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Farming the Foreclosure Market

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By Joel Cone

foreclosure-webRISMEDIA, April 11, 2009-Amid all the hype and hearsay surrounding foreclosures, three agents in diverse parts of the country are making hay with short sales and REOs. And there is plenty of hay to be had: the number of properties with foreclosure filings nationwide rose 81% between 2007 and 2008 to 2.3 million, according to RealtyTrac, with those numbers projected to rise even higher in 2009 as interest rates reset on yet another wave of questionable mortgages and unemployment rates ratchet higher.

Armed with a membership in the RealtyTrac Agent NetworkTM-along with a solid understanding of their state’s foreclosure process and how their market most efficiently clears foreclosure inventory-these three agents are working within their local systems to produce spectacular results, even in blatantly depressed real estate markets.

RealtyTrac launched its Agent Network in 2005 to connect motivated foreclosure buyers and investors with local agents and to provide agents with a source of exclusive buyer and seller leads.

Cultivating Qualified Buyers

For more than three years now, Vickie Lobo has successfully worked as a buyer’s agent in one of the nation’s largest foreclosure markets-Riverside and San Bernardino counties in Southern California. She remains excited about her market’s potential thanks to the large volume of growing foreclosure inventory.

“The properties are coming out very fast and I love it,” says Lobo, a Rancho Cucamonga-based real estate professional who estimated the inventory in her market is 60% short sales and 40% REOs. “There are a lot of short sales on the market because everything is upside down. You’re seeing very few properties that have equity out here.”

Lobo closed 42 transactions in 2008, a noteworthy accomplishment given that she works in an area of the country known for its vacant blocks of foreclosed homes.

Lobo generates many of her buyer leads through membership with the RealtyTrac Agent Network, which she joined in 2006. Frustration from dealing with overburdened lenders has Lobo avoiding short sales whenever possible-unless a client is interested in a particular house that happens to be a short sale.

With so much product available on the market, Lobo is constantly tracking properties online and utilizing her industry connections to make sure she knows when new foreclosures hit. Key among those connections are her relationships with local REO agents who represent the lenders in her marketplace.

“Find the REO agents in the area you’re interested in and be in their face,” Lobo says. “Their goal is to get rid of that property as quickly as possible. They love agents who come to them prepared with good, qualified buyers. REO agents are my buddies.”

Once she begins working with a client, Lobo finds out what properties are available in the market where the buyer is interested in purchasing. For each property, she makes sure she knows who the bank is, how much is owed and the current market value, which she calculates by doing her own analysis or finding out what the broker’s price opinion (BPO) came in at. And, most importantly, she advises her clients to be patient and work with her as a team.

“I tell them, ‘Don’t be overly anxious to buy a property just because you know it’s a good time to buy’,” Lobo says. “You have to put in as many as eight offers to get one acceptance because the competition is so steep. You beat yourself out if you lowball it. You have to go in with both guns cocked.”

Sowing Seeds for Successful Short Sales

On the other side of the country, Jeffrey Meisner, a real estate professional based in Woodbridge, New Jersey, is also seeing rampant foreclosure activity-with short sales outnumbering REOs in his market.

“Foreclosures are everywhere-in every segment of the market,” says Meisner, an investor who became a real estate broker because he “couldn’t find anyone who had knowledge about foreclosures.”

Meisner, a member of the RealtyTrac Agent Network since 2005, advises his buyer-clients to be patient with the market and take their time to look around for the right house before making an offer.

“If you understand how to buy foreclosures and have the liquidity to purchase them, you can do well,” Meisner says. “You have to be able to walk into a house, see it and make an instantaneous decision to go forward and present the strongest possible contract to the bank. Don’t give them a reason not to accept your offer.”

Meisner estimates that he receives up to 250 inquiries a month regarding foreclosed properties. When a buyer lead comes in through RealtyTrac or any other source, he insists that the client come into his office and sign a “Buyer Agency Agreement” first. Plus, he has new clients sit through a foreclosure seminar he offers once a week.

“I work only with those willing to commit to work with me. About 30% of the people who commit to me actually buy property,” says Meisner. “It locks me into them. If they want my help as a foreclosure expert, I give them a seminar and answer all the questions they want.”

Reaping an REO Harvest

Short sales and REOs are the only homes that are selling in Miami Beach, where Gene Garrote is the director of the REO division for Weichert Realtors Best Beach. His division was handling 120 short sale listings in February.

“There are tons of short sales, which will become REOs-most of them. Retail is finished,” says Garrote, a member of the RealtyTrac Agent Network since 2006.

“It’s very exciting. It’s very fast moving; a little bit difficult. I deal 100% with buyers and the bank. I get the buyers through RealtyTrac, and the banks give me the properties.”

Garrote advises real estate professionals wishing to work oceanfront communities to learn all the applicable rules and regulations in the area.

Like many REO listing agents, Garrote started by performing broker price opinions for the lenders, which he still does today. Once he lists REOs on the local multiple listing services (MLS), it doesn’t take long before he is contacted by interested buyers who want to see the properties. After a weekend opening, some properties attract as many as 10 presentations and five offers, which he presents to the bank.

With so many properties on the market, cash is king. “I’m seeing a lot of cash offers. A cash offer is just less paperwork,” he says.

Agents like Garrote, Meisner and Lobo have found fertile ground in the foreclosure market. Their hard work cultivating the soil and sowing seeds has yielded a cash crop of short sale and REO transactions. But although the harvest is plentiful, the workers are still few. Pick up your plows and sharpen your sickles. It’s time to farm foreclosures.

For more information, please visit www.realtytrac.com.

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