As foreclosures and short sales become a larger and more significant portion of a real estate agent’s inventory, the BPO or Broker’s Price Opinion has become a common task for many real estate agents.

A BPO is a valuation of a property in which and agent can receive compensation for providing a professionally prepared opinion of value.  A typical foreclosed property will have had 8-10 BPO’s prepared by various real estate agents over the course of the proceedings.  Lenders will pay anywhere from $50 to $200 each BPO  to the real estate agent (or company) for completing the BPO.

It has been my experience that even in states where the broker or company must be paid (like in Florida) that the broker or company will pass through the entire payment directly to the agent… in other words, the BPO is non-commisionable.  Since the amount for each BPO is relatively small and many agents today are living on the income that the BPO’s generate, the practice of passing through the commission seems to be a generous position.

Yesterday, I heard that a particular company was switching their practice on BPO’s and other fee for service items so that the company will charge their portion.  In other words, in a $100 BPO payment that is non-commissionable the agent would receive $100.  In the commission scenario, if the agent is on a 70% spit, the agent would now receive $70.  That is a 30% pay cut.

For the company, expenses are up and revenue is not – this seems like a logical item to consider.  For the agent – less is less and I can see where it can be a substantial reduction in income for someone that is basically surviving on the BPO income.

And so here is yet another example of the real struggle in real estate companies today… how can the company remain profitable without losing quality agents? The answer is critical to operational survival.  Please comment…