Foreclosure Profit by the Numbers: RealtyTrac

One of the leading resources for foreclosure data is RealtyTrac (www.RealtyTrac.com). As we’ve mentioned in previous blogs, statistics are better than any crystal ball. In this article we’ll take a good look at the current national foreclosure and related statistics and see what we come up with.

First of all, there is a stat called “New Foreclosure Filings”. This term, according to RealtyTrac can be defined as; “the moment the mortgagor files a Notice of Default to the borrower” which as most know can misrepresent the ACTUAL number of foreclosures that occur (due to borrowers recovering from their default status). The number of New Foreclosure Filings as of this blog is at 272,967 for the month of September & 2,034,370 Year to Date! That’s a LOT of filings even if 50% of the filings redeem (which is highly unlikely).

Now let’s move on to a more REAL number, in other words a number that can’t be influenced by numbers that can change (such as redeemed mortgages that went into default). “Foreclosure Sales” is the next number reported by RealtyTrac. As of this blog there were 21,345 sales in the month of September 2007 nationally and 167,545 Year to Date. If you couple this statistic with the “Average Sales Price” you begin seeing the reason so many real estate agents get involved in REO. Year to Date, the Average Sales Price has dropped only $2,800 to settle in at $166,185.00.

So, here’s the math laid out for you:

$166,185 * 5.5% (average commission) / 2 (list side & buy side split) = $4570.00 commission to each side

Sure, you must consider overhead and a referral to the asset management company, but let’s now consider the next equation:

Consider that there are currently 1,363,758 Realtors in the US (11/2007 NAR). Then consider the fact that there are 2,034,370 new foreclosure filings nationwide.  That means that each Realtor in the USA could handle 1.5 listings EACH if everyone learned REO.  We all know that not everyone likes working with REO so you can start adding up those listings quickly.  Lastly consider the fact that several broker price opinion reports will be needed for each of these properties at least 2 times, paying approximately $45 each time.  That comes out to be roughly $183,093,300.00 in reports paid out over the next few years.

Are your ears perked up yet?

Colorado Statistics are Clear in Foreclosure Boom

There was one state that stood out among the rest back in the early 2000’s regarding a plummeting real estate market – Colorado.  You’d think that a vacation hot-spot and booming metropolis like Colorado would be safe from the foreclosure boom, or at least in the same boat as the rest of the nation currently being faced with the reality that we’re in one of the worst real estate markets in history.  Colorado, however, is what’s commonly referred to as a ‘counter-cyclical’ market.  In other words, the economy of NY and Wall Street tend to represent the rest of the nation in general, whereas Colorado tends to be at it’s peak when NY and WS are down and vice-versa.

Why is this information important?  Because Colorado’s economy will help the rest of the nation predict where the future lies.  Since nearly 2002 Colorado has steadily increased in number of foreclosures and is still on the rise.  The only reason Colorado dropped on the “Top Foreclosure State” list is because other areas like parts of California, Detroit, and Cleveland shot so high up on the charts that they surpassed Colorado.  Here are some interesting statistics that not only reflect Colorado’s most recent foreclosure boom, but also the foreclosure boom they felt in the 80’s from the oil bust.  It is evident that the same things we’re seeing now happened in the 80’s as well.  If you want to know your future don’t go to a crystal ball, just look at these statistics:

In 1988 there were 17,122 foreclosures in Colorado (the height of it’s foreclosure boom from the oil bust that occurred years earlier).  In 2004, 23,567 foreclosures cases were opened by the Public Trustee’s office.  In 2006, 54,747 foreclosures were filed in the state of Colorado by the Public Trustee!  These numbers are staggering even when you consider that a fraction of these foreclosures redeemed their bleak situation.

Let’s now take a look at the population of real estate sales agents & brokers during these time periods:

According to the National Association of Realtors (NAR), here is the “Historic Membership Count” of Colorado:

1984 (just after the oil bust):  15,252
1987 (starting to feel the aftershocks of the oil bust):  14,482
1988:  13,622
1989:  11,686 (pinnacle of the aftershocks of the oil bust & peak of foreclosures)

What’s evident here is that real estate sales agents & brokers tend to “jump ship” when the market turns to a foreclosure-heavy arena.  Why is that?  Most likely due to the unique skill-set required to operate a successful and accurate foreclosure-based real estate firm.  The same thing is happening in Colorado’s current market as you can see:

2000 (peaking tech boom): 19,618 agents statewide in CO.
2003:  23,295
2006:  27,640
And now the numbers in 2007 are dropping (full statistics not reported at the time of this blog) which will not be seen until 2008-2009 when their license on file expires from inactivity.

What all this comes down to is that there is a wealth of business to be had in this real estate market, the only caveat is the knowledge of foreclosure real estate (otherwise known as REO).  The National Foreclosure Sales Training Institute provides all of this knowledge and MORE to real estate professionals around the nation.  Get going on the REO Training material and start making more money that ever before as a real estate agent or broker.  Become the six-figure agent that you always dreamed of while maintaining the same or less hours than ever before!  Become an REO agent now and reap the rewards for years.  Foreclosure is among us and isn’t going away for a very long time.

A Cleveland Foreclosure Miracle

Darlene Stutzman, a young wife and mother from suburban Parma, OH and her husband, Michael, got in trouble when he got sick and had to take an unpaid leave from work. She found out about ESOP (East Side Organizing Project) when she called Cleveland’s 211 government resources line. Michael, who was back at work, was unable to join her for the counseling session

With hard work and diligence on behalf of both the Stutzman family and ESOP counselors they were able to get Countrywide to convert the Stutzmans’ ARM into a fixed rate mortgage at 8.75 percent. The second mortgage was entirely forgiven with the debt wiped out. The couple’s loan payment would drop to $785 a month, plus taxes, and it would stay there, well within their budget.

Dame was surprised: While other ESOP partners have made similar concessions like loan forgiveness, it was the first time Countrywide did it for one of her clients.

But the plan made sense for the company, she said. A single foreclosure costs a lender an average of $50,000, according to a study from Congress’ Joint Economic Committee. Countrywide may be losing money on its original deal with the Stutzmans, but it’s still receiving payments, and it doesn’t have to unload a house in a depressed market.

“It makes good sense, because Countrywide will be collecting on a loan that someone can afford to pay,” said Dame.

Stutzman more reserved about the outcome. “It sounds good, but I think it’s something that should have been done a long time ago,” she said.

Countrywide did not make itself available for comment on this piece.

(an article summarized & taken from CNN)

National Foreclosure Sales Training Institute Prepares for Launch Date: 12/4/07

On December 4, 2007 a fully-developed training institute for foreclosure sales is projected to launch nation-wide.  The business model has been developed to provide comprehensive sales training for real estate agents on the topic of foreclosure listings.  In the recent months a greater need for this type of training has spread over the nation to assist real estate agents with the evolving downtrodden real estate market.

The National Foreclosure Sales Training Institute (NFSTI) is currently putting the finishing touches on it’s user-friendly website that will only require users to pay one annual admin update fee of $37.  NFSTI has also developed several classroom courses to complement the online educational system which will provide counselors whose sole purpose is to assist with the development of business plans for the real estate agents.  Not only will NFSTI teach “What to Do”, but will also teach “How to Do It” in regards to acquiring bank-owned listings.

We are looking forward to seeing a lot of success and making positive changes in many professionals’ careers and lives.  It’s time to put the fun back into real estate and get some money into the pockets of the professionals.