OK so I get the message loud and clear. I am a kill joy and the bearer of really bad news here on this form. I know, I know I am the one who always brings the REO hopefuls down.  Yes I admit to sounding like a real “Debbie Downer” here. That is how the non REO agents feel anyway. The REO agents in the field today know I am only telling the real story.  We can all put on our big girl and big boy pants and realize that the fact that there is no Santa is not the fault of the kid who ruined it for you in 2nd grade. Your disappointment came from the myth that Santa existed in the first place. Oh sure it was exciting to believe you could get anything you wanted from SANTA. Exciting until the first time you didn’t.

That is the way REO Real Estate is. Agents have a myth that REOs are the way to get a great income without working for the listings. Another words no more FSBOs , expired , no more cold calls and no more competition for listings. That is as pleasant as Santa folks but like Santa it IS A MYTH. There is no GREAT income anymore for the REO agent.

Ok let’s get down to reality. REO listings were VERY good 17, 12 10 or even 8 years ago. Then all the non working conventional Realtors decided they wanted to list REOs. They scrambled, begged and bartered for the chance to list REOs. They agreed to put utilities in their name, to take a lower commission, to do more visits (property checks) to the properties, to advertise, to assist in CFKs and evictions free of charge, free BPOs  and a lot of other things free of charge that ruined the REO profitability for all of us. All asset mgr and any REO client will say “well if you do not want to accept the listing for this amount there are plenty of agents who will. We will just re assign it”  THEY ARE RIGHT. I have turned down a lot of very low paying assignments in the past year only to see them listed later with another  REO agent in our area. Realtors have no sense of organizing past a designation. Banks and AM know this.

We all know agents who leave the grass grow, have no utilities on, don’t install a lock box and really make it miserable if not impossible for any other agents to show let alone sell their listings. That is the result of too much loss and not enough income.  If you do an REO the right way you will not make much money at all (as I have been saying for months here). So the banks have made it almost impossible for agents to do the job right and make more than a few dollars an hour.  Out of the banks greed “bad” REO agents were born and so were us Debbie downers and the starving REO real Estate agent.

Let’s do this, any one of you can come to my office in Ohio for 2 days to a week and see what is really entailed and how much profit is made in the end. I will gladly share with you at the end of that time how to accomplish getting on the waiting list for any one of my clients if you still want to be an REO agent. I will stand by my phone and await the non stop ringing.

Or we can ALL come together, organize and make the REO industry profitable again. Impossible you say? Now who is “Debbie Downer”?

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Comments

  • Thank you Micahel , 

    I am not going to spend anytime telling you how hard working I am because anyone who is really in the REO industry knows how much work it takes to be an REO agent especially for 17 years with many of the very same clients. Anyone who does FM or FNM knows what those listings take. Any REO agent knows you don't magically get listings. You have to do a lot of hard work or you loose the accounts permanently.

    So please don't misunderstand me. I closed 6 last week and will close another 3 this week. I also closed one conventional listing.The commission on the conventional listing, 13620.00. The commission on the REOs all 6 of them 6,000.00.  I worked on the conventional listing for 6 weeks total . I worked on all the REOs minimum of 3 months before listing and another 3 months on the market until they went under contract. I have about 30 hours in the conventional listing and well over 200 hours each in the 6 REOS listings. I have invested about 2000.00 in utilities, and about 2500 upfront in repairs in the REOs. I invested about 250.00 in advertising in the conventional listing That's it 250.00 total cost for the conventional listing.  As a good strong business man PLEASE JUT DO THE MATH! The number do not lie. And the Truth is the truth. REO DATA and an agents stats can be easily found. So I have no  reason to be anything but honest here. Most of us who are REO agents are just like I am. We know this industry is a disaster for REO agents.  All we want is to be paid a respectable amount with a reasonable amount of responsibilities. 2.25 per hour is not anything close to reasonable for a licensed. educated professional or anyone else for that matter.. So if you have a wonderful story and good result than good for you. But please understand you are far from the norm in the REO industry today. So until you walk in our shoes, and believe me my friend you will, don't judge us.

  • Marian,

    Thank you for sharing your experience here.

    Your story is a very familiar one. Hundreds of agents saw this happening again and again in the REO market. Ocwen was one of the first to strip the listings from their loyal longtime agents and give them all to an in house agent. There was no compensation for all the work already done by these agents on the assets that were "reassigned". As the larger companies merged or absorbed the smaller lenders the loyal long time agents were dropped like hot potatoes all across the country. We lost as many as 50% of the good and very loyal REO agents during that time. Today there is no security in the REO field and as stated many times before no respect or loyalty from these asset owners and AMCs.

