Every year all across the country, hundreds of homes onced used in criminal enterprises, bought with illicit funds or owned by foreign nationals found to be engaging in terrorism, end up in the hands of the federal government. Some of these cases you probably have read about, with news organizations picking up on the more sensational examples—a $63 million California mansion bought with political bribes, for instance.
While the practice of law enforcement seizing personal property—real estate or otherwise—remains highly controversial, with plenty of criticism focused on overreach and abuse, the process of selling these homes—most of which are not multi-million dollar mansions—creates a unique and fascinating niche for brokers and agents. People who are up to navigating the bureaucracy and handling often fraught transactions—involving unique properties and unusual procedures—have the chance to gain the trust of a very specialized and steady client in the U.S. government.
Joe Sainz is an independent broker and the founder and owner of 5280 Realty in Colorado. A third-generation native of the Centennial State, Sainz says he takes tremendous pride in his business, and specifically the 5280 brand (referring to the city of Denver’s elevation, measured in feet).
“I have literally been to war two times in Federal court with some big boys, and have walked away with my four Federal Trademarks for the term ‘5280’ for everything real estate,” he says.
It may have been this dogged commitment to his local market that brought Sainz to the attention of the U.S. Marshals, who at any given time oversee 300 – 500 forfeited properties—the vast majority of which end up sold through a traditional real estate process, listed on local MLSs and big portals.
About six years ago, Sainz says he got a call asking if he wanted to take on the unique, and often challenging task of selling properties forfeited to the Feds. Describing his company as an “outside the box” enterprise focused on marketing that leverages his own background in civil engineering and long-time tech experience, Sainz guesses that the government singled him out based on a variety of factors.
“They were just looking for a good agent in that area,” he says. “I don’t know if he was looking at numbers or what he was doing, but they definitely found me.”
While in terms of pure numbers, it seems unlikely that an agent or broker could build the foundation of their business on these sorts of transactions, both the challenge and particular appeal of selling forfeited properties is something that Sainz says has become a valuable part of his real estate enterprise.
“I don’t think it would be appealing to a lot of different real estate agents or brokers,” Sainz says. “I don’t mind it. I’m efficient with it; I’ve got my system down.”
How the sausage is made
Sainz says that at the beginning, he would read up on the civil or criminal cases behind the listings he took. But that didn’t provide any real value from a real estate standpoint, and while the cases are occasionally interesting, the details of the deals struck and criminal activity were often depressing.
“I’m not getting into following the cases or finding out or anything anymore—none of my business, though it is really interesting,” he adds.
But how does a home make its way from a criminal (or someone accused of harboring criminal activity) to a listing on Zillow?
The details vary widely for every property, but Sainz says that generally, federal law enforcement will seize all property that is owned by someone who is accused of wrongdoing, and then strike a deal which involves forfeiting some number of homes and other valuables, along with potential other penalties. That process takes years in the courts, and Sainz describes occasionally hearing from his contact that a forfeited property will imminently become available, followed by months of radio silence before the intricacies are finally worked out.
“It’s definitely very unique,” Sainz says. “There isn’t a class you can take on this.”
The day-to-day operations around moving forfeited properties is handled by international project management company Colliers International, which signed a multi-year contract with the Marshals back in 2017. A spokesperson for the Marshals told RISMedia that Colliers handles every property on an individual basis, “considering location, condition, price and demand in the local market when selecting a local broker for each assignment.”
The spokesperson also said that commission and compensation is determined “on an individual basis, with the commission structure being agreed to with Colliers International as the engaging entity.”
According to Sainz, during his six years of selling homes for the government, that structure has only followed one template—3% split between buyer and seller agents, with Sainz receiving his payment only about two weeks after closing. The Marshals (or Colliers) don’t pay for any other ancillary cost, Sainz says—marketing or photography—and actually ask brokers to pay to list properties on a special consumer portal called RealLook, which carries only seized properties.
The U.S. Marshals spokesperson, in response to an RISMedia inquiry on what services are paid for, again said that “each sale is reviewed on an individual basis.”
The government additionally lists every property as-is, according to Sainz, with no negotiations allowed with buyers over renovation or remediation.
“They will not change a lightbulb,” he states.
There are also several additional documents that Sainz says he has to process himself. Buyers are required to put down 5% earnest money, which has to be wired to Florida—something that has scared off more than a few interested parties, Sainz says.
