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To BPO or Not to BPO: That is The Question

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bpo, real estate agentAs I journey through the learning curve on short sales, REO listings and all other things bank owned, I have entered the world of the BPO.

A BPO, broker price opinion, is a market analysis for a commercial institution, usually a lender. Very often, but not always, the BPO subject is in danger of foreclosure.

Usually the BPO is a drive-by which requires a photo of the front of the house, an address verification photo and a shot of the street view. These pictures are attached to a report that typically involves 3 comparable listings and 3 comparable sales in the area. There is no set fee for this service, but in my experience the range of pay is $35-60.

Sometimes the company will need a full interior BPO, which requires making an appointment with either the homeowner or the caretaker of the property….not an easy task under most circumstances. I have found the payment for these goes from $80-115.

Typically I do the drive-by BPO’s which can be turned around fairly quickly (house is in my target market, etc). Most often I am able to quickly obtain the photos I need without being seen. Sometimes, however, there is a very awkward conversation as the homeowner inquires why I am taking pictures of their home.

I am never comfortable with this because the truthful answer, “I was assigned by a company to take pictures as part of a report to gauge the value of this property”, sounds vague. They always ask me for more information, which I really do not have. The institutions do not share with me why they are requesting this report.

Through the course of the last year I have gone back and forth with the return of investment (my time) for these BPO’s. Just as I got really involved the government stopped the foreclosure process for homes…only over the last few weeks have the BPO orders started back on the increase. I have yet to get a listing from my efforts, which was the main reason I started doing the reports.

I am interested in hearing from others with experience in BPO’s. Please take the very brief poll below:

Lesley offers 21 years experience in real estate, public speaking and training. Lesley has a degree in communications and was the recipient of an international award for coordinating media in real estate. In the course of her career Lesley has presented at international real estate conferences and state REALTOR associations, hosted a real estate television program, written articles for trade magazines and created marketing and PR plans for many individuals, companies and non-profits.

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16 Comments

16 Comments

  1. Joe Loomer

    August 21, 2009 at 7:30 am

    Lesley – I spent a good deal of wasted energy on BPO’s as the market was tanking in late 2007. Result? Listed one crack house at 24K which sold for 17K. I had three deputy sheriffs accompany me to take the interior photos – thanks to some useful sponsorship opportunity I took advantage of.

    My wife used to do one-two a month back in the day (pre ’06). We never realized a true return on the investment.

    With gas averaging $2.45 a gallon, it’s a waste of time now.

    Navy Chief, Navy Pride

  2. Missy Caulk

    August 21, 2009 at 9:00 am

    Lesley, one of my team members does BPO’s. She made about 7K last year. Personally they are not for me. But, she likes and needs the extra income.
    She has not received any listings from it in the past 2 years.
    In this market we do what we need to do.

  3. Lesley Lambert

    August 21, 2009 at 4:43 pm

    Joe, I hear that a lot. I wonder how it is that some people break through and get a ton of REO biz and others (like me) can’t seem to break in at all?

    Missy, I started them during a very slow period in the winter to help augment my income: I get it!

  4. Matthew Rathbun

    August 21, 2009 at 6:07 pm

    Lesley,

    This is a great question. I suppose there are a few questions that I would ask myself if faced with doing them again (I no longer do them because I think the risk is too high for me personally)

    1. Will doing a BPO take away from my marketing time needed to keep the funnel full of serious consumers, that may have a far higher return than this BPO?

    2. Does my E and O Insurance cover me for doing them?

    3. If I were to take my projected income for the year, divided by 2050 (number of work hours in a year based on 40 hour weeks) would the number of hours it takes to do a BPO be profitable? Example: Let’s say that I get paid $75 to do a BPO and it takes 2 hours (travel time and PC time to submit). If I wish to make $100,000 a year, that means my time is worth roughly $49 an hour. Already I’m in the hole and I haven’t include the cost of technology to handle submissions, gas, vehicle use etc…

    4. Am I adequately trained to perform the requirements of the BPO? Typically they ask for what repairs are necessary and if repaired what would be the return of value. I’ve taught lots of GRI, Pre-Licensing and about 40 other topics. I don’t remember one of those curriculum ever teaching that information – save Appraisal training.

    5. Do I have a resource to substantiate my suggested values of the property?

    6. What is my Broker’s policy?

    7. What is State Law?

    8. What recent case law exists in my state regarding agents doing BPO’s?

    9. Will doing the BPO for the Loss Mitigation Officer potentially yield a contract to do REO listings? Will this relationship be profitable for more than just the cost of the BPO?

  5. Ken Brand

    August 21, 2009 at 6:35 pm

    IF things are tight, doing BPO can put food on the table. If you do them, go in knowing you’re doing it for the fast paycheck and the service you deliver, if you get a listing, that’s a bonus. I think doing them in hopes of getting listings is setting yourself up for disappointment and your time developing business can be better spent in other areas.

  6. Diane Guercio

    August 21, 2009 at 7:32 pm

    I used to do several BPOs a week, and did end up picking up several listings from it. Most of my business at the time was REO. In addition to being signed up with the BPO companies, I was signed up on REOtrans, and had several Clear Capital BPOs that were done for Wilshire turn into listings.

