4 Ways Real Estate Agents Can Profit in the Foreclosure Market
The numbers are staggering. And stacking up, too.
Foreclosures are sweeping across the nation like a fall cool and brisk breeze.
National foreclosure activity is up a whopping 93% from a year ago, according to RealtyTrac, a foreclosure data firm in Irvine, CA. The company also reported recently that the country saw about 179,600 homes in some stage of foreclosure this summer, one for every 693 U.S. households.
And most analysts, myself included, don’t see foreclosures slowing down soon. In fact, many predict they will continue through most of 2008.
But as bad as that news may sound, REALTORS can bring valuable services to the world of foreclosures. I have a client in Virginia who made $1.3 million last year and spent just $200,000 in overhead clearing more than $1 million working the listing side of foreclosures.
So how can you get in on the game? Here are four tips:
1. Educate yourself. It’s not as simple as saying, ‘I’m going to start working the foreclosure market.’ It’s very different from the resale market and you have to understand the language, the factors at play and the players. Plus, there’s a lot of due diligence and plenty of work up front. A couple of good places to start are The National Assn. of REALTORS, which has a new consumer brochure called: "Learn How to Avoid Foreclosure and Keep Your Home." It covers dangerous mortgages, predatory lending and options to foreclosure. And visit www.dsnews.com, an online magazine about the foreclosure industry.
2. Pick a side – sellers or buyers. On the selling side, asset management companies will often pay REALTORS a flat fee to prepare a broker price opinion (BPO) on homes in foreclosure. And REALTORS can get a commission if they end up listing a foreclosed home.
Fannie Mae, Freddie Mac and Countrywide, for example, will hire REALTORS to serve as listing agents for their real estate owned (REO) properties. The companies set the commissions, which are usually competitive. And get this, the average REO property is selling for about $217,000; the average price for a non-REO house is $220,000 – not much difference.
On the buyer side, REALTORS can become a HUD-approved broker. Here REALTORS work with investors or first-time buyers. And agents can also help investors as third-party bidders in auctions, where REALTORS buy properties then list them. Agents can find foreclosure properties in newspapers and law bulletins and www.publicrecords.com.
3. Develop the right team. To position themselves for success, REALTORS need the right people on their team -- folks to drive, do research, title work, closings and listings. Outside of the office, Realtors need to develop relationships with lenders, bankers and asset management companies.
4. Understand the big picture. Now I want you to take a few steps back and see the larger picture here. As a REALTOR, you’re not just a buying and selling machine. You’re a flesh and blood advocate for property rights in this great country of ours.
And you should see foreclosure for what it really is: someone’s abrupt end to what we’ve come to know as the true American dream.
It’s easy to get lost in all the numbers and statistics when the housing market takes a dirty turn. But remember, real estate is – and always has been – about people. I’d venture to guess that’s exactly why you got into the business in the first place. To help people.
And when a foreclosure is looming, people need help. This is a market where you can make your professionalism shine.
So shine on and best of luck to you!
(Bob Corcoran is a nationally recognized speaker who is founder and president of Corcoran Consulting Inc., 800-957-8353, an international consulting and coaching company that specializes in performance coaching and the implementation of sound business systems into the broker’s or agent’s existing practice. We look forward to hearing from you. Sign up TODAY for your first coaching call, it’s FREE. http://www.CorcoranCoaching.com/free_coaching.php)