For well over 10 years I have been involved with several banks or asset managers doing drive by BPO's . For 
those of you who are not aware of what a "drive by BPO" is..it's when you drive by a property to determine;
Can actual values be determined from just viewing the outside? That question is loaded. In doing my valuations I tended to be on the conservative side. I generally assumed the property was NOT in good condition, unless the landscaping and general exterior maintenance of the home looked good.
Doing these valuations was very difficult at first, then after awhile I detached my emotion from it and just ran the numbers and plugged them in. My detachment came from the knowledge that I would not get "held to my valuation." Occasionally I would miss the mark and get a phone call from one of the managers asking me to justify my values. That when I knew someone else had come up with a totally different number. Sometimes one of us did the valuation on the wrong house.
In Denver the addresses are on a grid. North and south directions in the address are imperative. I soon found out the importance of questioning the address when it didn't seem right. For me, detachment to the property made it much easier for me to get my BPO work load done quickly. I realized this was just a "general" valuation, that a more specific valuation would come later with an interior BPO. This realization enabled me to buzz through 5 -10 BPO's a week.
Times Changed
As the market got more and more flooded with delinquencies, I got busier and the REO companies started paying less and less. Instead of cutting down on what they expected from a drive by, they increased the responsibilities. Some companies wanted physical photos taken of ALL the comps. Some required the BPO be done in 24 hours. They paid anywhere from $40 to $150 for a "normal" BPO. My time was being eaten up with "dead end business." I started to streamline what I did. I chose to work only with companies that were easy to work with and most importantly paid on time. Payment became the biggest criteria in my choosing who to work with. There are several companies that sounded very nice to work with, but had a track record of paying late. Others never paid at all. Eventually I stopped working with all but one company. They were the best to deal with, we had a good relationship where I could call and say, "I'm leaving town this week, can you hold off on BPO's or would you wait until I return?" It was nice to be able to talk to a real person to determine the best route to follow.
All Good Things Come to an END!
Last year they started giving me BPO's to compete for the listings. These listing opportunities were on drive bys that I had done many months before. When these came up, I didn't get paid. I was competing for the listing. Well at first it seemed fair enough, but after losing out on more than 1/2 my chances to bat, I questioned why I was wasting my time. One of the opportunities had me going out to a 5 -plex that was in a very, very bad neighborhood. I entered the property, (like an idiot) one of the unit's doors was unlocked. When inside I felt I was not alone. I rounded the corner to the kitchen to see the oven was on, full blast. Someone was using it to warm the unit. I reached over to turn it off and ran like heck out of the unit. My spine was tingling with fear.
Back safely in my car, I called my contact, who was not there. Her partner opened the file to see why the complex had not been secured. It was then she told me that place was "off limits to agents without a police escort." It had been the scene of a crime and was still considered dangerous. They had forgot to tell me. After that I decided to retire from doing BPO's. As much as I loved getting the checks, risking my life was not worth it. I cancelled all my listings with this company within 30 days.
This year my life has been very nice without them. IN fact I've worked less and made more money. I will never regret doing BPO's. I credit this work to helping me learn the Denver metro area when I moved up here from Colorado Springs. My 100s of BPOs took me places where I'd never been and probably never will go back again. I learned values by actively doing valuations in 6 counties.
Shock of all shocks... Funny my husband just got paid for a BPO he did FOUR YEARS AGO! It was shocking and funny. We wondered if they finally hired an accountant to straighten up the books...
Should others seek REO business? I would discourage others from seeking REO Business including drive bys. Based on my experience, I did the work for many years. It wasn't always terribly busy, some years there were only 10-15 during the whole year. It was recent that I had to limit the amount I would accept.