    I was just offered 9 listings that were PULLED from another agent. The commission was 500.00 each!! Yep you see it here 500.00 maximum commission for the listing agent and a maximum of 400.00 for the selling agent. OF COURSE I told them I was not even going to entertain working for them. I turned down all of their work.

    As far as mentioning commission, talking about commission is fine. The big no no is price fixing in the equation. As Realtor we discuss commission with clients every day. Commissions in Real Estate are supposed to be negotiable. Yet the AMC do and have been setting commissions for several years now. Right now I have a saved e mail from 4 years ago. It is from a leading lender in the US. It states "to stay in line with industry standards" we are now reducing the commission paid on all of our assets from 6 to 5 %. NOW to ME THIS IS the very definition of "PRICE FIXING." When entire industry gets together and sets commissions without the ability to negotiate them what would that be considered if not price fixing?

    So yes we can speak of and even debate commissions, negotiate them or even expect a certain amount that can be negotiated. We just cannot fix commissions or attempt to get the Realtor industry to do so like the asset owners are now doing.

    On banning together, we could establish expected and normal duties to be performed. No more practicing law as we are requested to do. CFKs save the asset owners 10's of thousands in legal fees and damage loss every year. Several times a week I am requested to name all lien able items. Well folks this is the job of a Title Company, a field of law practice and insurance industry practice, neither of which I am licensed in.

    We are asks to pay expenses, utilities and many items, thus lending the LENDER money without interest. To me this is or should be covered by lending laws. Another field I am not licensed in ..lending.

    We should be able to practice Real Estate not construction, contracting, lending, evictions, title services, preservation services and all the other things now being expected by the AMCs as a listing agent with a REAL ESTATE LICENSE.

    Forming a unified organization of REO Realtors and or Realtors in general to set some guidelines and some boundaries for AMC and asset owners will be the only way we will ever see this out of control movement/attitude to use and abuse REO agents stopped. Think of this... 500.00 per listing !! That is where this is now. Where will they stop???

  • I'm closing on 3 REO sales this week...it appears that you need to spend more time working and less time complaining. In my experience, folks like you are always upset about something. Its a great market right now and I'm sure that everyone who works hard will be successful. Happy selling everyone!! Cheers

  • Excellent post! I agree that we need to band together to make the REO business more professional and have some rights against the big companies. But PLEASE, do not discuss commission rates, (which is also a crock) here ever, unless you want to deal with the after effects. We as realtors, are not "allowed" to discuss our commission rates with anyone......I would hate to see an agent get in trouble for making a honest and harmless remark here on this blog. Before we know it, we will be banned from blogging!! I thank who ever started this  site to give us all a voice and a way to communicate!

    We were "fired' from PAS this past fall with no reason what so ever. Just one day received an email (yes, email) stating that all of our properties would be re assigned. We had worked for them for over 10 years, with faithful service, doing evictions, cash for keys, repairs, property inspections, Weekly reports, monthly BPO's, arranging for lawn service, trash-outs, sales cleans.......all for free!!! They expected us to turn on utilities and pay any deposits, pay the utilities monthly bills and wait for to be reimbursed, that is if they felt we did the invoice and check properly, for 45-60 days to get paid back for their bills!!! It is a crazy business and you work your butt off, never get even thank you or  a pat on the back! Heaven forbid you get  a multiple offer situation and then believe me you work!!! If you have multiple offers, you must send each buyer's agent a letter to notify them of the situation, giving them a time limit for offers, then you must submit all the offers-some require a worksheet, to the seller for them to then decide who to accept, even if the first offer was a full price offer!! That is not fair in my book.......PAS and most other companies make buyers wait 15 days after the listing has been on the market, before they will look at an owner occupied offer......so if you were on top of the market and see the listing come available, you must wait to present your offer, by that time, there are 10 other offers and you must compete with that offer! Again, not fair, or professional business practice, the seller feels they must give everyone time on the market for them to see that the  property is listed, forget the good agent who is on top of the market......give everyone, even the lazy ones, a fair chance!! I guess it boils down to that EVERYONE is entitled in this world, forget the hard work.....

  • Hi Judy, It's nice to see support from agents who are living this nightmere.