Although Sainz says he often provides his expert opinion on price, the government usually sets their own initial list price based on their own process and opinions.
Despite all this, selling forfeited homes is something that Sainz says he is glad to do, offering both an engaging challenge and a steady source of income when the market slows.
“I average maybe six a year, but we’re anticipating a lot more,” he explains. “99.9% of the real estate agents and brokers out there have never done a transaction like this. They’re different. It’s the government, and the way that the government does it is a little bit different.”
That steady source of listings, with no need for prospecting or cold-calling, is something that as a broker willing to put in the extra time and effort, is a great situation for him, Sainz explains.
“I own the company, so I can make my own rules,” he says. “I’d rather have something than nothing. There are a lot of agents out there that are making 100% of nothing.”
There are no required disclosures that the property is owned by the government or was forfeited in a judicial proceeding. What happens usually, Sainz explains, is that the buyer agent sees that 1.5% commission split on the MLS, and reaches out directly to him.
“I get a call, and they’re like, ‘Hey Joe—what’s the deal with this property?’” he laughs. “I tell them upfront—here’s the deal.”
Buyer agents can request an increase in that 3% commission—almost always without success, according to Sainz. In some cases, Sainz says he has asked representatives from the Marshals to call and assure hesitant buyers that everything is legitimate.
The idea of having to wire money to an unknown party in Florida (before any contract is even signed) is especially odd, and often a dealbreaker, according to Sainz.
“About 90% of the agents get it,” Sainz says. “But I’ve had about 60% to 75% of the buyers that these agents are working with not get it—where they’re just, like, ‘Oh hell no.’”
The homes themselves vary widely, he claims, from solid, well-maintained single-family homes to poorly-maintained fixer-uppers. Most of them end up being a great fit for buyers, though, he claims, based on both value and the properties themselves. The government also makes sure all liens or other title issues are fully taken care of.
“The two that I’m listing now, they’re exceptional, they’re beautiful homes,” Sainz says. “The typical buyer ends up with an exceptional deal.”
Right for the job?
A handful of other agents and brokers who listed forfeited properties did not return interview requests, or declined to speak to RISMedia on the record, citing the sensitivity of the issue. Sainz reiterated that he fully understands this kind of business is difficult for many, especially those who have to split commission multiple times with a broker, a franchise or a team leader.
“By the time that pie is sliced up, they’re getting a really small slice. So it’s really not very attractive for the normal real estate agent to want to do these,” Sainz says.
Sainz says maybe the biggest barrier to moving these properties is buyers’ agents practicing illegal steering—discouraging clients from moving on these properties due to the 1.5% commission rate.
“Buyers are interested in the property—there’s a lot of agents out there that are really good, and they are interested in giving that client the best property and making sure that it is a good investment,” Sainz says. “But others are just in it for the money, and if they’re in it just for the money, they’re going to steer their buyer away from that property.”
Sainz also claims that bigger franchises continue to discourage their agents from taking on sales that are lower than the current 5% – 6% total commission rate, either explicitly or through de-facto internal practices, further limiting the pool of agents who would jump into the forfeited property game.
This alleged price-fixing (or commission-fixing) has deep roots in real estate, and is at the center of at least one ongoing lawsuit that could potentially affect the industry on a more fundamental level.
As an independent broker, Sainz repeats that he really appreciates the kind of business he gets from the Marshals. He also says there are signs that “things may be changing” as far as the rigid structure of how these properties are sold, as he was recently asked to put together some more market research on his region.
“That’s telling me they’re interested in what the market is doing,” Sainz explains. “There may be a substantial amount of these forfeited properties coming to certain areas, and we need to get these moved. If we do things a little bit differently…I can get these sold a lot more efficiently.”
For anyone hoping to take on the task of selling forfeited properties, it really comes down to a business philosophy. Sainz describes having built his whole brokerage around that workmanlike, far-sighted and independent approach, doing nearly everything himself in nearly every transaction. That has allowed him to earn the trust of the Marshals and also efficiently get deals done (he says he keeps his closings under 30 days despite the unique nature of the process).
“At the end of the day, it isn’t really so much about the pay for me,” Sainz says. “I can do a transaction from cradle to grave all by myself. I don’t have a team supporting me where I’m paying all of them and doing all this different stuff.”
For anyone else who thinks they can do the same—and wants a steady source of mostly quality listings in a down market—an unexpected call from federal law enforcement might be something to hope for in the near future.
