Editor’s note: With experts predicting foreclosures to rise in the next year, many in the industry already have new strategies in place for how they’ll manage this market change. This three-part series explores new technologies in play for lenders, investors and real estate agents who work with foreclosed properties. (See Part 2: Web sites streamline foreclosure and Part 3: Lenders save money with foreclosure technologies.)
Warren Adams, a Realtor at Security Pacific Real Estate in Fair Oaks, Calif., said the “technology” he once used to track pending foreclosures consisted of a pile of newspapers and a pair of scissors. The Internet has changed that.
“When I started doing this I was cutting out notices of trustee sales and putting them on my desk. It was a real time-consuming process,” said Adams, who specializes in buying foreclosed properties at trustee sales and marketing the properties for banks. “The days of walking down to the county recorder’s office and (then) going to the trustee sale are kind of a thing of the past,” said Adams.
Now, Adams subscribes to an Internet-based service to learn about pending foreclosures. “Being current is everything. I can see what sales are coming up today. Within a matter of minutes I can do most of my homework online to determine if it’s even worth looking at a property,” Adams said, and sometimes an in-person visit is the last thing on his list when considering a property.
Though technology has placed foreclosure information at the fingertips of more agents and consumers, foreclosure can still be a time-consuming and costly process, and foreclosure specialists warn that not all foreclosed properties are a great deal, and not all foreclosure information that you find online is timely and accurate.
While property auctions still take place on the steps of the local courthouse, technology has injected more competition into the foreclosures industry, Adams said. “There is a lot more competition because there are a lot more people who are computer savvy,” Adams said. “With everything going to the Internet there are a lot more people who are looking at the properties.” And a short supply of for-sale homes in some markets, coupled with rising home prices is drawing more attention to foreclosures. “So many people are looking at trustee sales because there is no other inventory out there.” Five years ago, Adams said he had about 100 listings. These days, he has about five.
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Foreclosures are a specialty in the real estate business, and “most average Realtors do not get into it because of the support that you need to maintain this kind of business,” said Adams, who focuses on the listing of REO (real estate-owned) properties owned by mortgage lenders. “There are a lot of new agents, and a lot of agents do not know how an REO works. A lot of people think with an REO they’re going to get a good deal. They don’t realize what they’re getting.”
Each lender tends to have different systems and processes in which they dispose of REO properties, Warren said, and there is definitely a learning curve for agents who are new to foreclosures.
The foreclosures market will undoubtedly start to pick up as the housing boom subsides, Warren said. “There will be a lot of foreclosures coming up in the near future,” he predicted. “Too many people stretched their necks as far as they could because prices had gone up. They had no choice. It’s going to come back and haunt them.”
Technology can have a downside, as some Web sites have sprung up that charge money for foreclosures information that is not kept current. Warren said he saw a listing on one Web site for a foreclosed property that he sold nine months ago. “That is a huge problem. I get a lot of calls on properties that are long gone.”
Lynn Murphy Dickerscheid, a Realtor for Star One Realtors in Hamilton, Ohio, said she also has found Web sites that did not deliver current information on foreclosures. “They will sell you this and all they’re hooking you up to is the listings,” she said. “They’re selling you their public information. It’s not information to me – it’s ridiculous. If you want to know where homes are for sale, call a Realtor.”
While technology can be helpful in marketing foreclosure properties and prospecting for foreclosures online, Dickerscheid said that the business is otherwise largely unaffected by technology. “I wouldn’t say technology has anything to do with it. I don’t think it has impacted the foreclosure market at all,” she said. Working on foreclosure listings “can be a headache,” Dickerscheid also noted, as the commissions can be slim. She said that for one recent listing, she suffered through a flea-infested walk-through on a property that offered a very low commission.
Outsourcing is a recent technology trend in the foreclosures arena, said Richard W. Bronstein, president and owner of R.W. Bronstein Corp. & WNY Metro Bronstein in Buffalo, N.Y. Bronstein is a real estate broker, auctioneer and appraiser who has spent about 46 years in the real estate business and handles several types of foreclosures. Some companies that manage foreclosed properties “are using servicing companies from India” these days, he said, and “we’re finding the wrong lockboxes and missing keys or missing lockboxes” on some properties, he said.
The Internet is most valuable as a communications tool, Bronstein said, and he said that the best way to shop for foreclosures is to subscribe to a printed publication, the Law Journal. Foreclosure listings on some Web sites can be misleading, he said. “One of the biggest national (Web sites) tends to have sold properties in there forever.” On the other hand, Bronstein said that the Web has brought consumers to his company.
Real estate transactions involving foreclosed properties can take a long time to carry out, Bronstein said, and technology has not had much impact on that. In New York it tends to take 45 to 60 days to conclude a transaction, he said. New York state system for handling foreclosures “is archaic and costly,” he said.
Bronstein said he recommends that prospective buyers of foreclosed properties work closely with an agent. And “you should never buy property without seeing it,” he said.
Like other foreclosure specialists, Robert Vitelli of Better Homes New Jersey, VRI Realtors, said Web sites that list foreclosures can be a mixed bag. “Most of it is bad information,” he said. And while “anybody with a computer can do their own research off of the Internet and find foreclosed homes on their own, still the best way to go is through an agent,” he said.
MLS services are a valuable tool in locating foreclosures, and Vitelli said he has found a select group of Internet sites that he surfs for foreclosures. Buyers sometimes approach the foreclosures market with high expectations for finding lower prices, but that is not always the case, he said. “Banks are pricing their foreclosed homes closer to market,” Vitelli said.
Tomorrow: Web sites that streamline foreclosure and pre-foreclosure sales.
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