials in your “Sample Broker Price Opinion” to establish these boundaries along with the “Lender’s Offer Guideline/Review Guide”. You would also cover the elements of your exclusive marketing agreement with them.

5.  Trial Close & Handle Objections: Once you have presented the materials in Steps 4 & 5, you will want to ask the most powerful closing question of all. That question is “DO YOU HAVE ANY QUESTIONS ON ANYTHING THAT WE HAVE DISCUSSED?” If they say “No”, then the next natural question for you to ask is “THEN MAY I HAVE YOUR APPROVAL ON THIS AGREEMENT SO I CAN GET RIGHT TO WORK ON MARKETING THESE PROPERTIES.” Be assertive here and remember that 90% of closing is simply asking for the order. Don’t be surprised if you hear them say “Okay.” If they say they’re not sure, then that means they still have questions and/or concerns that you need to find out. You might want to ask them “WHAT QUESTIONS DO YOU STILL HAVE OR WHAT CONCERNS DO YOU HAVE THAT WE NEED TO ADDRESS.” Again, be assertive here. If they express a question or concern to you, write it down and say “THEN LET’S DISCUSS THAT BUT AS LONG AS WE’RE GOING TO DISCUSS THIS ISSUE, WHAT OTHER CONCERNS DO WE NEED TO TALK ABOUT.” If they do have other concerns, write them down and deal with them one at a time. If they have concerns, you will want to remember the communication track for handling objections which is:

• Clarify the real issue: For instance, if they have a concern about your commission or other issue, you might want to say something like “I’m sure you have an excellent reason for that concern, would you mind sharing those reasons with me.” With the commission, the real concern is with the proceeds or minimizing their losses.
• Isolate the real issue or issues: Once they have opened to you about a concern, use this opportunity to find out their other concerns. You might say something like “Okay, let’s talk about the commission but as long as we’re going to discuss that, what other issues do you have concerns or questions about?”
• Answer the concern or concerns: For instance, if they expressed concerns regarding the commission and being able to minimize their losses on the property, you might want to show them how your REO Marketing Plan will ensure the highest possible price that will maximize the proceeds. Another useful tool here would be your Marketability Evaluation/Checklist.
• Validate your answer: Here you will want to confirm that they understand why, for instance, that paying a competitive commission rate will benefit them. You may want to ask them, “Do you see how paying a competitive commission rate will greatly enhance the quality exposure for these properties”.
• Close for the decision: Once you have addressed and answered their concerns, it will be time to once again ask them “If you have no further questions, I’m ready to go to work for you; may I have your approval on this marketing agreement”. Again be assertive here. They may have to get someone else’s approval in the organization and if that is the case, ask if you can be present in case they have questions. Obviously, meeting with someone who has authorization is important to try to establish at the outset. Also, remember to not give up until you have asked for their commitment three times.

6.  Final Close for the Marketing Agreement: This is just the trial close that finally works and you then obtain their signature on the agreement.

7.  Precondition the Lender for the Marketing Process: Here you would review the procedures that will be following and how you will be updating them and how you and they should communicate with each other.

Remember to follow-up as you promise because you will be evaluated and scrutinized by these lenders on your ability to keep your commitments to them. You will need to show them that you will be able to respond quickly to issues and concerns that will most certainly arise during the process. Be sure to detail your own marketing activity when you send them your bi-weekly Marketing Activity Reports.

Keep in mind that initially that this will take significant time to assemble and present. However, like learning any new skill or process, this is just a learning curve and you will become more proficient and efficient as you do it over and over again. It is worth the effort.

David Compton will be speaking at ERA IBC 2013 in Austin, TX March 21-24, 2013. Register here.

photo credit: Nick Bastian Tempe, AZ via photopin cc