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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Also, I have been able to considerably increase my fees and many companies are paying them if they cannot find another agent. I still do not like doing them, they are too far and waste my time. Nations was the last straw. I did that bpo as a favor to them. they are finished as far as I am concerned. They used to be a great company to work with.
Ed, I am really regrouping my real estate marketing. I have had success with short sales and I am trying to get more agents into my brokerage. I have quite a few agents but the market has been very slow. not many new listings or listings that buyers can afford in the area. I am going to cut out these outlying areas that are killing my time and finances. When I gross a lot with REO listings and BPOS, I spend so much in costs, plus I have to hire admin assistants to help me out and they are not cheap with billing and filing and utilities. The new technology fees are killing me. I have had so many opportunities go to waste because I am spending so much time on REO and BPOS. I hope to weed this out within the next two years and grow my business. I do a great job with buyers and when I have a chance, fair market sellers and short sales.
Colleen, regarding your BPO comments, I whole heartedly agree. Many agents do not realize they can be a waste of time. One BPO acceptance equates to approximately 1.4 hours of your time to enter your researched data and findings, a cost of .40 cents per mile (to and from), wear and tear on your vehicle depending where the asset is located (in some cases you need a four wheel truck), the time spent driving, so if you are 50 miles away that is another 1.2 hours of your (in addition to entering the data), your overhead i.e., electricity, E&O insurance, Tax you must pay and report, in the end an $50 BPO equates to approximately $10 in earnings.
So to increase your potential earnings (not necessarily you, but in generic terms), I would apply myself to networking like no body's business and make it a point to meet two new people every day, that is approximately 40 new contacts, or potential listings, or purchases per month. Hence, if you work 20 days out of the month that would equate to approximately 4,800 contacts per year, if done correctly this should get a minimum of 8 to 12 listings per year and some purchases in the process, thus a $100k annual in commissions could be achieved if done properly with discipline, the right strategy and extreme focus.
I am not sure, I am also kicking BPO companies to the curb, Nations Valuations is a company I have been doing work for 12 years. They got so bad and reassigned a BPO on me that was 70 miles one way to inspect because they did not like my comps. The pay for BPOs has declined about 30% since I started doing them. Too many desperate agents will take these listings and BPOs. I have started upping my BPOs fees since it is getting too expensive and time consuming to do them.
Coleen,
I do understand the fear here. We are REO agents who have thrown ourselves in to the overwhelming task loads of the REOs. REO agents have had no time to do much else. With all the weekly checks , Status reports, BPOs, billing expenses, CFKs and everything else required for the REO listings most REO agents were very busy with no time to work for conventional listings. Somehow I wonder if that was not a strategic plan on the part of the AMCs . (And no I am not a conspiracy theory supporter) We all have heard "well if you won't do it there is another agent who will." They used agents against agents and in times of sheer desperation they cut our pay and added responsibilities because they knew the state of our industry.
We all have had great relationships with many asset managers. We are always reminded by these people who are sympatric to our plight that " they don't make the rules". The truth is AMC management and some lenders themselves make these commission and expectations decisions , as we all know. . It is almost a good cop bad cop scenario in the REO industry. The management team has no problem cutting our throats to make more money for their bottom line. A lot these companies are amazed that Realtors will do all of this work, pay all of THEIR bills and do it all for such small compensation. We now see them pushing harder and making the "fee paid" a set 650.00 . They call it a commission but a commission by definition means The payment of commission as remuneration for services rendered or products sold is a common way to reward sales people. Payments often will be calculated on the basis of a percentage of the goods sold. This is a way for firms to solve the principal–agent problem, by attempting to realign employees' interests with those of the firm.[1]
We as REO agents never know how long any REO will be on the market or how many tasks we will have to complete (how much work we will be required to do) before we are finally able to close a sale. So we know we are not being fairly compensated for the work we do. Each asset is different. We also know we are not receiving a percentage of the sale price. We are receiving a percentage of a percentage. I have figured my hourly pay many times before. After expenses it is as low as 2.25 per hour on many listing. It is never more then 7.50 per hour after all the premarketing, marketing and closing assignments are added in by the hour. Out of that I have to deduct some of my Licensing expenses and E&O on each asset. Most agents also have a Brokerage fee of some sort.