    Can you imagine as I said if a traditional Realtor in any area began taking listings for a 1 to 2 % commission? (believe it or not the REO compassion are now decreasing even more.) On top of that what if a traditional agent offered all of the services I mentioned to sellers in their listing presentation? I think the agent's phone would burn up with calls from his peers asking him what the heck he was doing. 

    It is a well known and age old fact that banks have been trying to eliminate Real Estate Agents forever. They want to find a way to avoid the commissions. Well now they have the best of both worlds. They have agents who work for nothing, loan them money interest free and take on all of the responsibility of their properties. If they go to any other form they will have to pay someone to do all of what they get for free from the REO agent. They would have to pay the utilities themselves and all of the expenses now fronted by the REO agent.They would have to hire people to go out in the field for inspections,pictures, signage now done at their whim weekly or more often, by the REO agent for free. The banks require  500K or more of E&O and another 4 million of business insurance so they can recoup any losses they can blame on the agent via the agents coverage. 

    We all need to be concerned and proactive about what the banks are doing to our industry. To think they are going to change from the current and very profitable system of using agents at minimal costs is a little hard to believe, but anything is possible.

  • Hi Barbara,

    You are 100% right on. Agent's have no idea what they are getting into if they take a REO listing. The paperwork alone is a mountain to climb, weekly inspection trips to the property, money out of pocket for utilities and all prep work including clean out and interior, exterior cleaning. All this gets very expensive. If you're lucky, you will be reimbursed within 30 days. 2.5 comm. usually. Great if you get all the 200K houses but you have to take the bad with the good. Like you said, if you started with HUD years ago, you're probably very wealthy. However, those days are over.

    Actually, there is a buzz that a large company will be buying directly from the banks soon. Not sure it's true yet. They will buy cheap, renovate, rent, and eventually sell. This will be all over the USA. Not good for us.  

  • Hello Lucien. Thank you for your response. I am scaling down all of my REO business and expanding my traditional listings and sales. I have fired or refused listings from 5 clients I have worked with for over 10 years in the past 24 months. As is in any business, job or career, a change should be properly planed and prepared for. After 17 years in the REO business there is no way to just walk away one fine day. I have 15 clients now down from 20 or 21. I am slowly reducing them, the worst ones first.

     You know in the late 1800s/ early 1900 and since that time unions were formed not out of fear of competition but as a result of poor working conditions and low pay. As far as wanting to minimize the competition, well there are more than enough REO assets to go around several times over my friend. I will help anyone I can in our industry. I think 20 listing per agent at one time should be the limit. That allows the REO agent time to also work in the tradition Real Estate industry.  I gave a very large account to a Broker in the Cleveland area. I let the asset manager know I was not going to work in the area and gave his name as a referral. He was trying to break into REOs and I gave him the "opportunity". He feels the same way I do now about the industry change in the past 5 years or so.

    The real message I am trying to send is one of truth. Many agents seeking to get REO listings do not know what the real story to being an REO agent is. They have the misconception that it is a good way to bring home a good paycheck, Most say ," how hard could it be?" or as you stated " Do you think the same thing isn't happening in other segments of the industry?" To answer that question I have to be clear and say no, it is not the same. There is no other Real Estate listing that have as much disrespect, responsibility, costs and demands  as an REO listing today. I am working traditional Real Estate and have always done so. My last 2 years in traditional sales netted me 10 times the commission on 5 homes that 20 REO listing did. I do not have to pay for utilities or repairs. I do not have to do monthly BPOs and do not have to have my commission cut without having a choice in that decision. There are so many ways that the REO listing and the conventional listing are different, far too many to mention in this response. 

    I think everyone should educate themselves BEFORE they jump in or wish they could, into anything they know very little about, especially a career or job decision. Part of getting information is asking questions and getting information from experienced people, true and accurate information. That is what I offer. I take anything I commit to very seriously. I have been an REO agent for 17 years because I do take commitment seriously. But there is a point when you have to reevaluate your abilities, knowledge, efforts, performance, contributions and worth. REO agents know they are used, not valued.  

    I also hope to get all agents to recognize what is happening and to take a stand for a more respected and fair REO business for every agent out there. Taking listings at 1.5 to 2 % would rarely happen in traditional Real Estate.(unless it was a very high end listing.) To loan property owner money to fix up their home before they put it on the market? To pay property owner’s utilities while their home is on the market? To take care of and pay the lawn for them, maid services, their HOA fees, sewer and trash bills? All of the traditional agents would be yelling from the roof tops if traditional Real Estate begins evolution in this direction. Anyone taking listing with those extras included and a commission that low would be in for a really hard time from their peers. For any seller expecting those things most agents would not even think of accepting that listing. So why is it different in the REO industry? That is what I am here for. To tell the truth and to hope all agents REO and traditional Realtors stand up and protect our industry. To value ourselves and each other, to help make a change that we all can benefit from and be proud of, that is the reason I am here.

