Just got back from a mandatory REO agent conference. Cost 149.00 plus 2 days of really aggravating reprimands,, threats and some really demeaning reality. Oh and 109.00 per night hotel costs plus 2 days away from all of my other work which pays the bills. The cost to be a chosen REO agent . 499.00 in the first few weeks for "training" Funny considering I have been doing REO work longer than the people who wrote the "training course". (and they were not even a Realtors) Then another 199.00 to be added on the platform. Cost of the signs and marketing material which are mandatory for the asset owner.
So far 1200.00 in expenses - income 0 for this new company, one of the now 15 I work with. One I have worked with for 16 years now.
What I learned, well as a veteran REO agent of over 16 years I learned I have gone backwards. I am a broken person who has sunk to the lowest depth any agent ever imagines. All REO agents have become mere robots/ tools of the REO asset owner. As Dangerfield quipped “No respect no respect at all!!” 16 years ago I was paid very well in the REO field. Not many agents wanted to list the worn down un-kept "dirty properties" Fewer yet wanted to show clients these low priced fixers. So I listed them and almost always sold them and was paid 6.5 % with no fees. No platform fees, no referral fees, no fees at all. I was also paid a management fee to oversee the trash outs clean ups and maintenance. A 2500 minimum to assist in a cash for keys, 50.00 for the listing BPO for that asset and for each BPO I did after getting the listing. The BPOs were a one page 15 minute form with 3 sold and 3 actives. One liners and a few comments on the bottom. No status reports were ever called for and there was no mandatory anything other than just sell the asset. I was valued and treated as a skilled professional by the asset owners. The list price was set and if someone , anyone made an offer in the first 24 hours that was close to the list price, well it was sold. No long drawn out drama filled waiting period or wild price expectations. All utilities were put directly into the asset owner’s name and mailed by the utility companies to that asset owner. I paid for nothing, billed nothing and was never expected to be responsible up front for a single thing the property required.
Fast forward to today. I am expected to have 5000.00 in reserve for each property I am assigned for repairs , past due taxes, past due HOA fees and anything else that may be required. I am expected to bill all my expenses and pay 5.00 per invoice, wait 6 weeks to 90 days or even longer to get reimbursed, Of course I can not charge interest or a service charge. Just lend the money free of charge to multimillion dollar corporations. I am expected to do weekly status and condition reports, weekly full property checks with pictures, monthly BPOs free of charge within 2 days of the request. Now that BPO is a 3 page form, more detailed than any full appraisal. It takes about 2 hours to complete and has some really ridicules demands as well. I now an expected to do cash for keys and even assist in evictions all free of charge. All utilities and security deposits for them are in my name and mine to pay. I now get 2% to 2.5 % commission maximum(many are a straight 1000.00 for any property 100 K and under) with a 140 to 175.00 charge per listing for platform fees at closing. Out of my commission I also pay a referral fee to the assignment or asset company. I have to carry 500,000, to 1 million E & O. Which is very expensive if you do CFKs or eviction work, which is mandatory for all REO agents. I also have to carry a personal liability policy for 4 million and show proof of both every 6 months to a year. I have to pay for at least one yearly background check. Pay a yearly platform fee of no less than 400.00 yearly . A yearly education course fee of no less than another 400.00 and now mandatory conferences at my expense no reimbursement and no escape from attending, they are mandatory! Now I have "report cards " with categories for everything from BPO % to DOM averages to Owner occupant versa investor sales. I am expected to print or buy all the asset owners marketing materials including signs and brochures for their mortgage divisions. Send them buyer leads , also known as recaptures and give them monthly reports of the leads I send. Now I am reduced to a non respected very used, controlled and low paid unwanted necessity in the REO world.
So every time I see or hear any agent say " How can I get into REOs?" I shake my head and say "be a greeter at Walmart. It is easier, much more profitable and yes you can keep your self esteem and even some dignity too."
Yesterday, today , what will it be tomorrow? Well my guess is an REO agent will be expected to work for free. Don't laugh or doubt it HUD actually did do this for a while. It is coming if we do not stop and say "No more!!" I am now devoting time to re establishing my conventional Real Estate practice. Let the starry eyed REO agent wanna bees have the REOs and let the asset owners ….well you know where I am going here.
