What are foreclosure brokers?
It used to be that foreclosures were rare events. About .5 percent of all home loans were foreclosed in a year, a figure which reached 4.58 percent in the fourth quarter of 2009 according to the Mortgage Bankers Association.
The huge foreclosure surge has not happened everywhere — some areas have seen vastly more foreclosures than others. RealtyTrac.com reports that the six largest states in terms of foreclosure filings — California, Florida, Arizona, Illinois, Michigan and Texas — represented 60 percent of the national total in January 2010. RealtyTrac also reports that 2009 was the worst year for foreclosures since the Great Depression.
Marketshare
In many markets foreclosures are a large proportion of all homes available for sale. The general rule is that the greater the percentage of distressed homes on the market the weaker local prices. Until the massive inventory of unsold foreclosures is removed from the market it will be difficult if not impossible for local home prices to stabilize much less go up, especially in hard-hit foreclosure centers.
Foreclosure Brokers
In real estate there are brokers who specialize in neighborhoods, condos, farms, commercial property, etc. Specialization is important because the value and factors impacting the use of a given property can differ depending on the type of property and its purpose — a $500,000 house and a $500,000 store-front building are both priced the same but the factors which give them value and utility are radically different.
Foreclosure brokers, in general terms, are licensed real estate brokers and salespeople who specialize in distressed properties. Distressed properties include homes owned by people facing foreclosure, individuals who want to sell with a short-sale, and properties being sold by lenders, what are called real estate owned or REOs.
Distressed properties are typically more difficult to buy or sell then run-of-the-mill real estate because there may well be special considerations. For instance, the approval of a lender will be required to have a short sale. The approval of a court will be needed if an owner has filed for bankruptcy.
In exchange for more complications, of course, there can be significant discounts. With foreclosures bought from banks and other lenders the deal can sometimes be made more attractive with financing from the seller.
When looking for foreclosure brokers be sure to ask about practical experience such as the number of properties bought and sold during the past six months or a year. Be wary of folks who flash certificates and credentials — always ask how much time it took to acquire such documentation and endorsements.
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