Tips on Real Estate Investing: Foreclosures

There's news everywhere regarding the national foreclosure rate. From today's REALTOR Magazine On-line, here are some solid tips, the best of which is simply that just because a property is a foreclosure doesn't mean it's a good deal, should you decide to invest in a foreclosure:

7 Tips for Foreclosure Property Investing

With foreclosures rising nationwide, prices falling, and inventories swelling to historic levels, investors with a discerning eye and knowledge of the foreclosure process can build a profitable portfolio of distressed properties, says James Saccacio, CEO of RealtyTrac, which tracks foreclosure data.

Saccacio offers this basic advice to foreclosure investors:

• Know your market. The most important tool in your real estate investing toolbox is knowledge of the area where you plan to invest.

• Develop an appropriate investment strategy. Find an investment strategy that will work in your market, and then do what it takes to implement that strategy.

• Make the foreclosure process work for you. Decide what foreclosure buying technique works best with your investment strategy and your strengths as a person.

• Scrutinize each deal. Many real estate investors wrongly assume that if a home is in foreclosure it's a good deal.

• Rely on a trustworthy team. You'll be in over your head if you try to do all the work involved in foreclosure investing on your own.

• Network with banks and lenders. In a slow real estate market, banks and other lenders are saddled with larger inventories of foreclosed properties and will be more motivated to sell those properties at bargain prices.

• Act quickly, but don't be in a hurry. A slow real estate market gives you the upper hand as a buyer, but you'll still need to act quickly to get the best deals.

— REALTOR® Magazine Online

Thoughts on Real Estate Licensing

Many industries struggle to maintain a certain level of professional respect, however, some lines of work such as real estate sales & insurance sales, seem to have never quite gotten past the point of being a punchline. Nowadays, marketing is everything. Look at lawyers, dentists, & other medical specialists, professions where even the thought of advertising used to be offensive. There are commercials everywhere, and not only is it becoming accepted, it's becoming absolutely necessary to the vitality of many of these practitioners. Granted, there are still those who do quite well for themselves and are completely referral-based (my dentist comes to mind), but these examples have built practices the hard way through years of grinding it out, one client at a time. I'm not trying to draw a direct parallel between law or medicine & selling real estate, but some of the challenges to answering the perception question are similar.

Consider the following article written by former National Association of Realtors Chief Economist, Dr. John Tuccillo. The perception of the profession of selling real estate will not graduate beyond an "anybody can do it" sort of hobby until changes are made regarding entry into the occupation. During the "boom years", this mentality was only bolstered as huge ranks of people jumped into the art of selling real estate with both feet. It was easy to make a quick buck. As 2007, however, is half over, many agents are struggling to make a living as the market downturn is affecting marginal producers. Perhaps the downturn will weed out many agents, which at least in theory, could be a good thing. Or, perhaps it will be a catalyst to a greater change in how people become real estate agents.

Many agents, including myself, have been screaming for higher standards for gaining a real estate license since way before 2007. It is absurd to think that someone who has as much influence on what, in many cases, is the largest financial transaction many people will ever make can gain the ability to do this through attending 90 hours of academic classroom material, passing a test, & paying some fees. Large brokerages have been fueled by attracting huge numbers of agents knowing that even the least capable agent might fall into a deal or two in one year, but is this really good for the industry? The above referenced article appears to answer that question directly. Let's hope its merits produce better agents & a better, more legitimate industry as a whole.