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Barbara I LOVE YOU. So few people tell it like it is!! Ive been in constant trouble for several decades from telling it like it is from the mortgage world through the real estate world, having done both at the same time. A friend of mine takes as many as 150 REO at a time from a major bank. He can only do it because he is wealthy. His monthly costs for PGE, maint, etc are more then most peoples yearly salary. I do BPOS and have completed over 3,500 in almost 3 years. It kept beans on the table but Im not taking any vacatiobns with my spare money---thats for sure. Point is I speak to hundreds of other agents and listen to their stories. Ive been SCREAMING at people for two years that this bop/reo thing has developed a cottage industry of leech companies that SELL course, info etc and the worst are the places that make you PAY per month to be members. These places tell you that you will have your face/info in front of hundreds of lenders looking for BPO and service agents. TOTAL BULLS+++ Lenders dont do that. They c all Corelogic, etc. Maybe a fe regional c redit unions or tiny banks may and I guess its still possible to smooze your way in the a real assett manager at some hole in the wall. I will never joing any rerlated organization n....DONT NEED TO. It makes no difference. So you get a set of letters in back of your name. Nob ody cares. The big companies know its BS.. Let me say that I was contacted by several of the biggest portlas asking if I wanted ti be their freddy mac preferred becasue of my attento to detail. They didnt care if I had 'Official Trained BPO' type initials or NABPOP membership. To back up a bit on that though---I think NABPOP is very worthwile for most BPO people. I didnt need it because I was mortgage underwriter trained and can do appraisal review so I know my way around adjustments. The biggest thing was, they told me, that I went an extra mile and was always causing myself extra time to give the true picture of the property vs just getting the figures to fit for auto approval. Ive lost money on many BPOs if you fire dollar per hour but Im proud of my work and its always kept me in work. Now, this isnt a 'Marvins so great' thing---its to show that good, hard work will be chosen over acronyms any day and to SAVE YOUR MONEY instead of paying for seminars. If you want to spend money, try to fins APPRAISAL courses or just go do something else because after a new initail uptick in this business, it will wane. Dont count on it for a long term profession. Im kinda sick it of now to be blunt.
Regarding doing it to ourselves, yes and no. Come on---its a free market system. You have thousands of hungry agent clamoring to have ANY chance at a commission and the fee paid wil drop and drop because there is always someone more desperate than you. If you were the bank, why not take advantage of it? Its smart business! Gotta say though the r.e. brokers taking covering the monthly costs on all this REO make it a HELL of a lot easier for the banks to take the properties back. If NAR and all members said hell no we aint doing this any more, more people would have time to try and save the houses. We are being USED. As time goes by you will see REO prtfol;ios sold in bulk to ig companies to be held as rentals. You may see REO sales in the future all go through one or two big auction sites. Thanks about it---that makess more sense and costs far less money if you are a bank. No real estate people even need to be involved if its advertised correctly. We will all be fighting over the few fair market sales that have to take place regardless of economy. Call me chicken little. The mortgage industry called me that in 2008
Barbara, you are right on all points and thanks for saying what we've all been thinking. The only for us long time REO brokers starting over is in knowing we are not alone.
I'd like to add that when banks/asset management companies saw we were willing to pay platform fees or fees for training or whatever they want to call their pay to play fees they decided it's better for their bottom line to give 50 paying agents 1 or 2 listings a year rather than give 2 or 3 good agents 50 listings a year.
It seems they really don't care if their agents do a good job, just who'll pay and accept the least compensation. In the end they get neglected properties with no marketing that'll sell below market. The only opportunity I see in REO these days is on the selling end, either selling to investors or buying for myself. If they want to list with an out of town or out of state broker at a 2 or 2.5 percent co-op commission, with no utilities on, little to no maintenance and let them sit until someone buys them at 20-30% below market I'll be that guy. Let someone else list them until/unless that end of the business changes.
Scary to be REO agent and could get even worse when on top of all the suffering, dedication and expenses you get audited by the IRS and the clever auditor disqualifies your deductions and you are taxed twice!
Before too many people make the statement that REO agents did this to themselves. Let me say we are now paying record gas prices. We need gas! So did we contribute to the high gas prices we are facing? Well of course we did, we drive. Don’t use gas and the price has to drop.
This is the same concept with the REO business. Don't need an income or have bills to pay and REO agents will get top pay once again. As I said 16 years ago REO was a "dirty business" to many agents and Brokerages. Big companies did not "want their sign in those overgrown yards in front of those sad properties. There was plenty of traditional real estate to sell and or list. We all had plenty of pre- approved buyers. To me REO was the niche that all wise people say you must find to be successful in most competitive businesses. In 2006 the REO business became the only one if you were a Realtor in most areas. No non REO properties were selling. Owners were upside down and COULD NOT sell. It was almost impossible to get your typical buyer a loan. We lost hundreds if not thousands of agents during those years. This is when the REO companies saw the desperation of the Real Estate community. That is when the reduced commission, the fees and all of the other absurd requirements and demands were born.
