Brokers, Agents and The Foreclosure Market
Brokers and Agents should take a good look at the foreclosure marketplace for several reasons, not the least of which is to broaden the range of services they offer and enjoy increased sales.
Consumers are fascinated with the concept of saving money on their home purchase. That's why they seek information about foreclosed properties.
The perception is that they will save money. This isn't always true. Not all foreclosures are deals. Regardless, the same consumer has expressed an interest, need or desire to purchase a property, and whether they buy a foreclosed home or not, they still need to purchase a property. This creates several opportunities for the wise broker/agent.
The plain truth is that most foreclosed homes are now sold by brokers/agents representing the lending institution that foreclosed the mortgage or trust deed. Why is this? Over the years, lenders have learned that the regular distribution channel for real estate sales is still the best. In other words, selling their foreclosed property inventory through brokers/agents is the fastest, most economical way for lenders to dispose of these properties.
How does this help you? First, by letting your customers know that you can show them foreclosed properties only adds to your collection of real estate services offered. Second, many of these homes are listed and ready to be shown immediately. Because these are "post-foreclosure" properties, they have no liens, encumbrances or other issues that may cloud the title. Therefore, they are RTG (ready-to-go). As a matter of fact, these properties should be mixed in with your regular inventory and shown as such. The only difference between these properties and other resale's is that the lender had to force a foreclosure proceeding for non-compliance with the mortgage or trust deed. Typically, this means non-payment of the loan as stipulated in the borrower's agreement.
Most foreclosures will be sold at market value. That's because the lender has authorized the repairs (typically, little more than paint, carpet and some cosmetic work) and through a broker's opinion of price and market value, has determined that the property, in good condition, will bring fair value. Other properties may need more work. The real dogs, the worst of the worst, will be wholesaled to investors. These properties rarely make it to the general public.
The free real estate magazines available in supermarkets and convenient stores are filled with ads from brokers/agents offering foreclosed properties. These brokers/agents have learned the value of offering these properties long ago. If nothing else, these ads bring buyers into your office that you otherwise might not reached before. There is hardly a broker/agent alive today, that hasn't been asked about foreclosed properties from prospective buyers.
There are no special requirements necessary for selling lender-owned properties. The seller's representative (a local brokerage) will offer these properties for sale and you will participate in the transaction as you would with any other home purchase/sale, new construction, resale, foreclosure or other.
Regulations regarding the sale of government-owned properties have changed frequently in the last few years. To make sure you're up-to-date on the latest changes, please visit hud.gov for HUD-owned properties and va.gov for VA-owned properties.
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