With the housing market warming up and millions of Americans still recovering from the economic effects of the pandemic, learning how to get foreclosure listings is going to be a huge step your business. Here's everything you need to know.
Ready to learn how to get foreclosure listings? In this quick read, we’ll go over everything you need to know!
Economists are, for the most part, predicting a red-hot year for real estate in 2021.
This comes as “More than 3.3 million U.S. homeowners will be on the hook for delinquent payments when mortgage forbearance ends,” according to Daryl Fairweather, chief economist of Redfin.
She goes on to predict that while this may result in a “wave of foreclosures,” most will be able to avoid it.
Michael R. Strain, director of economic policy studies at the American Enterprise Institute, notes that, as of August, more than 10% “… of the eight million single-family mortgages backed by the Federal Housing Administration were delinquent by more than three months.” (bloomberg.com)
In February, pre-CARES Act, 10,438 FHA loans were in foreclosure. In August, after the Act was passed, only 352 foreclosures were started.
CARES is about to expire, thus the expected “wave of foreclosures.”
Whether it’s a tsunami-strength wave or a ripple, these homeowners will be looking for help. Position yourself to be the one person in your market they can turn to – Here’s how to get foreclosure listings.
As in all things real estate-related, location is paramount when deciding whether to spend your limited and valuable time on how to get foreclosure listings.
Some markets will naturally only experience a trickle of foreclosures while others will be harder hit. Check out this chart at redfin.com to see if yours is forecast to be among the latter.
Cities that are home to the highest percentage of “Homeowners Very or Somewhat Likely to Foreclose in the next two months,” for instance, include:
Following close behind, however, we find Las Vegas, Providence and Los Angeles.
Since the article was published on December 7, these figures apply to December and January, while “… most forbearances will not terminate until April or May 2021,” notes Bryan Neft at jdsupra.com.
If you’ve been in the business for more than a minute you no doubt recall 2008. It seemed as if every real estate agent on the planet, overnight, became a “foreclosure specialist” or a “short sale expert.”
Regardless of their lack of training, they irresponsibly took on clients who were either upside down in their mortgages or so distressed they were about to lose their homes.
Horror stories filled the news about homeowners who hired an agent who didn’t know the first thing about distressed property sales. Homes they thought were saved were lost.
Don’t be like those agents. Learn about how to get foreclosure listings, obviously, but also how to properly help a client in need. Brush up on what you need to brush up on. Be the guy or gal that actually helps distressed property owners.
This starts with knowing the foreclosure process. Yes, it’s a baby step, but we hopefully learned from the Great Recession, is that some agents are sorely lacking in the fundamentals.
The foreclosure process is lengthy, which is good news for homeowners. It starts when mortgage payments go unpaid. One missed payment and the lender will send a notice to please make the payment. Two missed payments will result in a nasty gram from the lender.
Absent a worldwide pandemic with widespread unemployment and the government stepping in to halt foreclosures, a homeowner can miss four payments before the lender gets really serious.
Lender’s policies vary, however, so this isn’t a fast and hard rule, according to Craig Anthony at investopedia.com.
Default: At 30 days late, the homeowner is generally considered to be in default, but still able to work with the lender to remedy the situation. His or her credit score, however, will take a nasty hit.
The lender sends a Demand Letter after the second missed payment. If the borrower keeps skipping payments, the lender will send a Notice of Default (NOD), typically when the borrower is 90-days delinquent. The notice is recorded at the county recorder’s office and off goes the loan to the foreclosure department.
Reinstatement period: Now, the reinstatement period begins. The homeowner has 90 days to bring the loan current.
Notice of Trustee’s Sale: If the borrower hasn’t brought the loan current within 90 days of receipt of the NOD, “… a notice of trustee sale will be recorded in the county where the property is located,” notes Jean Folger at investopedia.com. The lender also has to publish the notice in the newspaper for three weeks, along with the date of the sale and where it will be held.
Trustee’s Sale: The home will be put up for sale at auction. If it doesn’t sell, it becomes a REO (real estate owned), or bank-owned property. REOs present another opportunity for agents to become involved in distressed property sales.
Again, the process is location-dependent. States vary in foreclosure requirments for lenders.
We strongly encourage any agent who has never listed or sold a pre-foreclosure home to find a mentor. Hopefully, there’s an agent in your office who specializes in dealing with distressed properties.
Ask the agent if you can shadow him or her for a few weeks. Mentorship is one of the best ways of learning in real estate.
Depending on the foreclosure industry specialty you choose, you’ll need to brush up on or learn more about it. You’ll need to know how it’s changed since the recession, who the major players are and how to contact them.
Consider specializing in one of the following:
Learn all you can about the specialty you choose and work on getting leads and clients. It takes time, but after the first couple of deals, you’ll have it down.
When the lender files the NOD, it is also recorded with the county. These notices are public records and you can search for them, for free. It’s a tedious process and one that is easily handed off to a staff member.
It may even be worth it to hire someone temporarily to do the research for you. Depending on your region, you’ll be looking for a Notice of Sale, Lis Pendens or Notice of Default, according to Florida broker Allison Bethell, at fitsmallbusiness.com.
She also mentions two online directories to which you can pay for pre-foreclosure leads, REDX and foreclosure.com.
Naturally, you’ll run up against competition for these leads, especially from investors. Bethell suggests that the public records search is likely the method with the least competition when looking for how to get foreclosure listings.
Working with HUD foreclosures may be the best way to get your feet wet when you’re brainstorming how to get foreclosure listings. These homes were purchased with a government-backed loans, such as FHA and VA.
You’ll need to file some forms with HUD to become a HUD-registered agent, among them a broker’s application.
“If you are interested in becoming a listing broker you must contact the Asset Manager in your region to receive information,” note the experts at hud.gov.
“You can locate contact information for the Asset Managers on the HUD Homestore,” they continue.
Agents who are successful getting REO listings understand that this can be a lucrative niche. It’s not easy to get started and it may take some time. But, again, the payoff is well worth the time and effort.
If you won’t be working with a mentor to learn the ins and outs of getting started, your climb to success will be even slower.
Here are a few of the basics:
2. Next, compile a killer resume which should include your bio and your sales history.
3. Gather contact information for banks and asset management companies
4. Apply to all of them
“So, you’re gonna send in your resume via hard mail, email and then follow up with a phone call,” according to Steve Daria, Florida broker and investor, at youtube.com.
He goes on to claim that “… this is where 95% of your competition is gonna stop,” sitting back and waiting to be contacted.
Daria suggests calling asset managers once a week. Ask them if they need any BPOs (Broker’s Price Opinion) in your area. Offer to do these for free if it will help you get your foot in the door.
Your aim is twofold:
Sound familiar? Building rapport with potential clients is key to getting their business. Following up with them and with past-clients is where the “fortune” is in real estate.
In the aforementioned video, Daria gives suggestions on what to say to asset managers once you’ve built rapport with them. Fast forward to 3:48 to find out.
He also offers a reasonably-priced course, teaching agents how to get REO listings which may be worth your time if you want to jumpstart the process.
Real estate agents who specialize in certain niches have advantages over the generalists. It’s easier to brand yourself when you specialize, it’s easier to focus your marketing efforts and, often, it’s more lucrative to serve a specific segment of the market.
“The commission for working with foreclosures can be more lucrative than standard real estate transactions,” according to Lindsey Thompson at chron.com.
“HUD homes pay 5 percent commission, and VA homes pay 6 percent commission. Typically, the agent does not have to split that commission with another agent.”
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