So we are working for less than we would work if we were offered a job anywhere else. WHY? Can you imagine we go to an employer and they want to hire us for 2.50 per hour? We would walk right out the door.
We are all chasing what used to be. We are all hoping some magic will happen and these AMCs and asset owners will wake up and say" let's pay these good agents better and lets pay our own bills". We are drinking the kool aid and dying the slow REO agent financial death.
We are in fear of loosing the coveted REO account. Why? As far as the policing goes I send emails and speak to AMCs and agent coordinators all the time. I fill in the surveys with exactly what I think. I always hear the words " We hear you, we hear this all the time from REO agents everyday"
We have to find a way to stop this downward trend REO agents are caught up in. A year ago when I wrote this Blog I began narrowing down my clients. Another words "Firing" many of them. I sent listing back for re assignment , removed my name from any and all auction company agent lists and choose the best of the best to work with. I was amazed how many just kept sending me more listings even though I was not doing ANY work on the ones that they still had in my name. I wasn't completing a single task and kept telling them to reassign them. They just kept sending more listing assignments.!!They need us we just do not believe they do. They are using our fear against us and they are very aware of what they are doing. It has been working very well for a few years now and it is getting worse as we REO agents all know. What is next?
beware of Blue Mountain, I have told them to directly what I think of them. I have filed a lien on one of their properties for electrical work that I had done that I was pressured to do, then they conveniently turned around and said they were giving the property back to the former owner. I have never done that before, but the amount was huge. I did notice they are doing very little in Ohio lately.
you know what is funny is that I am a good buyer's agent and work with traditional sellers and short sales when time affords me the opportunity. I have gotten so wrapped up with REO that it leaves me time for little else, except for what I need to do with my brokerage. Now I am making less money for doing more work. That just bites. I got ripped up by an asset manager in another blog on this site for what myself and another agent said about some issues we were having with reo companies and I felt like I was being policed up. This is exactly why so many agents are scared to say anything. I have very good REO clients who are fair and compassionate, others I am not so sure about.
Colleen, You are so welcome.
I am so making waves!! If there is an injustice I think we have to do something. Too many agents are in trouble now because they were primarily REO agents. Good agent who have had all the rules changed over the past 5 years. Agents who did a good job, spent all their time on lender owned assets and had little time left for conventional Real Estate. Now the pay back for all of that loyalty and hard work is where we are now. Someone has to expose what is happening here,
If you work and do not get paid you should consider filing a lien on the asset. Check your local laws or set up a free consult with an attorney. Who cares if you never get another listing from someone who cheats you anyway?
Everyone in the REO business distances themselves from the rest of the "team". Many REO asset owners look the other way when things go left of center. They insulate themselves from other's actions legally. They are smart when it comes to lessening their liability.
Thanks very much for the information Barbara, I thought that the law had been changed about the disclosure form. I signed up for Freddie Mac ( a company I had worked with in the past) and the question was about the $5000 per property for reserves. I have some but I am not sure why I have to be the bank. I will look for Denise's previous posting and find that number. I do not want to make waves, but things have gotten worse lately. I am very bothered by the fact that I am pressured into paying huge bills in some cases and waiting in cases over 6 months to get reimbursed. One more thing of concern, is what I feel is the tactic of some companies not paying at all for reimbursements, such as IAS who ripped me off and others for properties. I consider that to be a form of embezzlement. Broker Price Opinion called me the other day and I hung up on them after telling them yet again not to call me. Why are the banks/lenders not concerned about these crooked companies?
Colleen, As far as the statement Doc from the title company agreeing to be responsible for past due bills. I NEVER NEVER sign it. I refuse and tell the title company it is not part of the LA and is NOT a seller required document. That ends that right there and then. I always let the title companies know that I can take any and all of my buyers to another title company anytime I feel that they are not treating me and or my clients right.
My advise is never be intimidated by a title company.
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