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.
Comments
Yes Colleen It is too much micromanagement! The banks love it that way,,,then they call all the shots..
and they get the work done on their own schedule, M-F 9a-5pm, no holidays etc.We do have a choice to DECLINE the listing ...The problem is that there is always some new or hungry agent, or agent who just wishes to beef up their own inventory, and make more sales...if we do not like it, we must lump it. We do need to complain to NAR and our local State atty General sounds good...for a start. The banks are taking great advantage of us, IF WE KEEP LETTING THEM. This Blog will get the word out. DO NOT ALLOW YOURSELF TO BE REELED IN LIKE A FISH, or we will be making way less than minimum wage FOR THE BANKS!
Tell the bank to negotiate the fee...UP...or not taking it...Ask to see a scope of the work expected FIRST...
As Barbara stated in her post...what they expect is never ending, and we become the manager of THEIR Properties...(and when you cannot even keep the listing till it closes,..30-90 days Keystone says.. then they move on...but they do not tell you that BEFORE you agree...they can also cancel at any time!) we have lost a great deal of our time, effort and funds, babysitting THEIR PROPERTIES, and when it does close when we have the listing, the fee we receive is so small it is not worth the time, trouble, aggravation and liabilities if we are LUCKY. We are chasing perceived value clients, but they are not! They are Wolves in Sheep's clothing.
Please spread the word to complain to our own REALTOR organization, NAR! Locally as well like you suggested to the attorney general is also another start...and spreading the word amongst our professional agents.
Denise I am also concerned about what some of the these lenders/banks are doing. Even with short sales. I have two with Keystone right now and I have been babysitting two properties for at least two months, with no expected list date. I have to inspect these properties weekly and they are not that close to me. I am not sure who to complain to, THE NAR? I also think starting with the Attorney General and your local real estate board, as well as your state association of realtors to find out the best transaction. Banks should let us tell them what commission we charge, not them. I have some banks that do not allow dual sides with the listing brokerage or will reduce the total commission even further if I bring a buyer to the table. I have actually gotten a list from one bank reducing the total commission structure of what they were already paying. It is getting to the point in some cases of a 1% commission. At least if I deal directly with a bank I get a better commission split and I get reimbursed very quickly. Some actually have their own preservation departments that turn on utilities and there are a few others that are following suit. Some will let you split the commission as you see fit. I hate it when I am told to offer a higher split to a selling agent. too much micromanagement.
Years ago I remember the BANKS wanting IN on the REAL ESTATE TRANSACTION with REALTORS.
Looks like they are getting their way with the REO's.
As Barbara posted above, the banks are taking advantage of the real estate agent and I concur. KEYSTONE is of particular concern to me. For a 35% referral fee when it sells, no payments to agent who does the work, such as I had to do, like: Cash For Keys with tenants who might harm you, eviction letters, trash out, utils in agents name, vacant property notice, winterization of property, Water Turn Off by the towns...BPO's by the boat load, property inspections, bill back to Keystone to get reimbursed.. We do all the work, then if they do not list it properly, and it does not sell, then they move on to another agent after 60 days or so...and they reduce the price to the proper price point. The next agent did not do the hard work, but does get the payday. I am no longer going to take KEYSTONE REO's. They make the agents pay for all THEIR OWN PROPERTY EXPENSES and do not reimburse us for all our costs, just to bill them takes considerable time to do it properly.. and our stamps, and checks...and then we have to pay THEM 35% or whatever. NOT WORTH IT. THE BANKS ARE NOW IN REAL ESTATE...!!! JUST SAY NO... I will complain to NAR,,, who do I complain to? !
Sally,
This was the practice for a lot of lenders when I began doing REOs .It isn't that way anymore because AMs stepped in. All banks have local branches in each State. They do not have the staff in an REO dept at this time however. The banks have no idea how much money they are loosing by using AMS now. Re keys are done 3,4,5, times and even more for no reason at all. Preservation companies give a per asset price on all the REO. Typically 5000.00 for each one. The 5 K is supposed to cover care and maintenance for the asset. A whole list is given to the asset owner to impress them. We as agents know almost 75% of what is on the promise list for the 5 K charge is never done. We also have AMs that do not use agents for marketing. We all know who these AMs are. These AMs never see the properties. They hire contractors to do all the weekly checks and all else. Little do the banks/asset owners know that these properties are being damaged beyond repair and are loosing value every week because no one is really watching them even though the asset owners are paying AMs to do so.
All of this is disappointing and hard to swallow. We all see it getting worse and worse every year it not by the month. But we do not do anything. As I mentioned in the blog, I am not doing it anymore. I am exploring my options and working on change at this very moments. I am posting from the mountain tops and telling it like it is. If I loose clients well then I will use my 1st amendment rights even more, louder and with Company and mgr names to boot. If my voice can make even one thing better for this industry , well then I guess I have to use it.
