As homeowners walk away from properties they can't or won't keep, real estate brokers have had to change tactics to sell houses locked in the long foreclosure process.
Just as challenging is finding ways to keep the houses well maintained so they don't scare away potential buyers.
"Some of us are making a killing off this," says Ken Wiseman, broker at Reno Rancho Realty. "We're having a banner year."
Wiseman has sold 52 houses so far this year, but he must dissuade many callers.
"They think they're going to get a screaming deal on these," he says.
"We've already priced them the lowest possible."
Prices set by banks and other owners of foreclosed properties usually match the lowest comparable price within a one-mile radius. That translates into discounts of 5 to 10 percent.
"They won't get $50,000 off a foreclosed home," says Wiseman. "If they want to be investors, they should buy a portfolio of 50 to 100 homes on Wall Street. Those sell for 60 cents on the dollar, as is."
Wiseman started working the foreclosure market a year ago, when he saw a wave of foreclosures coming and he began talking with loan-service companies about handling their workload.
He says the loan servicing companies work with a limited number of real estate agents because there's a lot of training involved.
"But once you're in, you get the workload," he says. "I get agents calling me wanting to know, 'How I can get in on this?' They're starving. I'm working 24/7."
But selling foreclosures comes with a host of headaches.
The loan-servicing companies that own foreclosed houses require Reno Rancho Realty and other brokerages to sell the house within 60 days of taking the listing. The real estate firm must pay utilities to keep the home in water, light and heat. It gets reimbursed for those expenses when the house sells.
Often the ousted and angry owners trash the property, and Wiseman needs to make it presentable before it will sell. That means hauling off yard debris, abandoned furnishings even animals.
He used to hire contractors to do the job, but now, he says, the half dozen loan-servicing companies that own foreclosed houses in the region all have contracted with Field Asset Services, headquartered in Austin,
Texas.
Holtz Enterprise, a Reno cleaning firm, is among those that contract with Field Service Assets to clean up foreclosed properties.
"Business is booming," says Tom Madrigal, a customer service representative for the firm. "Our business has quadrupled since 2005."
It's nothing new to Madrigal, who prepped foreclosed homes doing property clean up and trash hauling for more than 10 years in Los Angeles before he came to Reno four years ago.
But now, Madrigal sees a different demographic: lower-income properties in lower-priced neighborhoods. Once, the ousted homeowners once were the employees of business owners. Now business owners themselves are losing their homes.
"And there will be many more with all the retail closings we're going to see," he says.
Madrigal runs a lean operation; rather than carry overhead, he leases trucks and equipment as needed for the clean up jobs. Despite the heavy workload, the firm still faces financial pressures.
"It's the payment schedule," he says. "I must wait months to collect because banks don't have payment capital to pay for jobs done."
Meanwhile, buyers who need to finance purchases of foreclosed properties find that foreclosure expertise is limited among lenders largely because of the extensive training that's required.
Things get even more complicated when a home is sold for less than the amount owed on its mortgage a transaction known as a "short sale."
Property owners commonly took second mortgages, so multiple banks must work together. With three parties in the mix, the timing can get tricky, says Sylvia Smith, president of Western Title Co. in Reno.
"Short sales account for about 40 percent of sales being closed now," says Smith. "It's very difficult at times. All the parties must agree. And, they're very time-consuming, with a lot of correspondence and emailing."
Despite the time and trouble of training to handle short sales, her entire staff at Western Title has run that gauntlet, says Smith, to preserve their professional relationships.
"Real estate agents have favorite title and escrow officers they like to work with," she says.
