What is a "broadcast BPO order"? Why do agents get excited or upset when the topic comes up? What does this have to do with my business? Hey, if these things only pay $45 to $65 each, why does it even matter?
Maybe you're new to real-estate, or maybe new to the REO world, or maybe you've just plain been focused on listings & sales, and haven't taken a close look at BPO's in a while. If so, then I can hopefully share some tidbits of advice from my own experience to help you learn more about them. Who am I? I make a software application that captures broadcast BPO orders, and through refining that software over the last year I've learned a lot from my clients about the subject.
What's a BPO? BPO's are big right now, because it's a poor-man's appraisal and banks use them to save money during the foreclosure process. Any real-estate agent can do a BPO, but not every state allows them, and some states have restrictions. Generally speaking, a BPO means driving by a house, snapping some photos, and filling out a lengthy form that looks a lot like an appraisal but carries a lot less weight. I guess you might call the BPO an "educated opinion", whereas an appraisal is an "expert opinion", and the difference between those comes out to several hundred dollars that the bank saves by not doing an appraisal.
What are BPO Companies? Whenever you've got lots of little orders floating around that are tough to manage, somebody's always going to come along with a "middleman" idea to make a few bucks off keeping it organized. Low and behold, when the economy got worse & the market was flooded with BPO's, the few existing BPO Companies were joined by a bunch of upstart management groups, which brings us up to a total of several hundred BPO Companies assigning BPO orders to agents and selling the results to the bank.
BPO Companies aren't supposed to be fly-by-night operations, but that's how they seem to behave. They come & go quite regularly, and if you follow the big ones you'll see a string of BPO-company bankruptcies, mergers, acquisitions, and other confusing maneuvers that make it difficult to track which company is doing what on any given day. So, LandAmerica becomes UTLS, REOTrans becomes Equator, and so on.
Like any industry, there are a few big players and a bunch of little guys - in the BPO world, you've got Mark to Market, Equator, Clear Capital, and a handful of other giants, and then a ton of smaller outfits that nobody's ever heard of. If you're an agent, you want to sign up with the big ones, because that's where the work is: they have giant staffs of salespeople who network with major banks to ensure that their stream of BPO revenue doesn't dry up, so by registering with them as an agent you benefit from their volume of operations.
What are Broadcast BPO's? There are typically two ways that the big BPO companies distribute orders. The first is by assigning them directly to agents near the subject property, which they pick by proximity and agent rating. If you're an awesome agent and you do consistent work, you'll have a good rating, so you'll get orders assigned to you directly that you can either accept or reject.
The other type of distribution for BPO orders is "broadcast", which means exactly what it says. The BPO Company sends out 500 emails to every agent in the area, and the first one to click "I accept this order" gets it. They typically earn $45 (exterior) / $65 (interior) for completing them, but the real payout is that your agent rating goes up for each one that you do (if they're quality & on time).
Agents are willing to fight for these BPO's because those $45 orders lead to assigned orders, and also eventually lead to assigned REO listings, which pay a LOT more than $45 each. So the agent rating is the key factor in building your credibility with the BPO company, and that credibility gets you perks over time.
How many of these things are there? Lots and lots. There are millions of BPO's done every year, and 12% to 15% of those are broadcast to anybody who can get them. Basically, when you register with a BPO Company they have you submit a list of ZIP codes that you're willing to work, and when they broadcast orders they'll just notify everybody with the subject property's ZIP code that an order is available.
Obviously, this creates a competitive environment - so incredibly competitive, in fact, that agents have hired East Indian call-center staff to click "refresh" to catch orders for them, and others have written in-house software to automatically accept orders by logging into BPO websites to simulate a person checking for orders.
When you think of "Joe Agent" sitting in his living room looking for work online, the paragraph above seems a little ridiculous - but the organizations willing to hire overseas labor to accept orders setup large "shops" that crank out thousands of these orders every single week. For them, it pays to spend $3 an hour for somebody to monitor a website and click refresh to catch orders on their behalf.
The biggest BPO shops that I'm aware of are in Los Angeles - that seems to be the center of the world for BPO's these days, with lots of orders flowing and even more agents waiting to accept them. Just like any other market economy, a few people control a lot, a few more have enough, and most have little or none.
