Like many of you, I have been working in the Bulk SFR REO space. I started in August of 2007 and in the last 2.5 years have spoken to probably 1000 people or so. Here are some of my observations.
“Brokers”, "Reps", “Mandates” and "Intermediaries"..Oh My!
Jargon, all professions have it. But what does it mean. And more importantly, is it even real.
I am a Lic. Real Estate Agent in the State of Florida and have been since 2002. I spent several years selling homes, and moved into the commercial space in 2004-5 where I specialized in selling apt bldgs (large and small) to Condo Converters. When that market dried up I moved into distressed asset liquidation. Thus my title is Lic RE Agent or loosely “broker”. When I was a dues paying member of NAR I was also a “Realtor”.
What I have noticed is the majority of the people I have met in the Bulk REO or distressed asset space are not Lic Real Estate professionals. In fact they aren’t Lic. in anything at all. They call themselves “entrepreneurs” or “investors”, or some other euphemism. And while I can appreciate and even encourage such a spirit, it is the lack of formal training in Real Estate that has caused much heartache. Let me explain.
As a Lic. real estate professional I must learn Law, Standards of Practice, Ethics, etc, and renew and update this knowledge every 2 years. An unlicensed person learns none of these things and unfortunately most of the unlicensed people I have encountered are seriously lacking in one or all of these categories. This isn’t a slight to them, but a “heads up” to the rest of us. The first question you should ask anyone you are working with is are they licensed in anything? This will tell you a lot about their knowledge, experience, understanding, and even possibly ethics level. This doesn’t mean if you are dealing with a Lic. Individual that all will be roses. I routinely get inaccurate information from other Lic Agents, not out of malice, but out of the naïve or inexperienced viewpoint of forwarding data without first verifying it. IF SOMETHING ISN’T WRITTEN (BY THE SOURCE), THEN IT ISN’T TRUE.
“Mandate”: This is the most misused term I encounter. The term mandate is used in reference to an act by which one individual empowers another individual to conduct transactions in that person's name. In this sense, it is used synonymously with Power of Attorney. As a Lic Real Estate agent I do have certain “powers” granted to me when I list and sell a property and there are different levels of representation I can be bound by (agency) one of which can even give me the power to execute a contract on behalf of my client. But that is a VERY rare instance. In the Bulk REO world this term “mandate” however is thrown around loosely to mean “any broker who happens to have a connection to a seller or buyer”. If someone claims to be a mandate or says they speak to a “mandate” I always ask one thing. PROVE IT. Show me the POA or agency agreement. I’m not an attorney but I do know it is fraud to claim to legally represent someone when you don’t.
“Intermediary”: This is a fancy term for a person in a chain of people. In that chain may be Lic Professionals, but more often than not it’s just a chain of “brokers” with no formal training, education, experience, licensing or expertise. Thus the information being passed on by one of these people is RARELY, IF EVER accurate. Why? It’s not because these people are bad, or stupid (although I have sometimes found both also to be true), but rather uneducated and ill-informed. Meaning they don’t know what questions to ask, and what to look for. When they are given an “outpoint” (piece of information that doesn’t make sense or couldn’t possibly be true) they don’t know any better to question it, or don’t know who to ask to verify it, and then forward it down the line as a “true datum”, passing from person to person, arriving to you as “fact” which upon a little due diligence, is just the opposite. Case in point: I have been presented with at least a dozen “opportunities” to engage “platforms” and other “selling entities” (non-profits, etc) that are somehow working with the FDIC in selling Bulk REO. One major outpoint. I have a former client that works for the FDIC and he has confirmed for me that the FDIC is not bulk selling REOs. I have verified this through several other channels, and I challenge anyone to prove, in writing, otherwise.
I have one stable datum in this business. If someone is claiming something to be true, I ask them to prove it in writing. If they can’t or won’t, I move on as it’s undoubtedly a lie. Maybe not their lie, but someone on that chain is forwarding false or ALTERED information and the person forwarding it to me didn’t know or care to verify it. LOOK, DON’T LISTEN is a motto to live by.
“Reps”: This is another euphemism for a person that speaks to a buyer or seller. They may or may not be licensed and most likely don’t actually “represent” anything (in the legal or agency sense).
"Partner": Invariably is just another intermediary on a chain of intermediaries. They may or may not be Lic. in anything and all above applies.