I spoke to NAR last week about these issues. I was told they are not getting any complaints from REO agents about any of this. So we can not totally blame NAR if we are not being proactive ourselves. Let's face it everyone...we are afraid to make any waves for fear of loosing our now low paying accounts. But think about it...we all know at this point there is not much to loose here . As things get worse and worse and Agent income gets lowered by the AMs and asset companies, we all have to say OK how far down am I willing to go before I try to do something to change it? This is a personal decision of course but it is also an industry question as well. As Realtors we belong to one of the largest origination in the US. The problem is we are too afraid to organize on the REO issues. How little can Realtors be paid before someone decides to do at least something on the Realtors behalf to keep this occupation from being like a third world county sweat shop job? NAR does not know what we make or are expected to do as REO agents. Even other Reators think we are well paid and lucky. ONLY REO AGENTS KNOW. Well us and the AMS and asset owners. A rep from NAR told me that the largest asset owner in the US promised NAR last year that they would not drop commission below 6 % on REOs!! I had to explain to the rep that they pay 5% or 6 % but then take back 3 % via registration and other fees, education seminars and referrals fees. What a surprise to him when I told him I was only being paid about 1 to 1.7 % after all of the Asset owners deductions. He just could not understand why REO agents would work for that. That was before I even mentioned all the 5K asset requirements and agent paying for repairs, utilities and all else. So when we are saying it has to stop remember their is an I in quit!!
This will get worse, if something is not done. I am surprise that CAR and NAR has not done anything. They should already know what was happening in our industry.
I read your Auction article. It will not get better if we don't have the government step in and set new guidelines regarding our commission/income (needs protection), and new companies coming in and taking advantage of us Realtors. Realtors can end up in the unemployment line.
What I would really like to see are the banks/servicers of the mortgage holders is to have the assets to be handled locally from their branch offices. There are too many unethical or illegal activities coming from out of state. I believe if a representative from a branch check the Realtor's work locally, he/she will understand our situation. We will have Realtors working with an honest paycheck, and the government will probably have less concerns with the wrong homes getting foreclosed upon or companies not giving a short sale approval because they want the assets with equity. This can be a good idea to get the unemployment down.
Sally, The problem is Realtors are and have always been "independent contractors."
As far as the auction companies "making tons of money" on the REOs , the truth is everyone is making tons of money from REOs but the REO Realtors. There are literally hundreds of asset companies today. Asset management is big business now. Asset companies charge both the asset owner and the Realtor to manage the Bank owned properties. REO agents do all the work and the asset management companies make a fortune off the Realtor's work. Then the asset company charges the REO owners fees (some times large fees) for everything the REO agent does without pay as part of the assignmen, just to be paid a total 2.5 % commission.... minus fees.. REO agents do free BPOS, CFKS, assist in evictions, order and oversee property preservation and rehabs , pay utilities, do weekly status reports, do weekly occupancy checks, re keys, and also even are required to loan up to 5000.00 per property interest free to the asset owners. All of this and more just for a 2.5 % (or less ) listing agent commission minus portal,education, referral fees and other charges mandatory for an REO agent to be given even one assignment. The truth is there is a lot going wrong, a lot that is unethical and a lot that no one is talking about that needs brought into the light. It is time to start exposing the underbelly of the REO industry and tell the REAL story of the REO agent's dilemma. No one knows what is being imposed on and expected of REO agents but the REO agents and the asset management companies and asset owners. A good question would be why are we Realtors, good , reliable, intelligent business people letting this happen?
The problem with most of these Asset Management Companies is that they are getting away with scamming us Realtors, and no one is reporting or complaining to the BRE/DRE, labor department, CAR or NAR.
Usually, if a company is to open a business and hired salespeople and contractors, they would provide an expense account to them. They also have the capital and the support, so that the hired sales department would not put out the funds for the company. The salespeople/contractors would have to provide documentations on all the expenses being charged. I believe if a company had their salespeople put up the funds upfront, the government can shut them down.
This is a big problem in real estate by letting Asset Management companies coming into our state and taking advantage of us Realtors who are professional and don’t think about complaining due to lack of knowledge. I personally believe if a person or company who want to go into the REO Asset Management business, they should understand why Realtors are given the 3 to 6% commission, the amount of time spent to get an income or no income, the expenses involved including real estate education, the income tax that needs to be paid and the number transactions we realtors get per year which is usually not a whole lot for the majority of Realtors. It seems to me if you become a REO Asset Management company, you really should have the capital to cover the expenses and not rely on hired help. What usually happens is that Realtors sometime don’t get paid. The DRE/BRE should have a link for Realtors on illegal activities from Asset Management companies, so that they can be shut down if there are a lot of issues with them like hiring people and don’t pay them. Both the DRE and labor department can make money on penalties (government needs money) with these illegal activities.
