Real Estate's Hot Specialists

Real Estate's Hot Specialists
Foreclosure Agents Thrive While Others Struggle to Survive

By JAMES R. HAGERTYApril 9, 2008; Page C12

As the housing slump drags on, sales are so slow that many real-estate agents are giving up or barely scraping by. But one group of brokers is thriving: those who specialize in selling bank-owned properties.
Foreclosed homes are "the only game in town," says Larry Salas of All-Star Realty Sales in Miami. His firm has about 150 homes listed for sale, all of them foreclosed properties, up from 25 or 30 a year and a half ago. Mr. Salas has never seen such a weak market in more than 30 years as a real-estate agent, and that suits his firm perfectly.
Riding Out the Slump: Coshow Real Estate Group in San Diego is among a growing number of real-estate firms to take prospective buyers on tours of foreclosed homes.
Sales of previously occupied homes nationwide last year totaled 5.65 million, down 20% from the record set in 2005, and sales are expected to fall further this year. So some real-estate agents are moving on to other occupations. Membership in the National Association of Realtors has fallen to 1.24 million from a peak of 1.37 million in October 2006.
But Joseph Iuliucci, a Las Vegas foreclosure specialist at Prudential Americana Group, has never been busier. He has more than 500 listings and was among the top 10 home sellers nationwide for the Prudential Real Estate franchise chain last year. Mr. Iuliucci needs a staff of 22 agents and assistants to stay on top of things.
Data from First American CoreLogic, a research firm based in Santa Ana, Calif., show that lender-owned homes account for roughly one out of nine homes listed for sale. In some places, sales of lender-owned homes or ones threatened with foreclosure are dominating local markets. Foreclosure-related transactions accounted for 52% of all sales in the Las Vegas area in March, according to the Greater Las Vegas Association of Realtors.
Once a month or so, Prudential's Mr. Iuliucci takes prospective buyers on bus tours of foreclosure hot spots, such as a cul de sac where five of seven houses are lender-owned. Such tours are becoming common across the country. Coshow Real Estate Group, a real-estate brokerage in San Diego, leased a bus and hung a "Foreclosure Bus Tours" sign on the sides. The firm offers tours of the area every other weekend, either of foreclosed condos or single-family homes.
Carla Coshow, the firm's founder, says that finding foreclosed properties can be tricky, because lenders don't list all of them on multiple-listing services, databases used by real-estate agents to keep track of homes for sale. "We think that one-half of the property is not on the multiple-listing service," she says. The banks "believe that prices are going to go back up and are holding on."
At one of Coshow's tours on a recent Saturday, about 25 prospective buyers arrived at Coshow's office to be met by a group of agents and a table laid out with pastries and drinks. Each participant was given a "Repo Express" name tag and a booklet listing the seven condos to be visited that day. For each listing, there was detailed financial information, including the current asking price and what the previous owner paid.
"We're not saying these prices are what anybody should offer," Ms. Coshow said as the bus headed for its first stop. "But at least they're reasonable."
FIS Asset Management Solutions, of Westminster, Colo., organizes sales of foreclosed homes for its bank customers, using a nationwide network of local brokers. Chad Neel, president of FIS Asset Management, says he has a list of 30,000 brokers who specialize in bank-owned properties. His company has pruned the number of brokers it actively works with to less than 4,000, giving more homes to those considered most effective.
One of those brokers is Chuck Braniff, who sells foreclosed homes in Flint, Mich. Mr. Braniff has spent more than 15 years building up his relationships with firms like FIS and with the employees of banks who dispose of foreclosed homes, known in the trade as "real-estate owned," or REO, properties. In return for a steady flow of listings, banks expect him to do such tasks as monitoring homes that are heading for foreclosure and arranging for repairs when thieves rip out copper pipes. He carries a can of pepper spray to ward off dogs in tough neighborhoods.
Banks often pay the listing agent a 2% commission rather than the 2.5% to 3% often commanded by those listing ordinary homes. "We work our tails off, and they take part of the commission," Mr. Braniff says. But he isn't complaining. Mr. Braniff has three children in college and prizes the steady flow of work he gets from foreclosures.
On a recent afternoon, Mr. Braniff walked through a three-bedroom foreclosed home in a middle-class suburb that went on sale five months ago at $149,000 and finally found a buyer at $95,000 in March. The home had a walk-in closet, a whirlpool bath and pinkish shag carpeting in one of the bedrooms.
"A couple of years ago," Mr. Braniff said, "this was a $175,000 house." Much of the problem is Flint's loss of industrial jobs, but there are other factors. Looking through the homes, "you almost inevitably find out," Mr. Braniff says. "Drugs, death, divorce, gambling."
One question is how to advertise these homes. Some brokers like Mr. Braniff think buyers sniff a bargain and get excited when they see "bank-owned" on the for-sale sign. But banks often think such signs create a stigma that is best avoided.