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;
- it's still standing
- it's occupied or vacant
- what it's value is based on the neighborhood
- if it needs repairs
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!
Comments(38)