Over the last few weeks, I have spoken to a number of top producers who have decided they’re simply not getting paid enough to put up with the hassles of either listing or selling a short-sale property. Their new mantra: no more distressed property sales for my business!

The same goes for writing broker price opinions (BPOs) for lenders who have foreclosure inventory. Getting paid $50 to drive out to the property, take measurements, and do all the work to determine the sale price is simply not a good return on their time. In fact, it barely covers their mileage expenses.

Given that distressed properties are still a major portion of the market, where can an agent specialize and still make money without having to wait months on a deal that may not ever close? If you’re fed up with the distressed-property game, here are five alternatives that can keep your business strong without having to ever utter the words "short sale, REO (bank-owned property) or foreclosure."

1. One-third of the population owns their property free and clear
If you’re not willing to deal with short sales, then prospect for potential sellers who have been in their property a long time. In fact, most title companies can provide you with a list of property addresses, their owners, as well as how long they have lived in the property. These are great candidates for listings, especially in the higher price ranges.

A key challenge that move-up buyers face is obtaining reasonable jumbo financing. If a homeowner owns his or her property outright, the owner could carry a first or second mortgage to close the gap between a conforming loan amount and the purchase price. Given that jumbo loans are so hard to find, a seller-financed first mortgage can generate a 6 to 9 percent interest rate on the amount borrowed. This is considerably better than putting the money into a CD or savings account.

Also, many move-up buyers have substantial downpayments and top-notch credit. In some respects, making a private loan may be a better choice than putting the money in the bank.

2. Investment properties
Professional investors tend to be contrarians. They buy when others are selling and sell when others are buying. Today is the ideal time for investors to purchase real property.

In most areas, the bottom has finally hit. Interest rates appear to be increasing again. The outlook for commercial deals looks pretty abysmal because commercial financing has dried up, except for loans that roll over every five years. What’s the alternative? Two- to four-unit properties that qualify for normal residential financing. Depending upon the price, these properties generally qualify for conventional or FHA loans. …CONTINUED

With so many people facing foreclosure, many rental markets are reporting great demand. Furthermore, given the low interest rates, residential investment properties can be a smart move because they’re much more likely to produce cash flow. The one major concern is how investment properties will be treated as part of the health care reform bill. The Bush tax cuts will expire in 2011 and the new bill calls for increased taxes on capital gains and dividends.

3. Global clients
In many places in the world, you can buy a home only if you pay all cash. Consequently, global buyers can be great candidates to purchase because they often can complete an all-cash transaction. Global clients also tend to have a higher close rate compared to domestic buyers.

Also, don’t ever assume that there aren’t global clients in your market. Many companies are bringing in foreign nationals to work in a wide variety of businesses, especially in technology. If you are fluent in another language, have your home page translated into the language(s) you speak.

You can also do periodic blog or social media posts in that other language. Again, most buyers and sellers are more comfortable around people with whom they share similarities.

4. First-time buyers
In some markets, first-time buyers represent up to 65 percent of all transactions. The great thing about first-time buyers is that they don’t normally have to sell another piece of real estate to make a purchase. Also, they tend to purchase entry-level homes where there still is plenty of financing. To locate these buyers, prospect high-end apartment rentals as well as single-family residences that are currently leased.

5. Boomers downsizing
One of the biggest trends right now, provided they can get financing for their current sale, is boomers downsizing in preparation for retirement. A typical pattern is for boomers to buy a piece of property to try out the lifestyle. If they like it, they will sell the house where they raised their family. The result is two sales rather than just one.

Ignoring the distressed-property market means you must work much harder to generate leads. Nevertheless, this may be an easier option that spending hundreds of hours doing BPOs or waiting months to hear that the bank turned down your client’s short-sale offer.

Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, trainer and author of "Real Estate Dough: Your Recipe for Real Estate Success" and other books. You can reach her at Bernice@RealEstateCoach.com and find her on Twitter: @bross.


What’s your opinion? Leave your comments below or send a letter to the editor. To contact the writer, click the byline at the top of the story.

Show Comments Hide Comments


Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
Thank you for subscribing to Morning Headlines.
Back to top
Real estate news and analysis that gives you the inside track. Subscribe to Inman Select for 50% off.SUBSCRIBE NOW×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription