LEGAL NOTES

Across the nation, foreclosures are on the rise, and savvy Real Estate agents are finding foreclosure properties and selling them to interested buyers. Here’s how to get in on the foreclosure market.

There are unprecedented opportunities in today’s Real Estate market for buyers with good credit and the ability to secure a loan. Interest rates are low and prices are very reasonable, but what makes this market truly unique is that buyers have many more choices due to the large foreclosure inventory across the nation.

This opens up many windows of opportunity for Real Estate agents who take the time to understand how to market and sell foreclosures. Agents who take a close look at the foreclosure marketplace can broaden the range of services they offer and enjoy greater sales.

Many real estate agents today are conducting foreclosure bus tours to educate potential customers about the benefits and risks of foreclosures. For agents, this is an excellent opportunity to teach a large group of interested buyers how to evaluate, finance, and purchase a foreclosure.

In many cases, foreclosures can provide excellent investment opportunities, and many customers are very interested in taking advantage of these opportunities. However, most have no idea where to begin. As an agent offering a bus tour, you can position yourself as an educator and trusted advisor to these potential clients, who in turn will likely hire you as their agent to execute these deals.

One way to ensure that business will come your way is to offer a free bus tour and require participants to sign a contract hiring you to show them the foreclosed properties. If they buy one of the properties within 150 days of the tour, they must use you as their agent. In Nevada of course, such an arrangement requires a signed “duties owed” and a representation agreement (either exclusive or nonexclusive).

On the bus between visits to each foreclosure, agents typically answer questions and address concerns about buying a foreclosed property. For example, buyers need to understand that most foreclosures have atypical closing requirements. Most foreclosed properties sell in “as is” condition. In addition, the majority of sellers are banks, which will not pay for inspections.

Naturally, when they hear these things, buyers will be concerned that the house has hidden problems and is a risky buy. For example, a property may have hidden electrical, plumbing or structural damages that could easily wipe out any profit margin. An educated agent knows that customers can have their own inspections done and legally back out of the contract if they find problems, as long as they add a clause to their contract in the beginning allowing them to do so.

Most customers are interested in foreclosures because they assume they will get a smoking deal. However, this is not always the case. Some foreclosures are excellent deals, while others are more trouble than they are worth. Regardless, in a rough housing market, filling a bus with interested, qualified customers is priceless. Whether these people end up buying a foreclosed home or not, they still want to purchase a property. As an agent, this alone creates many opportunities for you.

Real Estate agents can find valuable business opportunities in the foreclosure market by finding properties for buyers. However, it is important the agents learn about the foreclosure process and related state laws—such as those regarding liens against a property and redemption periods—before positioning themselves as experts. A state’s redemption period is especially important to understand because it states the length of time in which a defaulted homeowner can recover a property after the foreclosure process begins. For instance, in Nevada, there is a one-year redemption period on judicial sales.

Agents should also become familiar with a state’s foreclosure timelines and prepare buyers for the worst, as foreclosures can often be a lengthy and time-consuming process. Informing potential buyers about the best- and worst-case scenarios early in the process will help ease concerns and make the process smoother for everyone involved.

There are also many opportunities for agents to help homeowners who are in danger of having their properties foreclosed upon. In many cases, these people do not understand what options exist. That is where a foreclosure-savvy agent can step in and alleviate the situation by providing education and a support team to handle short sales.

A short sale occurs when a lender accepts less than the balance owed by the homeowner. Although the homeowner still takes a hit to his or her credit rating, most lenders perceive a short sale as less troublesome than the negative financial consequences of a foreclosure—namely a “foreclosure” or “bankruptcy” ding on their credit report. Using a short sale, homeowners can settle their debts and get a fresh start with a “paid status” or “settled deficiency” status on their reports. If you position yourself as a short-sale expert, you will open up new avenues of business that help get you out of a down-market sales rut.

By showing your customers that you understand how the foreclosure market works, and can point them in the direction of these deals, you can make an important addition to your menu of Real Estate service offerings. In addition, because many foreclosed homes are listed and ready for show, they can be relatively quick and easy deals if all goes well.

Purchase a PDF Copy of this Article
$5.00 Immediate Download

Downloads are for personal use only and are not to
be sold or reproduced in any form.

Disclaimer: The above is not intended to be, nor is it legal advice, and should not be relied upon for any reason. Even though this article maybe disseminated throughout the U.S., the material covers only Nevada law, and no other. E RealEstateExec and Exec MediaGroup, LLC expresses no opinion on any other state's law, nor about the handling of any particular legal situation. You should consult your attorney, accountant or business advisor before undertaking any action. No attorney-client relationship is created between E RealEstateExec, Exec MediaGroup, LLC and the reader.