I see jobs have been taken away from all states due to assets are being sold through the online auctions. The auctions companies are making tons of money by working in all states from one location. They are able to charge a premium from 5 to 10% to the buyers, plus the realtor’s commission. And they don’t need a DRE license to do this. They do have one DRE license on the contract, but you are never involved with this licensed person. The names are different. … Their staff people who are handling the real estate transaction are not DRE licensed. And they managed to be unethical with the buyers. … If you ever got involved in an auction, go check the auction people name at the DRE website. You will find they are not licensed in your state. And the auction people on the contract or email are not DRE licensed. … The title company is no help at all. They just go with it, knowing something is wrong.
A good rule to follow if you do consider REO listings or "signing up to become an REO agent" is to get all of the costs and expectations upfront before agreeing (and getting excited about being "chosen") to become and REO agent. Today the Asset companies, Asset owners and all of the REO platforms disclose this information slowly, a small piece at a time. This is done in a way that the agent is almost in too deep before all the costs and expectations are disclosed fully. It begins with an application, a small fee and a lot of promises and ends with a large financial and time investment and includes some very unrealistic agent requirements. All of this has to be agreed to and met prior to being assigned even the first REO listing.
IF you know all of what you are required to pay, provide and all of what your agent duties include before you take the first step, my guess is you will be surprised and unable or unwilling to agree and to provide all that today's Asset owners require.Transparency seems to be a new word which we as agents should be interested in too.. When asset companies tell you they do not want you to discuss their in house practices with anyone especially the press...well something is not so right in our REO world. So my suggestion is know everything BEFORE you jump in. We as agent are taught to disclose, disclose , disclose. It is time for us to REQUIRE the banks and all asset owners, asset management companies and all REO principals to do the same for prospective and veteran REO agents UPFRONT ! It is the RIGHT thing to do.
Sarah, there are a lot of reasons utilities are not turned on in REOs. At times the electric meters are removed due to non use of a property that was foreclosed on. To get electric turned on the county or local officials have to inspect the electric and make sure it is up to code and safe. If it isn't then it has to be corrected prior to service being turned own. Many REO companies do not want to repair assets and choose to market them with out addressing the electric issue. On the water being turned on.. in many suburban areas it is well water. This is "turned on" by flipping a breaker and de-winterizing the property.In urban areas with public water it is a matter of paying the past due water bills, de- winterizing and then waiting on the water company to set a time and a 4 hour window to meet the agent for turn on. De winterizing costs around 250.00 each time it occurs. Each time the asset is de winterized it has to be re winterized at another 275.00 cost. On some properties this can occur 2,3 or even 4 times. It gets costly and time consuming.Many asset owners are now letting buyers pay this cost which is a good financial decision on there part in my opinion.
We also have missing plumbing issues at times. More cost that many REO asset owners are reluctant to pay. In some urban areas utilities encourage vagrants and or beak- ins. REO assets are the unknown for agents. We have no idea what is functioning properly mechanically and what is dangerous. Recently a vacant REO home in Ohio exploded. The gas was on and the home blew up for some unknown reason. Most likely a gas leak or vandalism was the cause. This happens more often than is reported. I personally feel it is a safety hazard for the property, the neighborhood, the public and to the REO agents themselves to have most of these vacant properties left with water or gas turned on in them. I have seen more property loss and dangerous situations created by these 2 utilities being on in these vacant properties than I can even mention. Some intelligent/ experienced asset owners recognize this and do not have these utilities turned on. There are other reasons for the lack of utilities in REO properties. Agents not financially able to support utilities in 10 to 20 properties or more they have been assigned . Agents pay these bills and then wait to get re reimbursed. Many REO agents just can not afford to pay and wait for 30 days to 6 months for re reimbursement. There are other reasons as well but those are a few of the most common ones.
As far as turning on water "with a missing water heater and a pipe that was wide open", well I am not sure how anyone would consider that. The water would run continually, flood the basement, create a huge bill and damage the home and the mechanical components. Not a wise decision in my opinion, and to me it would be a VERY BIG DEAL. I am not sure how that worked out in the case you referred to, it is something I would not be comfortable doing.
Marvin, sounds like a good plan to me. Good for you. I am glad to hear there are agents out there who are not selling their freedom and their life for these asset owners who have no respect for REO agents. As you said "life is too short" . VERY VERY TRUE!
Many agents who have little to no REO experience think REOs are easier than prospecting for listing, doing FSBO, or many of the other age old ways to acquire private ownership Real Estate listing.Most non REO Agents do not know today's REO world and have a real misconception on the entire process. Once they get stuck in it and have so much cash invested and time into the REO world they have a hard time getting off the old hamster wheel.
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