What's the AutoAccepter 2? In April 2009, my business partner and I started a company to automate form-completion for BPO orders. We've got a cool process, it's highly addictive (because it saves agents a lot of time), and because of this our business grew rapidly.
About 2 months into the business, a few clients started nagging us for an AutoAccepter. We had nothing, but we knew what autoaccepters were (and we didn't like them). Ethically speaking, it takes work from the many and moves it into the hands of the few, which just didn't seem right when agents use BPO orders to make a living.
If it was up to us, AutoAccepters would have been illegal - but of course it wasn't, and a big AutoAccepter provider called "BPO Hunter" was grabbing all the orders at the time. They had an interesting strategy: BPO Hunter limited the size of their client-base, and charged top-dollar for BPO's captured. Since they'd automated order-capture, you either paid them rent or you went broke, so they had a stranglehold on the market....and they weren't accepting ANY new clients.
We started developing our own Automated Order Acceptance system, which eventually led to today's "AutoAccepter 2" software. Instead of a big, monilithic software application running on a server, grabbing orders for the few, we democratized the process: we built the cheapest, most effective tool we were able to and let as many people download it as we could. The result was BPO Hunter in reverse: a truly cool way to put the power bank into the hands of the individual agent.
What happens when EVERYBODY has an AutoAccepter? Since BPO Automation is democratizing the process of accepting orders, there's a theoretical point in the future where everybody will have an autoaccepter, which then removes the point of paying for an autoaccepter in the first place...well, almost.
Automated order-Acceptance is valuable not just because the market is competitive, but also because real-estate agents live highly mobile lives. You're always on the go, always on the road, and you just don't have time to sit in front of your computer to accept orders during the day (and these days, people do it all night, also).
In that context, the AutoAccepter is an insurance policy against lost work, but not a guarantee of income. Also, since there's no way to accept orders faster than using an AutoAccepter, when everybody has one, it means nobody is cheating - unlike last year, when BPO Hunter's closed cadre of clients locked everybody else out of Mark to Market for nearly two months (which is why we got into the business).
What about CAPTCHA Codes? In late 2009, Mark to Market started using a "CAPTCHA" code to limit who could accept orders. In mid 2010, Mainstreet Valuations did the same. We applaud their commitment to fairness by doing this, but it's not as fair as it looks because a CAPTCHA code only prevents a machine from accepting orders, and does nothing for underpaid, overseas labor doing the same thing.
Thus, by implementing CAPTCHA codes, Mark to Market and Mainstreet didn't become more "fair", they unfortunately just changed to a new type of unfair" that limits order captures to people who can afford to send it overseas or have their secretary click refresh for them during her lunch-hour.
The ultimate outcome for CAPTCHA-protected websites is REOTrans/Equator, which is one of the most competitive BPO broadcast environments because agents actually pay money to buy certain ZIP codes, and thus end up losing money every month unless they capture enough work to offset that volume. Hence, the CAPTCHA code prevents automation but the financial incentive pushes agents to try to make back their monthly investment, which has led to countless upset agents contacting us for a solution (by the way, they broadcast their orders at precisely 7am & 9am PST on weekdays, and those orders are always gone within 2 minutes, so click refresh fast if you can).
What's the future of AutoAcceptance? For BPO Automation, it's pay-per-order, and the reason is to keep leveling that playing field. We're a software company, and for us to stay in business, we have to pay programmers, web-designers, and salespeople. We run a tight ship to keep costs down, but not everybody can afford our product - and nobody can afford to go without it.
So after a lot of thought, we decided to develop the next version of our software on a "pay per order" model: we give you the software free, and charge 5% of the per-order payout in return for capturing them. It's a bit like BPO Hunter, but more ethical - we're not charging a high rate, and it's an open network that anybody can join.
Our current buy-it-once model has some advantages: if you buy our software today and you'll probably have it paid for in a week (depending on order volumes in your area). However, the pay-per-order model also has advantages: download the software when you need it, and don't pay until it captures orders for you.
Pay per order also has disadvantages: in terms of selling the software, we lose that revenue stream temporarily while we build out the pay-per-order network. However, it's worth the loss in order for the greater gain of being able to finally feel good about creating a fair playing field where all agents have the ability to specify what, where, and how much for the orders they want to receive, and then come back at the end of the day to see those orders waiting for them. We're developing this technology right now, and (we hope) that it will see the light of day before Christmas 2010.
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