  • If REO listings are so bad, why are you still taking them?  It seems the goal of this post is to discourage other agents from seeking them out in order to minimize competition for them.  If you are "unhappy and tired" of REO listings then go out and compete for resale listings.  Do you think the same thing isn't happening in other segments of the industry?

  • Richard, I see you are in Kansas and do sell HUD homes. HUD does have different procedures than the typical REO client. Although they do in most areas, require weekly cheeks with photos, they do not require utilities to be turned on and expenses to be paid by the agents. Their commission structure is also different than most REOs. At one point in time HUD paid no commission to the listing agent.HUD REO real estate is a lot different in MANY ways than the typical REO. I see you acknowledge that with your comments on other REO clints  " that jerk you around, low ball commission and pay slow." I also see you state you do not list or work for  other REO client's or as you put it "I do not work for several companies."So is most of your REO experience with HUD? To be honest here we as REO agents know that volume does not mean good pay. 

    I was not aware that HUD allowed you to do referrals to outside agents for their listing. I thought if you were out of the area of the assignment they simply re assigned from their agent pool of approved agent like all of the REO clients I work with. 

    Nice to know someone is making a decent living in the REO business.  I was wondering if you have assistants in your REO business. I see you are the broker/owner and also offer a wide variety of Real Estate services in your agency. So I see you have diversity and do not allow REOs to be your only source of Real Estate income. That is a very wise decision on your part and what I would love to see all REO agents do.  I am wondering if your definition of a decent living includes all of your Real Estate services or is is a gracious term for your REO income and the work it entails. I know not every single REO agent is unhappy or tired of the low pay with the excessive expectations, expenses and demands, but I also know about 95% of us are. Do you have an guesstimates of what percentage your REO business contributes to your agency income that you would care to share? Have you seen an increase or a decrease in how the REO part of your business contributes to your income in the past 2 years? 

    Thank you for sharing your experience, anything you can add in clarity is always appreciated.

  • Hi Patti, Thanks for your comment. I am not sure we can say they are lazy. LOL The truth is there has been so much misconception about REO listings, REO agents and the bank owned properties in general. Most conventional Real Estate agents were literally staving in the end 2006 through 2009.(and some even much longer) With as much as a 33% decrease in values, property owners could not sale their homes at that kind of loss. There was not enough business to sustain the Real Estate industry in most states. We all know this and most of us lived it first hand. We lost many good people during that time. Many agents held on and tried to devise another way to bring home a pay check. Thus the REO became a tremendous attraction. Only the REO agents were selling and surviving. That created a feeding frenzy and banks and asset companies were over run with calls from agents wanting to list their assets.That is when the REO industry became the disaster it is today for the REO agents. There were plenty of these assets to go around . The industry could have used a 300 % agent increase on it's own at that time and stated status quot with the way the REOs were assigned sold and paid. But with all of the agents begging to get into the industry the banks and AMCs saw a golden goose in the making. The banks created the first market mess and and now they saw a way to drastically increase their income(or drastically reduce their own losses) from the after math. The REO agent could provide them with an excellent increase in income stream. Platform fees, mandatory training, designations, reduced commissions, a reduction in their in house employees, maintenance expense reduction and even temporary LOANS interest free!! The agent now took on the CFKs process free of charge. This is a service that saves the banks a minimum of 7500 per asset. Now they pay nothing for it. Evictions used to cost between 7500 and 15000.00 per asset. Now they cost a filing fee and some minimal attorney's expenses. All the property checks used to be outsourced and expensive. BPO and appraisals were also out sourced and expensive. General contracting also expensive. All of the expenses to maintain, service and sell a property were all expensive. Now they are ALL free for the banks and asset owners because the agent has that responsibility. Commissions of 7 and even 8 % are now as low as .05 percent in many cases. It is not the lazy agents who caused this. It was the starving industry the banks created and now are recouping from on the backs of the very industry and agents they can not survive with out I have said before that our REO industry has drastically changed. It was the attitude and the desperation of the Real Estate agents that allowed that change . We were never less valuable or important for the REO industry but too many of us THOUGHT  we were.

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