It was not me who paid the first utility bill. It was not me who took that first reduced listing commission; it was not me who agreed to do that first free BPO. But it is me and all of the REO agents who are now stuck with those very industry altering decisions. Decisions that were made to become a "go to REO agent" for the asset companies when there was no other Real Estate to sell. We are now the only industry in the US that has taken a 50% or larger pay cut in the past 10 years. No one can name another . Appraisers were being paid 250 to 300 per appraisal 10 years ago. Now they are paid 350 to 550 per appraisal. When I started as a Realtor all of the Real Estate industry had lower fees, less charges and less profit. Now only the REO agent is paid less than 10 years ago. If you figure the hourly rate on these assignments, factoring in your costs you as an REO agent make well and I mean well below minimum wage. This was a banking industry plan and it worked beautifully. You either did it or you left the entire Real Estate industry. The REO holders saw that they could use the Realtors who were desperate because of the market crash .
It is also is easy to say "we did it to ourselves." Yet you have to realize it was a very gradual process to get where we are today. A few promises of volume for a reduced commission agreement. We went from a utility bill once and a while to now 5 K in mandatory repairs to be covered. I do not know a single agent who offered up 5 k for interest free loans to multimillion dollar lenders to get an REO listing or account. It was a condition of an account that the agent had been servicing for 5, 10 or even 20 years. Or a condition that was revealed after the new REO agent had invested the 1000.00 it took to sign up for the ‘opportunity” to get REO listings. I refused to comply and I was told if you do not take these assets "we will leverage all of your accounts against you." I still have the email. They did as they threatened and for 7 months nothing at all from that asset company. 5 of my top accounts were "advised" not to send me any assignments. I lived off my credit cards for a few months and picked up some conventional listings that paid well and moved forward. Now the story gets sweet, the asset company is now 1 year later, out of business. Yes that is all it took 1 year. They had done the same thing to all of their "preferred agents" and one by one we all were gone. No agents no asset management company. Pretty simple!
As for the industry righting itself ...do not hold your breath. We have to do something ourselves to see change. This industry will not do it on it's own. There is too much profit from charges to REO agents for these REO asset owners, banks and asset management companies. Do you really think they will go backwards like the have made the REO agent do?
As far as there being good asset companies still out there, sorry I disagree. If you are doing more than a one page BPO those good asset companies are gone, The 2 and 3 page BPOs are getting more time consuming. Are they paying more than they did 10, 15 or even 20 years ago? No they are not. This is a sign that even those "good asset companies " are now slowly taking away your value while slowly increasing their expectations of you. You can take that pay cut and pretend it isn't important or happening, but me ... I know better. This is where it starts. So protect yourself and do not devote all your time to anything that will eventually make you a helpless hostage to their demands. These companies are now overlooking the definition of independent contractor. They are price fixing, and participating in other questionable if not illegal practices. They will NOT change until they are forced to change. So right now, blaming the REO agents, playing the “it will correct itself waiting game" or denying all asset owners and REO companies are doing these same despicable practices is just one more nail in the REO agent's coffin.
Consolidation. Supply and Demand. It is the one group that is stronger that ends up winning the bigger piece of the pie. It applies to a free market system and not limited to one industry. While this post shows historical direction what can we as agents do to push out that sliver of pie? We didn't grow this great real estate industry to just take it when there is an economic downturn. Let's do some forward thinking and think outside the box. Funny to think as if we have to lobby NAR to take some action. Or better yet is there something that can be done at local levels?
Same here and thank you Barbara. It's got to the point, if you are not lucky enough to find the buyer....when you have time, you get almost nothing as you say. I am getting away from most REO's and doing more traditional real estate and more paid BPO's. I actually have had companies say they can't find anyone in this rural East Texas area to do BPO's or take REO listings. The last one that ask why I would not take a listing, I told them that I refuse to work for less than minimum wage or pay someone else to work. I have also set a minimum fee for BPO's and do not take any of the $40.00 or $50.00 ones any more and still get more than I really want but they are a good steady income. I don't know where you are but in Lufkin Texas more than 3/4 of all REO's are under 100K so you can imagine when they want a 35% referral fee from the listing side and other fees and only want to pay 2 or 2-1/2% on the listing side and since I'm not the broker of record, I have a split with my broker.....Maybe if we all stick together they will finally have to do something to get it back to they way way it was when we got into the REO business.
Barbara, you explained the REO business in true form, good detail. I quit handling them early last fall, it was getting worse with every new case. I handled two since then but it was one on one with the banks not asset companies.I had power turned on for one, emailed proof of payment and was reimbursed within 7-10 days each month and even received a very nice letter from the bank after closing.
Barbara you have hit the nail on the head. I also got fed up with the REO's and the advance moneies I had to put up with, that I no longer solicit REOs as I refuse, after 40 years as a realtor, to be treated like an unskilled worker.
Barbara, thank you. I stopped working with ALL reo asset managers and tell anyone, who asks me, to stay away from listing REOs and to find another line of work. There is no reason to be treated like the third rate unskilled worker and keep on subsidizing multimillion dollar companies with our work and our money. There is nothing but headache and loss of self-respect that comes from this work. Enough. I am done with their stupid training, mandatory classes, five star bs........done and happy about it.
WOW !!
You are GOOD !!
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