REO Listing Management: Occupancy Checks, Cash for Keys and the Asset Manager's Checklist

The short answer

REO listing management is everything the listing agent does for the asset manager after a bank-owned home is assigned: confirm occupancy by the deadline, help with cash for keys on the asset manager's terms, secure and clean the home, manage approved vendors, recommend a price, send monthly status reports and submit offers through the seller's platform. You work for the asset manager's rules, every step, in writing.

Step by step: REO listing management

Here's how I do it, in the order it usually happens. Their deadlines win.

1. Accept the assignment and read the instructions. Note every deadline in your calendar the same hour. Occupancy checks are often due within a day or two.
2. Do the occupancy check. Drive by. Look for signs of life: cars, furniture through the windows, lights, trash, utilities running. Knock. If no one answers, post the asset manager's notice if they gave you one. Take photos of the outside, the street and the address. Never enter an occupied home.
3. If someone lives there, find out who. Former owner? Tenant? Family member? Report it. Don't negotiate on your own.
4. Know the tenant rule. Under the federal Protecting Tenants at Foreclosure Act, made permanent in 2018, bona fide tenants generally get at least 90 days' notice to leave. A fixed-term lease may run to its end unless the buyer will live in the home. State law can add more. Tell the asset manager. Let their attorney handle notices.
5. Cash for keys, only on their terms. Cash for keys is a voluntary deal: the occupant leaves by a set date and leaves the home broom-clean, and gets a payment the asset manager sets. You deliver the asset manager's written agreement. You never make up the amount, the date or the conditions.
6. Secure the home once it's vacant. Rekey, install the lockbox the seller wants, and photograph every room. Check doors and windows.
7. Utilities and winterizing. Turn utilities on or off as the asset manager directs. In cold climates, winterize when told and post the notice. Don't de-winterize without approval.
8. Trash-out and preservation. Get bids from property preservation vendors. Send bids for approval. No work starts until the asset manager approves it in writing.
9. Call the HOA. Confirm dues, any balance, rules, and who to call for access or violations. Report it.
10. Send the BPO or market report. Most asset managers want an as-is and repaired value, with comps and a marketing plan. See how to do a BPO step by step.
11. Recommend a list price. Use the comps. Explain your reasoning. The asset manager decides. See how to price a listing.
12. List it on their terms. As-is language, the seller's disclosures and addenda, the showing rules, and the offer instructions in the remarks.
13. Send monthly status reports. Showings, feedback, competing listings, price changes, condition. On time, every month.
14. Submit offers their way. Usually on the seller's platform with proof of funds or a pre-approval letter and any required forms. When there are several, the asset manager may call for highest and final offers. Present them all. Then follow their addenda through closing.

REO listing checklist

Vendor invoice rules

This is where REO agents lose accounts. My rules:

• Bid first. Get a written bid for every job.
• Approval before work. No approval, no work, no matter how small.
• Before and after photos. Same angles, clear, dated.
• No markups you didn't disclose. Follow the asset manager's policy, and your brokerage's.
• Pay attention to the date. Late invoices may not get paid.

How to explain it to your client

Here the "client" is the asset manager.

Watch-outs

• Never enter an occupied home. Even if a door is open.
• Never improvise cash for keys. Not the amount, not the date, not a promise.
• Don't evict anyone. That's the owner's attorney, under the law.
• Don't remove belongings on your own. Personal property rules vary by state. Wait for the asset manager's written direction.
• No unapproved work. You may not get paid for it.
• Occupancy checks are paid work. Quote a fee or follow their fee schedule.
• Fair housing. Talk about the home, the price and the process. Never about who should live there.
• Occupants in distress. If an owner or tenant asks for help, point them to an attorney and a HUD-approved housing counselor.

Sources

• NLIHC: Protecting Tenants at Foreclosure Act made permanent
• Colorado General Assembly (C.R.S. Title 38)
• Colorado Division of Real Estate
• HUD: find a housing counselor

Further reading

• BPO and REO partner hub on kennarealestate.com
• Bank-owned homes in Colorado on kennarealestate.com

Keep going

• How to get REO listings
• What is REO (real estate owned)?
• Buying a bank-owned home: the buyer side
• Selling a house as-is

Want the whole system? The BPO & REO Kit gives you the asset-manager outreach playbook, six email templates, the BPO checklist, photo shot list, comps worksheet, REO listing checklist and a tracking sheet.

This is training for real estate agents. It isn't legal, tax, lending or appraisal advice. Program rules change; check the official source. Check with your managing broker.* *Owners facing foreclosure should talk to an attorney and a HUD-approved housing counselor.

Frog tip: Count conversations, not dials. Fifty real conversations of two minutes or more a week is the number that predicts appointments. Learn more →

Questions

What is an REO occupancy check?

A visit to see whether a bank-owned home is vacant or occupied, and by whom. You look from outside, knock, take photos and report. You never go into an occupied home.

Who decides the cash for keys amount?

The asset manager. The agent delivers the written offer and reports back. The agent never sets the amount or terms.

Do tenants have to leave when a home goes REO?

Not right away. Under federal law, bona fide tenants generally get at least 90 days' notice, and some leases may run to their end. State law can add more. The owner's attorney handles notices.

Can the REO agent hire vendors?

Usually yes, with the asset manager's written approval of a bid first. Keep before and after photos.

How do REO offers get submitted?

Usually on the seller's platform, with proof of funds or a pre-approval letter and any required forms. Follow the listing's instructions.

Brian Lee Burke is the founder of PadLeaders, a Colorado real estate broker licensed since 2003, team leader of The Kenna Group at Keller Williams DTC (formerly Kenna Real Estate Group) and the author of Mastering Real Estate and The Real Estate Playbook. More about Brian.