In retrospect I probably would have set limitations sooner than later. For me I found doing the BPO would take me away from the more important aspects of my work. I do feel for a newer agent, REO work is a good way to get started. But again I say that with limitations. Getting so deep into this niche is very dangerous, because it is more cyclical than other fields in real estate. Consider the fact the business will dry up some day. When it does, all the people you have been dealing with will find new jobs. The buyers and sellers either are gone or not in a position to purchase another house for a long time, if ever. The neighborhoods where you sold, you will be viewed as a "discounter" someone who devalued their neigbhorhood. This is the case where you will be blamed as the messenger!
Consider your options
My advice to others, approach REO drive bys with open eyes. There can be physical danger there, but the career pitfalls will get you too,, if you aren't careful. Be sure to; set up an accounting system to track accounts receivable from DAY ! limit your area coverage limit your time confirm you are working with companies that actually PAY you within a reasonalble period of time 30-60 days. do not do drive bys/REO's as your only niche trust your instincts ~ if it doesn't feel right, don't do it.
We gather our life experiences from may different sources. Having a variety of sources makes us wiser, more interesting human beings. Hope your experiences are positive and that you learn well from them. I know I tried to do so!
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Specializing in relocation to the Denver metro area, including Littleton, Englewood, Greenwood Village, Highlands Ranch, Parker, Castle Rock, Douglas County, Arapahoe County, Denver County and more.
Lessons we learn from the roadside of life ~ updated with link to pottery
Denver ~ We don't need no stinkin' mountain!
Archaeologists Needed ASAP~ Report to Denver! ~ Update!
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I was just about to say this belongs in war stories! I've never done a bpo. They've always seemed like a lot of work for a little money. I can imagine that my broker would want a split off it to, so then I would be down to less than minimum wage! Glad that nobody was waiting for you in that building. Creepy.
War Story it is! I had my bpo routing down to a science. I'd shoot the photo on my way to work or on the way home. I'd sit at my desk with the TV on and crank out the data in about 20 minutes per... I was collecting about $150 each, then they dropped it to $95. I refuse to work for any that paid less.
I never had to split...
The lender is getting what they pay for. A drive-by $50-$75 is exactly what it's worth. If the lender was desiring factual information, they would get a ful appraisal. The lender is choosing to lower investment costs in a gamble that a majority of the drive-bys are fairly accurate.
David ~ Or as the saying goes, "close enough for government work!"
kk
Back in the olden days when I worked for a mega broker in Maryland, they asked me to do BPOs for the relocation company.
I did one.
The end.
I used to do the BPO's myself with the hope of getting the listing. Now I give them to my very qualified licensed assistant to do. If we end up with the listing, then I take the listing. We only work with 2 companies - they pay quickly and she can get them done online reasonably quickly. (On her own time after work.) It's a nice little bonus for her - this year she'll make an extra $5000 or so. She is thrilled to do it!
Lenn ~ you are my idol!
:)
kk
Dear Santa ~ Are you asking me if it's true you talked to the crazy stager in Ill? If YOU said it's true, than I believe YOU. But that crazy stager is wrong about me having the red nose. The nose went into a witness protection program..for its own safety. I hope you are OK with that. I know you are are really, really good guy and would want everyone, even noses to be safe.
May I humbly suggest you take that coal and give it to the crazy stager? I'm sure he knows where he can put it...
I've been a very good girl this year.
Love,
kk
Linda ~ that is a good plan. It's a nice bonus for an assistant. You can get the benefits and go play golf!
kk
Kristal, I love your last three sentences in your Post. My experiences have been my most valued teachers. I have made a lot of mistakes once, but I rarely make them twice. And we all hop that wisdom comes as we mature. If we learn from our mistakes, even the negative experience can be looked at as positives.
Love the Santa hat!
George ~ Wisdom comes with experience. Too bad it isn't the other way around.
Carol ~ Thank you! It's an antique hat handed down generation to generation. A digital family tradition. :)
kk
How am I ever going to find the time to learn Photo Shop and do fun stuff like that?
"Work less and make more money." That sounds like a good mantra to repeat each morning over coffee. We have to plan, and work smarter, not harder or longer.
