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A Real Estate Niche Profits From Rise in Foreclosures
SOURCE: First American LoanPerformance | The Washington Post - December 28, 2007 TOOLBOX
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Others keep finding new niches. More than a year ago, Maryland real estate broker Kevin Goodnight launched REO Hotshots, a Web site where lenders can search for real estate agents his firm says it has vetted.
The members-only site -- which also lists appraisers, title lawyers and contractors -- charges lenders $249 a year. Agents and contractors pay $999 annually to get their names in front of these lenders.
The Web site and others like it hope to profit from the lenders' need to offload foreclosures as quickly as they can. The longer they hold these properties, the more money they lose.
"Many of these lenders are completely overwhelmed right now," Goodnight said. "They don't want to waste lots of time looking for agents or contractors, and they don't want to take anyone by the hand when they're this busy and teach them how to get the job done."
The premium on experience helps the Newcombs.
The couple eased into the foreclosure business at the height of the housing boom, when many borrowers were refinancing their homes. At the time, lenders needed to quickly determine the value of those homes and a handful of them hired the Newcombs to do "broker pricing opinions" at $35 to $150 each.
Those contacts came in handy when foreclosures rates surged this year. They completed 2,500 broker pricing opinions for a dozen of their lender clients -- up from 1,300 in 2006.
"That line of work gave us a chance to prove ourselves to the banks and develop a rapport," Barbara Newcomb said. "That's why we managed to get so many foreclosure listings when the market went bad."
These agents, like others, make their money in commissions.
The larger their inventory of homes, the more they are likely to sell. And the higher their prices, the better the commission.
The Newcombs say selling one or two houses a month keeps them going. They have eight under contract that are scheduled to close this month or next, including one that's selling for $575,000. Their most expensive home is listed for $769,000.
"We're going to be looking at a good January and February," Barbara Newcomb said. "I'm sure we'll be seeing more sales in March and April, but if we don't, what we've got so far is enough to tide us over."
