I am sure everyone has experienced a drastic change in the state of REO in the last year. I am now dealing with more and more corporate investors who are trying to sell properties as short sales after purchasing the note for pennies on the dollar, non profit and for profit investors trying to resell properties in markets even after rehabbing for an unrealistic value, too short time on market and to a buyer that does not qualify or will not live in certain locations. I am seeing less and less traditional REO properties, there are some banks I have not done work with for a year, and normally I sell 10-20 properties a year from them. I work all sorts of types of real estate, more so in the last two years, and I am finding that the average loan to close time is almost double in some cases. Even the short sale market, which is a market I deal with often, is now changing. I have always done a lot of BPOs, but lately I am experiencing very pushy clients, some clients call me 20 times a day and call my office, often to ask mundane questions like have I inspected the property. Really? I have days where I spend more time on the phone telling these companies that yes I have inspected the property and yes I will get the bpo in today. My agents are not REO agents and are working different types of venues like property management or with buyers. I am now being forced to look at different options, since the BPO forms are too long, too hard and keep getting qc rejections. I am also down drastically this year from last in terms of sales in general, even my traditional sales take nearly three months to close on average, it is almost as bad as 2009-2010. I am so busy doing free work for these companies that I cannot focus on my brokerage as much as I need to and the expenses are not going away. I am now supervising rehabs, being responsible for draws, being asked to pay for past due water and sewer bills up front, inspecting the final work more than once, and being asked to market in areas that are way outside of where I normally work. Many of the asset managers are actually very nice people who have confided in me that inventory is very low and they are working nontraditional REO markets to get inventory. Huge companies are pooling assets off to these companies and this is where much of the reo is coming at the moment. These corporate investors are in some cases good to work for, others are not. On the other hand, I have non communicative asset managers who are rude, nasty and treat me like dirt. The best relationships I have are with the smaller banks, they are easy to deal with and are much more one on one, although inventory is low in that area as well.
Buyers are being given misleading information about the market, however I hear and see daily that what is being reported by the media is not what is happening on the ground. I am not sure what to do or think, however, I am revising my plan, I am pulling out of certain areas and will not market in certain areas based on drive time and I am going to start focusing more on the traditional market. I will also sit back and wait and see what else will be going on. I suspect we will see more corporate entities moving into the market and I am not sure how I feel about that.
Comments
I do not consider your post as anything but truth and venting your frustrations. I agree with a lot of your post here. I am a veteran REO agent and I sincerely hope as Frank does that many, many more agents feel the way you do. Although my reasons differ from Frank's on the reasons I hope this occurs. While Frank feels we should adapt, I fell we have "adapted" enough already. The reduction in the REO agents commission was enough on the adapting for me. As mentioned we have to be responsible for legal issues, we are not licensed for or formally trained to do but have tremendous liability for. We have to loan large amounts of money interest free to multimillion dollar corporations who get bail outs when the are low on capitol. We have to be eviction coordinators, repair coordinators, general contractors, evaluation specialists, title specialist, closing coordinators, and more. We have to risk out safety, our sanity and especially our self respect for a listing commission that has now become as low as .75 %. On the average REO the Listing agent makes about 1000.00 minus fees. Who wants to brag about all that experience and knowledge and then disclose their hourly wadge in the next breath? Who wants to loan 5 K just to have the offer to EARN the 1 k at best minus all expenses. Who wants to be responsible for everything that anyone does in an REO property you are assigned? Finally who wants to "lead the industry" and do it by taking home a below minimum wage pay check?