On a related topic, I've done many CMA's for free for relo companies only to be told later, "Thanks, they are going to use Agent Betty. Betty sold them the house." Well, duh. That is being used for a free CMA. They take me at least a full day of MY TIME.
Carol ~ go get the "dumbed down version, that's what I use Photoshop Elements 5" It's awesome.
Sharon ~ I know I know... :)
MF ~ I resent being taken advantage of more than anything.
kk
"I resent being taken advantage of more than anything." I think that a big part of this is that agents as a whole don't respect/value their own time. They are to quick to do things for nothing in hopes of getting something down the road.
Ken ~ you are right about so many of us. We jump at chances to get business without thinking.
kk
I would say that a good rule is that if you are not cultivating relationships with asset managers that are sending REO listings your way, stay clear of BPO's. REO business can be very profitable, especially in foreclosure capitals like Michigan. But it is a niche market that requires specialization to succeed.
Richard ~ specialization is right. To be effect you need to 1) have good volume 2) have a repair crew to do fix-ups & maintanance. Just listing 2 or 3 a year is not worth it.
In the words of George W. Bush "Fool me once shame on . . . ??"
Kristal,
I missed this post when you did it. Actually found it on Localism.com! I have linked to it through the REO group.
I wish someone had slapped me across the face with this blog over a year ago. Initially I was doing every BPO I could for about 5 different companies. I still do the occassional BPO, but I work with one company exclusively. I only do drive-bys (no interior) and I only do those that pay high for a rush (I found I was submitting them within 24 hours anyway) because they usually pay about twice the dollar amount. I'm fine if I never get a listing from doing the work. I do primarily to hone my valuation skills and become more acquainted with neighborhoods [and it's my movie theater money] :)
TulsaMetroRealtor.com
Hi Karen ~ it's hard to keep up with everything these days. I didn't know there was an REO group, so we are even! :)
Anthony ~ sorry I took so long to write this! Had I known you were in need, I would have asked Matt to start Active Rain much sooner! :)
Ed ~ I suspect people don't fool you more than once.
kk
Ken Smith, I totally agree with your post. I find myself doing things all the time in hopes of business down the road. I need to value my time better.
Kristal,
I may be in the minority here, But I disagree with some of your blog. First, newer agents should never try to start out in REO work. It's a whole different animal and it takes experience in the market to accurately value properties for BPOs and listings. A newer agent probably has no clue what an MMR or CFK is and should not be sent out to do work they don't understand.
I also think that REO work is far more stable than conventional real estate. Unfortunately, foreclosure rates are way up when conventional sales are going down. No it won't stay like that forever, but given the equity-stripping and ill-advised cash-out refi's of the past several years, there will be many more REO properties coming over the next few years (okay, not in ALL areas, I know).
BPOs CAN be dangerous. An agent does need to be aware of where they are going and prepared for any problems, but I make an extra $7k or more a year just in BPOs. Add to that the 15 REO sales I've had in the past 2 years and 7 more listings being readied for the market, and it's way more than most agents in the area make just listing and selling on the local market.
REO/BPO work is NOT for everyone, no doubt about it, but speaking as one who has chosen this niche, I cannot imagine why any agents want to waste their time doing free valuations when you can get paid for the work, learn your market better, and possibly get listings from banks who are highly motivated to sell. I am not wanting to start a debate, just giving my opinion.
Amber ~ as a brand new agent I took a telephone call one day. The Gentleman on the other end of the line said to me, "Can you do a BPO for a Deed In Lieu for me? I'll send you the paperwork." I said "sure." I was furiously taking notes becaue I had NO idea what he was asking me for. I also figured someone around the office would know, or the paperwork would give me a clue.
I was wrong about "someone around the office" knowing what it meant. I was in an office where everyone BUT me had years of experience. No one knew what a BPO was, we did figure Deed in Lieu was in Lieu of foreclosure.
My saving grace was getting the "paperwork" in the mail. Yes, this was in 1984 before the invention of FAX machines.