    Was it worth my time? Would my time have been better spent getting traditional resale listings? I don’t know- if you study the stats, most of what was selling was in the REO price category in our area.

    Of course, when the Mass Land Court decision went into effect, it all became moot.

  7. Joe Dallorso

    August 22, 2009 at 8:23 am

    I did about 125 BPO’s in 2008. I quit because I never got a listing, they took too much time for the money and the BPO company was always calling me about deadlines like I was an irresponsible child.

    I do think BPO’s made me a better Realtor. I’m in a market where 42% of sales are REO or SS. BPO’s really drive home what houses are really selling for and what it really takes to sell a house in 30-90 days. The guidelines used by companies like First American & Core Logic make me feel like I can put a value on just about any property.

  8. Paula Henry

    August 22, 2009 at 9:01 pm

    What I make doing a BPO is time and dollars better spent on marketing and servicing my clients. Not my cup of tea!

  9. Jason Sandquist

    August 22, 2009 at 10:48 pm

    I use to do BPO’s as well in hopes of getting some listings. Then I realized I was doing all the BPO’s for listings being taken by the craptacular agent who never had time to respond to offers in the first place, so I walked.

    They paid pennies… Joe’s right, to much time and no return from some, not all.

    @Diane – funny one of the companies I signed up for was REOtrans and never got one.

    Also hate those BPO companies that do an email blast and the first one that responds gets it. Not a very good way to do business IMO >>> one of those companies is mark to market

  10. Fedric Lewis

    August 24, 2009 at 4:24 pm

    Hi…The concept of BPO companies is getting popular these days with the cost and time considerations. The outsourced work is being done at reasonable rates in a stipulated time. So its one of the fast growing industries today and a logical sequence of globalizing the IT market.

  11. Matt Wilkins

    August 27, 2009 at 12:28 am

    I know I’m going to be the odd man out here but I’ve been doing BPOs since November 2006 and now consistently do 100-150+ per month.

    Like anything else you have to have a system in place. I am very selective about the areas I service and plan routes for orders in my queue to make the most efficient use of time and gas many times molding BPO routes around my schedule. I’m also chooosy about the companies I work for based on criteria I set.

    Have I gotten a listing rom one… No. However I’m not sure if I want to from seeing what the listers in my area have to go through.

    My take on it: It is a nice way to earn a base income by staying immersed in the local market while still allowing time to work with a client base without feeling the need to push them into a sale.

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Is the real estate industry endorsing Carson’s nomination to HUD?

(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?

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NAR strongly backs Dr. Carson’s nomination

When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”

At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?

The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.

In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…

>>>>>Click to continue reading…<<<<<

#CarsonHUD

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Job openings hit 14-year high, signaling economic improvement

The volume of job openings is improving, but not across all industries. The overall economy is improving, but not evenly across all career paths.

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Job openings hit a high point

To understand the overall business climate, the U.S. Labor Department studies employment, today releasing data specific to job vacancies. According to the department’s Job Openings and Labor Turnover Survey (JOLT) for April, job openings rose to 5.38 million, the highest seen since December 2000, and a significant jump from March’s 5.11 million vacancies. Although a lagging indicator, it shows strength in the labor market.

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The Labor Department reports that the number of hires in April fell to 5 million, which indicates a weak point in the strong report, and although the volume remains near recent highs, this indicates a talent gap and highlights the number of people who have left the labor market and given up on looking for a job.

Good news, bad news, depending on your profession

That said, another recent Department report notes that employers added 221,000 jobs in April and 280,000 in May, but the additions are not evenly spread across industries. Construction jobs rose in April, but dipped in professional and business services, hospitality, trade, and transportation utilities. In other words, white collar jobs are down, blue collar jobs are up, which is good or bad news depending on your profession.

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What’s next

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If you’re hiring talent, you’ll still get endless resumes, but there appears to be a growing talent gap for non-labor jobs, so you’re not alone in struggling to find the right candidate.

Economists suspect the jobs market will continue to improve as a whole, but this data does not pertain to every industry.

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Gas prices are down, so are gas taxes about to go up?

Do low gas prices mean higher gas taxes are on the way? Budgeting for 2015 just got a bit more complicated, if some politicians have their way.

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Gas taxes and your bottom line

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Gas prices are down roughly 50 cents per gallon compared to a year ago, which some analysts say have contributed to more money in consumers’ pockets. Some believe that this will improve holiday sales, but others believe the timing is just right to increase federal taxes on gas. The current tax on gas is 18.40 cents per gallon, and on diesel are 24.40 cents per gallon.

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Supporters and opponents are polar opposites

Supporters argue as follows: gas prices are low, so it won’t hurt to increase federal gas taxes, in fact, those funds must go toward improving our infrastructure, which in the long run, saves Americans money because smoother roads mean better gas mileage and less congestion.

Gas taxes have long been a polarizing concept, and despite lowered gas prices, the controversial nature of the taxes have not diminished.

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Mooney writes, “So, this is not an argument that a gas tax raise is politically plausible — any more than a economically efficient tax on carbon would be. It’s merely a suggestion that — ignoring politics — it might be a pretty good idea.”

Rendell noted, “The World Economic Forum, 10 years ago, rated us the best infrastructure in the world,” adding that we “need to do something for our infrastructure, not in a one or two year period, but over a decade.”

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