I agree that a good REO agent is required in the field. That is a must in my opinion. Yet we are not compensated or treated any better than a desperate inexperienced person just trying to survive. So what does all of our experience and understanding in the REO industry get us? What is the value of what we have to offer? It was the asset owners and AMs that lowered or commission and increased our responsibility. This was a careful plan . Again supply and demand. In 2003 asset owners and AMs opened the assignments to all agents not just REO agents. This proved to be a disaster and in just 16 months the idea was scrapped.Back to experienced agents only. The commissions were not reduced until 2007, after we experienced agents were promised quantity as "preferred agents" for a reduced commission. We did not ever see that large influx of REOs as promised. We did however see the reduced commissions. The asset owners and AMs fearing the large supply of properties began hiring more agents to handle the "looming" supply. IT never happened for many reasons but mostly lender control over the process. As time went on it was discovered that agents would work for very little and do almost ANYTHING for a small commission. As Frank mentions he too does quite a lot for at most 2.5 % Listing commission, minus fees. As a veteran I am sure this is a decrease in the amount he was paid 20 years ago as an REO agent. I am also sure the responsibilities and demands are ten fold over that same 20 year time period. So yes even experienced REO agents have contributed to the low value of our experience and knowledge. In fact I really believe the veterans are the MAIN ones responsible for this sad story. So I too hope more agents feel as you do and stop doing so much for so little. I hope more of us begin to demand respect, and quit agreeing to all of the crazy demands from these asset owners and AMs. Of course there will be more business for the REO agents who stay with the game and eek by. Eventually though they will be so over extended and so used up with all the REOs demands that they will not be able to provide what is required and demanded. Then we may be able to re negotiate our value.
Do you serve cheese with that Whine?
I hope more people in my area feel the way you do. It will only increase my business even more. True REO Experts are highly trained with specialized skills that enable us to engage in a variety of REO situations.
We lead the way in the default industry.
The recent philosophy of many of the banks was to bring in more traditional Real Estate agents with little or no REO experience to handle smaller blocks of inventory. They felt this would allow the traditional agents to concentrate more on bank properties by giving them more personal attention and in turn, would move the properties quicker. The banks put pressure on the asset management companies to increase their agent database. Every Realtor wanted a piece of this specialized business to hopefully fill in financially until the market returned to a more normal cycle.
One cannot simply maintain, manage and market this specialized product by conventional Real Estate agents. It does not work and has not worked in the 27 years I have been specializing in REO's.
The traditional agent has very little, if any, experience in evictions, property management, rehab, security, board up, lawn maintenance, snow removal, winterizations and de-winterizations. Nor do most have the crews, inspectors and specialized agents to handle this massive undertaking.
This does not include the large amount of upfront cash needed to sustain staff and day to day costs for properties that often times may not be listed for over a year.
As the market on REO properties tightens up as it has done in the past, my business continues to grow thanks to all of the wannabe REO agents dropping out of the business and going back to selling traditional Real Estate now that asset managers are not knocking on your door handing you properties.
If this is a true REO forum, then we need to discuss how to adapt and grow our REO business. What works, who is adding agents, what websites to sign up on. Where is the market going and how do we adapt to this ever changing business.
As Thomas Paine once said, "Lead, Follow, or get out of the way.
I agree with both of you. I am also making, less and less money. I am now going to work property management, I just brought in an experienced property manager and another agent because so many people need to lease or rent. I am still down by half from my peak between 2006-2008 and I am spending more and more money. What is worse are the time on market and the lower values. many of these notes have liens on them or something was not done correctly in the transfer of title and I have to wait even longer for these to close. After I pay bills and expenses, I have little left over.
Many thoughts clogged my old brain as I read your post. 1. There are , Ill bet, many starving agents who read it and wish to God they had your problems because it means you are making SOME money, lol. 2. You can quit those places that are so hard to deal with but they will just find more suckers. 3. AMEN and AMEN on the media completely misleading the market, and a lot of real estate agents also do. 4. There is a LOT of paper movement. Notes are being discounted and sold over and over. It gets to the point where servicers/holders are into it so little that they go all out to steal the house. They will not work with the poor owner who may be in that position due to a loan mod process botched on purpose by the lender. Or they are starting to bulk sell REO See another thread abut this bulk selling. NOTHING is done in favor of anyone but big money. There is no fairness. There is only the screwing of the American homeowner. Rents are SCREAMING upward becasue of demand from displaced homeowners. Where is it all heading. Holy cow its bad out their with even worse to come and all underplayed by the gov and press.
Your wise to dump the rude an time consuming REO companies. Who has time for that and who wants it. If you can keep a hand full of good clients you work well with, put your effort into keeping them satisfied and task can get competed by the dead lines. I quit Reo World and Precision for those very reasons.