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How agents on the ground are impacted by the foreclosure crisis

It’s too early to tell how bad the foreclosure freeze is going to be for consumers and lenders, but make no mistake, this recent turn of events will be especially painful to one group… agents. Now most of us have dabbled with short sales and closed an REO here and there. It certainly does not constitute the bulk of our business. However, there are some of us who solely rely on these types of transactions. The rise of the REO/Short Sale Specialist is about the take quite a fall.

After the bubble burst, many struggling agents reinvented themselves as Short Sale/REO experts. And those agents who were doing ok also hopped on the bandwagon. There was a mad dash to court these deals because we were told this was the wave of the future. The recession hit. People couldn’t keep their jobs. A slew of ARMs were set to expire. The massive shadow inventory was lurking in the background. There would be tons of listings to supply the sales pipeline for years! Who could have foreseen this?

I feel really badly for this group of agents. Faced with the possibility that their sales pipeline was evaporating right before their eyes, last week, scores of my colleagues were stricken with panic as foreclosures threatened to come to a screeching halt. With their livelihoods hanging on a thread, agents (along with their deals) were paralyzed. These agents spent the past several years procuring connections with REO departments, perfecting their shortsale/REO protocol and rebranding themselves as REO mavens… all to have it possibly come crashing down on them.

One agent, the self-professed “Top REO Queen,” confided in me this weekend that she’d focused too much time and energy into building her foreclosure empire with her harem of REO assistants. Like many REO big players, she made her money in volume. If things don’t get resolved soon, she may have to lay off her team and totally restructure her business model. To start from scratch is daunting, especially since her sphere of influence for the past few years consisted only of asset managers! “I’m afraid I’ve painted myself into a corner,” she confessed…

There is something to be said about specialization. When executed properly, it can be a powerful branding strategy to set yourself apart from the sea of other agents. Yet, over-specialization can also lead to the danger of the proverbial phrase “putting all your eggs in one basket.” It’s great to have a specialty in one segment of the business, but always keep in mind that segment can dry up. Nothing lasts forever! Diversification is key. So, from this foreclosure mess, we are all reminded to try to cultivate a mix of revenue streams, clientèle & transaction types in order to buffer any drastic changes to our core business. Variety is the spice of life… and real estate!

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Written By

Watch Real Estate Expert Herman Chan put the REAL back in REALTY. In his show Habitat for Hermanity, Herman skewers the real estate business and pokes fun at his fellow agents, all the while empowering buyers & sellers with behind-the-scene tips & secrets of the industry! Get a glimpse beyond the glitz & glam of real estate. It's a hot mess! Featured on HGTV, House Hunters & other media outlets, Herman is the undisputed Real Estate Maven whose helpful & hilarious commentary you just can't live without! In fact, his real estate TV show has just been optioned in Hollywood!

27 Comments

27 Comments

  1. Gina Kay Landis

    October 11, 2010 at 11:27 am

    Yep, I was one of the BPO queens locally, doing about 20 + a month – for many different vendors, and felt that I should move back into residential sales along with other diversification – well! Good move, have had 2 closings thus far, wrote an offer yesterday, and BOOM – let’s hope this continues!

    • Herman Chan

      October 11, 2010 at 12:59 pm

      you’re a wise lady Gina. keep it up!

  2. Sheila Rasak

    October 11, 2010 at 11:43 am

    So this explains the panic in which I awake each morning! That being said, I’d entertain the opinion of the author on the merits of poising oneself for the glut of the opening gates of inventory once released. I think we’re in a holding pattern much like what happens when holiday time hits. How long can the icy freeze last?

    • Herman Chan

      October 11, 2010 at 12:59 pm

      hi sheila!
      one day we will all say “do u remember that foreclosure freeze back in 2010?” but who knows how long that will be? who knows how long the holding pattern will last. but hey, if you can hold out indefinitely and not let it affect your lifestyle, income, payroll, etc, then knock yourself out! most ppl don’t have that luxury though…
      thanks for your comment!

  3. Waterfront Jacksonville

    October 11, 2010 at 4:19 pm

    Maybe I’m missing something.

    I see how an REO agent is hit with the foreclosure freeze now that the banks have started taking the listings off the market. I don’t see how this affects the Short Sale agent and I’ve been unable to find anything saying how it will affect short sales.

    How does this affect the Short Sale agents?

  4. Kelsey Teel

    October 11, 2010 at 4:52 pm

    “Variety is the spice of life… and real estate!” — So true, Herman!

    Finding the balance is key and it can be very hard to do! I’ve seen agents go both ways…in this case, becoming too specialized while in other cases spreading themselves too thin. (i.e., having 10 different designations that don’t really mean a darn thing.)

  5. Jim Gatos

    October 11, 2010 at 7:11 pm

    Almost all of the local REO Bank real estate agents I am dealing with are genuinely nice people and for those I feel. They have to put up considerable money upfront to carry the repairs and maintenance on properties they don’t even own and also fill out disbursements to get paid. If they don’t they potentially lose a lot of money. For those agents, I feel bad if their business gets impacted. There are a couple of agents I have dealt with that had absolutely NO personality; no communication skills, nothing. It was dealing with “The Borg” from Star Trek! For THOSE agents, I’m gonna say; I hope you have listing and selling skills buddy, a HIGH level of listing and selling skills, buddy! YOU’RE GONNA NEED IT!

  6. Jamey Prezzi

    October 12, 2010 at 9:15 am

    Although it’s not easy, that’s the nature of our business now…… a constant shift. I do agree with Watefront Jackson, not sure how it will affect short sales as much in fact some are predicting that this will be better for short sale deals. My business is a different model so I don’t really do either from a listing standpoint but it will be interesting to see how it works itself out. Something tells me that the agents who did brand themselves in this field will easily shift to another but I have a feeling REOs aren’t going anywhere.

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