An Colorado-based asset management company called Cartel owed Maryland real estate agent Victor D. Watson $3,500 that he had tried to collect for over a year, he says. Out of frustration, he sent letters to the CEOs of Fannie Mae and Freddie Mac. Within two months, Watson says he got all his money.

Some slow-paying asset management companies are preying on real estate agents and brokers who are hungry for a shot at listing an REO property they might not get otherwise. They give the agent or broker a broker price opinion (BPO) order, (not to be confused with an appraisal order.) In most states, it is legal for an agent or broker to perform a BPO as long as the order isn't represented as a bank appraisal. Some states have the proviso in their licensing regulations that a broker or agent may do a BPO if it is possible that the broker or agent is doing so in anticipation of getting the listing.

Because brokers and agents are chasing the listing, BPOs are typically a lot of work for very little money, much like the free CMAs brokers and agents create for sellers to get a listing. Brokers' and agents' willingness to do hours of work for a fraction of what they are normally paid (some BPOs pay as little as $25) is a situation that puts more money into the pocket of the asset management company which then turns around and bills the owner of the REO a much higher sum. So if an asset manager never pays the agent for the BPO, the full profit of the price analysis goes into the asset manager's pocket.

One reason why BPOs are sometimes so hard to collect is that an asset manager could simply tell the broker or agent that he/she had no chance of getting the listing, which is almost always true. Listings tend to go to agents and brokers who have a relationship with the REO department of the bank which has the property, and they could care less about the agent who has been assigned to do the BPO by the asset manager. Most of the time, the asset manager and REO department don't meet. For this reason, most agents report that they seldom get a listing from doing a BPO. This gives agents little recourse in disputes. If they push to get paid, they won't get any more work, and they can't pursue getting paid because they could be proven to be violating state licensing law. That puts some asset managers in a sweet position to use agents and never pay them.

Another reason some BPOs are hard to collect is that most asset management companies are concentrated in California, Colorado and Texas, making it very hard for an agent like Watson, who lives in Maryland, to collect unpaid fees. To collect fees, he would have to file against the asset manager in the state where the company is registered as a corporation. Few Realtors go to the time, trouble or expense to collect as little as a few hundred dollars. The unscrupulous asset management company simply moves on and contacts another broker or agent for future work.

That's why Watson decided to go to the source - the bank or secondary mortgage guarantor that gives out the asset management orders to these asset managers.

"I noticed most of the forms that I had been given by Cartel had Fannie Mae and Freddie Mac on them," explains Watson. "Cartel was doing the BPOs on Fannie Mae and Freddie Mac so that was an indication that it has something to do with other forms. I went to Fannie Mae's and Freddie Mac's Websites and got the names of the CEOs and wrote them personal letters. I also went into the Cartel Website and removed myself out of their system."

As other agents often report, Watson never received a listing from Cartel or another company he says he is having problems collecting from, Coast to Coast Mortgage Services, Inc. out of California, which also owes him close to $3,500.

This begs the question - how do BPO bills get to be so high?

"You do one or two and they tell you that you will be paid in 90 days, and you continuously do them because you are thinking that you're still in the same time frame," says Watson, who has been doing BPOs since 1985. "That's how I did 20 in one month and I'm still waiting for my check to come."

"This is a small part of the business," he adds. "You do it in hopes you will get the listing, and I never got one. What I have learned is they have a set number of agents they will give the listing to. Unless you know someone in the REO department of any of the banks they are doing the reports for, you won't get the listing. You need to hook up with someone in the bank."

Watson says he's learned his lesson. "I am going to pull their reports," he says, "a lot of times, you can tell what particular bank they are requesting the report for, and then you can call the bank. Sometimes the bank won't respond, but I want them to know what kind of treatment the asset managers they hire are giving to agents who are providing the service."

What else can be done to collect money from slow-paying asset management companies? Broadcast your problem until it reaches the REO manager at the bank which owns the property.

It would have to occur to an REO department manager that their bank-owned properties might not be shown with enthusiasm by agents if one of their own is being mistreated in a scheme to save money on REO operations. An unresponsive REO manager would look like an accomplice to an unscrupulous asset manager. An agent who hasn't been paid could use e-mail, phone calls, agent-based list-servs(tm) or message boards at their local MLSs to report slow-paying asset managers and the banks who hire them.

How to find them? There is more than one way to find out which bank owns a property besides looking through the BPO order. You can either find the property in the MLS, contact the listing agent, and ask for his/her help in contacting the asset manager, or look up the tax records. From there it is easy to place a call to the REO department.

The most important thing to do is to try to prevent being taken by an asset manager in the first place.

"I do a lot of reports for a lot of other companies, and they pay regularly," says Watson. "They have a timeframe. If you do the report on Monday, you'll have check by Saturday. Others pay once a month and they are regular.

So how do you find the reputable asset managers?

First of all, beware if an asset manager calls you to give you a BPO order. Some asset managers, fresh from burning another agent, will find you in the phone book or MLS, and offer you what appears like easy money. They are always in a hurry, with an unreasonably tight deadline to get the BPO done. Before accepting work from an asset manager you don't know, do the following:

1. If you are going to do BPOs, ask around and find out which companies slow-pay and quick-pay. Keep a list handy and refer to it when you get a call.

2. If you get a call, ask what the asset manager's turnaround is. No reputable company's pay-out is longer than 30 days, and most are even shorter, says Watson. If you want to get your feet wet with one BPO, go ahead, but don't accept any more work from the company until you have been paid for your first order. Tell the company it is your policy to establish a relationship of trust before accepting more orders. Establishing trust means you get paid when you were told you would get paid. Otherwise you could rack up thousands in unpaid invoices.

3. Ask the asset manager for the name of the bank and the REO manager giving the order. Make it a part of your policy that you do not accept BPO assignments from asset managers unless you know who the asset manager's client is, and can confirm that the order will be paid by the REO manager should the asset manager default. Most will refuse, but those are also the same companies that weren't going to pay you anyway.

4. Charge more for your time and expertise. If you are willing to give your time and expertise away for $25, you might be willing to give them away for nothing. Low pricing invites predators to take further advantage of you. You're less likely to defend yourself over a $25 loss than $125.

5. If you accept the BPO order, ask the asset manager for his/her contact information. Then call the asset manager right back. If you find you can't get through to that person, or any human being, then consider yourself lucky. You just contacted a BPO mill that will likely never pay you. If you are allowed to leave a general box voicemail, you can wait a reasonable time for a call back, but if it isn't within a few hours, call back and cancel the order, and tell the company it is your policy not to do business with people who can't be reached.

6. The real estate industry could stop the nonpayment merry-go-round by simply refusing to do BPOs especially those from out-of-state asset managers without payment in advance. You be the first. Let your competition work for nothing. Don't accept orders without advance payment or a solid relationship of trust.

Published: July 22, 2003

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