Asset management explained

Today's story is about a mysterious person known as an asset manager.

 

As we know, to the bank that owns it, a foreclosed home is a giant liability.  However in a classic example of doublespeak the industry insists on calling these properties "assets" and, therefore, the people and organizations that have the responsibility for getting rid of them are called asset managers.

 

This is where the system gets a little complicated and where bureaucracy begins to raise it's head.  Most banks don't know too much about selling real estate and certainly don't want to get directly involved.  A lot of them are actually out of business which can make it really tricky.

 

Now lets' imagine that a given bank has 800 properties it needs to dispose of in Florida.  Now that might seem like a lot till you know that Florida has 69 counties with a total of over 400 municipalities.  That represents and average of about 2 per city, which multiplied over 50 states can start to be a bit of a logistical nightmare.

 

Enter the asset managers.  Their niche is to find local Real Estate agents in every nook and cranny who are 'willing' to take on the job.  Actually, every Real Estate office is full of agents falling over themselves trying to be the preferred REO agent for their particular neighborhood, but that's a whole other story.

 

So, the asset managers business is acting as the middleman between the sellers (usually the big banks) and the local agents at the sharp end who help prepare the properties for sale and will eventually list and sell the property on their behalf.

 

By now you can probably figure out that when you employ me to help you buy a Bank Owned Bargain, instructing me to ask the seller what they'll take "to make a deal" may not be very realistic.  In case it's not obvious I'll spell it out.

 

The Listing (sellers) agent had to do all sorts of free work, mostly doing Broker Price Opinions (BPOs) just to get the listing in the first place.  They are still doing loads of free stuff, like arranging for locksmiths, attending evictions, turning on electricity and filling out endless reports.  They also live in fear of offending the asset managers, most of whom they have great difficulty getting hold of anyway.

 

The majority of asset managers are clerks sitting in front of computer screens, sometimes in faraway places like India or Brazil.  They do what the computer tells them to, and often freeze if they have to step outside of the routine.  They are managing hundreds of assets spread over the country and have no interest in helping you get the best deal.  They also live in  fear of upsetting the front line seller's reps.

 

The first point of contact in the banks organization are also clerks sitting in front of computers.  When they get your offer on a property they are told by the computer what to do.  They have no clue what the bank is prepared to accept.  The computer will either accept (not usually), reject or counter any offer that comes in.  Often there is a grey area in which the offer has to be referred up to "management".  I have a sneaky feeling there are multiple levels in which marginal offers are referred to "senior management", then more senior management, and finally to the Grand Poobah, before a final judgement can be reached.

 

Sometimes people ask me should we take pictures of the condition of the property, do market surveys of recent sales, or send pictures of the buyers kids, in the hope of swinging a better deal.  It's a waste of time because the listing agent already did that stuff ad nauseam and isn't about pass any of your input along.

 

In case you're wondering I know all this stuff because I was an REO agent for a while.  Asset managers are no fun, and they work you death and pay as little as possible. However they perform a vital function and like the poor and foreclosed will always be with us.