For the next 60 days I did BPO's for free. I didn't know what I was doing at first, but after a few and some helpful suggestions from the nice man who called me, I got pretty good at them. As they say in the movies, the rest is history.
My contact gave me every listing that came down the pike. Not only that he referred me to others in his industry. I worked for several banks, PMI, and others. I did not compete for a listing. Over the next years I assisted my clients in liquidating assets of entire condo complexes. When the market was too saturated, I rented them and acted as a property manager until the time came to sell them.
I guess you can say I "cut my teeth on REO's as a rookie agent." Funny the others that refused to take on the business wished they would have. But since I was the only one who had the time to spare (I WAS A ROOKIE),
So to say that new agents shouldn't take on such business is really under estimating them. Granted rookies may not have the same experience level you bring to the table, but they do have more enthusiasm and a strong desire to succeed. My hat goes off to the new agent who is anxious to make a career out of real estate and is willing to "pay their dues." I paid mine. Now I'll step aside and let someone who wants that business more than me to have it.
I've got plenty to keep me busy! (yeah like writing a novel to comment on your comment! ) :)
Thanks for taking the time to share your response.
kk
I've done more BPO's than I care to admit. Recently decided it just wasn't worth it! A few years ago, it was something you could do in just 20 minutes. Anymore, they want more pictures, more data, more research.
Plus, you can get yourself in a bad situation. There aren't really any unsafe neighborhoods here, but Alaskans take their property rights seriously! I've had several people come out and ask why I'm taking pictures of their house, and one time had someone come towards my car with a baseball bat (fortunately not a gun - there are more guns than people in my state!). The worst are the companies that need a geography lesson (most parts of Southeast Alaska are not connected by road).
Until recently, I considered BPO's my "mad money". Anymore, they just make me mad. No more. I've hit the realization lately that some things just aren't worth it, and in 2007 I've cut out a lot of the things I do not enjoy. BPO's are at the top of that list.
Debbie ~ I'm with you on the "cut out a lot of the things I do not enjoy" bpo's were on the top of my list last year. The industry changed for the worst where BPO's are concerned. I'm too old to change with it, too old and beyond caring.
kk
I am a rookie who recently did my first BPO. The asset manager needed it that day, so I ended up doing the report then learning how to do them after it was turned in. I agree it was a great way to learn part of the market I wouldn't have learned that week. However, I was wondering how agents get the listing. Do you have to wait to do the REO? Can you contact the seller?
kristal- wow nice story. it gives you a lot to think about. not to mention all the hard work your doing not knowing if your going to get the listing wow
Kristal, Your post is a very well written and an accurate portrayal of the BPO assignment work, It parallels my experience with BPO's. Yes be sure to tract the pay, as some take long to pay, don't pay or keep dropping the amount paid the longer you are willing to do the work.
Hi Kristal,
Thanks for the nicely written post. I was looking in BPO's today and it was great to get another agents prospective.
I, too, did BPO's for a couple of years, and just got bored with it. If it's in my neighborhood, I take it. But the forms periodically change, and just when you think you're done, they want more pictures. It's hardly worth my time, but if I'm not busy, I'll do them.
I enjoy doing BPO's I have done over 120 in the past 5 months and have just received 2 listings. I will continue to grow and attain new clients and hopefully more listings.
Also, there is a lot of work that needs to be done in order to get and maintain and REO listing. I spend a lot of time servicing the 2 I have.
I guess I am pretty GREEN.
I am a licensed agent in Indianapolis, but have never done the BPO drive-bys and CMAs to get paid.
I would like to know, as a genreral forum question, who (in the experienced folks opinion) are the best companies with which to register?
Many, many thanks! Josie
I guess I am pretty GREEN.
I am a licensed agent in Indianapolis, but have never done the BPO drive-bys and CMAs to get paid.
I would like to know, as a genreral forum question, who (in the experienced folks opinion) are the best companies with which to register?
Many, many thanks! Josie