A Real Estate Niche Profits From Rise in Foreclosures

But the foreclosure business isn't for everyone, said Krein, head of the National REO Brokers Association. "Think about it. It takes a certain type of person to clean a crack house. It takes a severe Type A personality. About 40 percent of our members are ex-military in some form or another. They understand that you have to follow rules and do what you're told."

The other thing these real estate agents need: deep pockets. Agents typically pay upfront for cleaning and repairs, homeowners association dues, lawn maintenance, lockboxes and snow removal, Krein said. They also take on the water, gas and electric bills.

The Newcombs said lenders owed them as much as $60,000 at one point. The couple pays about $5,500 a month in gas and electric bills alone.

Bob Norrell, a senior vice president at Litton Loan Servicing, said he marvels at how complex this niche market has become. Norrell, whose firm collects payments on thousands of mortgages, said that he managed all his bank-owned properties on a single Excel spreadsheet for 20 years.

"Now the brokers and Realtors are uptight about all the information that's required of them," he said.

Norrell cites the vendors who set up booths at a recent conference he attended in Dallas, where more than 2,000 rookies and industry veterans gathered. Some offered software that banks can buy to track their homes and assign homes to agents. One offered a network of foreclosure-prevention gurus that lenders could hire to negotiate with borrowers.

The complexity of the market is why Cary Sternberg, a vice president at IndyMac Bank, wants to hire agents with at least two years of REO experience.

At the Dallas conference, Sternberg held workshops in the ballroom of the Hilton Anatole and told the crowd that just about everyone he knows in turn knows someone in the real estate business who wants to sell foreclosures.

Most of those wannabes are agents who sold plenty of homes during the boom years and think that experience will translate to the foreclosure business, he said.

"I've got to weed out those people because they do not understand the REO business," Sternberg told the crowd. "They're just looking to supplement their income."

The speech did not discourage Deirdre Glascoe, a self-described "newbie" who's not shy about wanting whatever extra money Sternberg can bring her way. Glascoe, an agent at Murchison-John Realty in the District, said she worked on government contracts in a previous career and understands that it takes patience to win a client.

"If [Sternberg] needs a job done in a certain market and the only one available is the newbie he does not want, guess who he's going to hire?" Glascoe said. "He's not going to come to XYZ street in Bowie from Austin to do his business."

With that, she grabbed one of Sternberg's business cards -- contact information printed on a fake $1 million bill.