If you think REO property preservation is right for you, read this full article. I’ll rule out the good and bad in the industry so you can make an informed decision. I do this to help you analyze a number of factors to decide if this is the best use of your energy. First, I will start with the different segments of this business.

The first market that I will analyze is that of working directly with real estate agents. I love working with real estate agents. You have the opportunity to develop relationships with extremely powerful and influential people. This has also been the most lucrative area of ​​my business. Although it represents less than 50% of my sales, it represents 70% of my profits. Working directly for agents eliminates the other intermediaries and pays an average of about 40% more than working for an asset company. It’s also fun to be invited to Christmas parties, birthdays, and all the other fun events that take place. You can network a lot and you can really expand your influence. Working with agents is really a people thing.

So why wouldn’t you want to work with agents? Many of them will not pay you until the bank reimburses them. In this case, you could be talking about three months or more. This is extremely frustrating, especially when starting out and needs the next fix. Second, they can file for bankruptcy and you will never get a penny. This has not happened to me yet, but I know of several business owners that it has happened to, one of them is for 158,000 who put him out of business. Oh. Then there’s the fact that you had to kiss a little butt. Rest assured that at some point while working with them, one of your teams is going to screw something up, and you will have to find a way to make up for it, through words or monetary means. Lastly, you have to deal with their mistakes that could get you back. I was recently threatened with a lawsuit because an agent authorized the work a week after a property had closed, and they said we were breaking and entering. You can usually calm these situations if you have enough people skills, but they are a danger to us nonetheless.

Then there are the asset companies. I hate working for asset companies. While a real estate agent will respect and appreciate your assistance, asset companies expect you to do your best for them. They’ll let you go in no time because there are 1000 other people who want to take your place. The pay is low and you will have jobs where you will lose money. Asset companies will adjust your salary on the fly and there is nothing you can do about it. I have also noticed that they tend to cut prices every couple of months. I am receiving significantly less than I was receiving a year ago with my largest asset company. In addition to this, they hope that more will be done. My completion form is about 14 lines longer than it was a year ago.

However, the biggest risk for big asset companies is complacency. I’ve seen this alone hit at least a dozen companies, leading most to bankruptcy. These companies will keep you so busy that everything seems to be going well. You will be doing very well and making a lot of money. Then your largest customer signs a contract with someone else, and the asset company fires ninety percent of its suppliers, and the remaining ten percent also has their burden cut off. This is particularly dangerous with any company that controls Fannie Mae at the time, as Fannie Mae tends to hire a new asset company every two to three years (in my area at least, they’ve had 5 in 11 years). They’ve given up on their other clients, and they haven’t been looking for any outside opportunities, and the next thing they know they go from twenty houses a week to zero. The last change I saw left several companies out of business and many were left without income for several months while building a customer base.

The advantages of asset companies are prompt payment and consistency. You will always be paid on time every week after your first five to six weeks. This is useful as you always know what to expect next. Also, the consistency of the work is nice. While it is possible for an agent to bombard you with ten houses a week and then not hear from them for two months, asset companies are stable as long as you keep a positive score with them.

The last thing to consider is the market as a whole. How long is this recession going to last? Is it worth trying to build it, to get to the point where it makes money and improves the economy? These are largely a local issue, here in Phoenix I think I have a good five years of solid business left. In other parts of the country it will probably be more or less. Some factors to consider are ARM loans maturing in the next few years, how many homes will go to the round of two foreclosures, and how many people will receive temporary or longer-term loan modifications.

So once again the question arises: is a property preservation company right for you? The answer boils down to: it depends. If you have a high tolerance for risk and money to live, in an area that is going to be in a long-term depression, then maybe. If you need convenience and security, you can’t manage people, and you’re in a soon-to-rebound market, the answer is probably not. You must analyze your personal and local situation and see if this is a business that you can enter while you are well.