Las Vegas real estate agent Adam Hunt helped two clients purchase foreclosure properties at bargain prices within a two-month period, which primed him to continue mining the foreclosure market.
“I wish I had more clients (interested in foreclosures) because it was pretty easy,” he said. “The sellers were very happy. The buyers were happy. It was very simple. And truly everybody won.”
Hunt got into the foreclosure market after some clients approached him, asking him if he could help them find foreclosures to purchase as investment properties.
“They were clients that came to me and said this is what they wanted,” he said, noting that the clients were beginning investors who had just learned about the foreclosure market. “So I jumped on RealtyTrac … and I was able to find all the properties we looked at there. And two months later I was able to close two deals.”
Hunt tested other resources to help him find foreclosures, but settled on RealtyTrac because of its convenient user interface and timely foreclosure data that wasn’t available through any other real estate data provider.
“You (RealtyTrac) would get them and I would check them on the MLS,” he said. “A lot of the times they weren’t on the MLS. Then maybe three weeks later they were on the MLS.
“What a great resource,” he continued. “For me it worked out great. I was able to find things I wouldn’t have found any other way and was able to do two deals. Without it I wouldn’t have been able to do those two deals.”
Hunt located some properties in default — the first stage in the foreclosure process — and began contacting homeowners to see if they were interested in selling to avoid the damaged credit that foreclosure causes. He tried e-mailing and mailing owners, but found that knocking on doors produced the best results. In fact, the two deals he closed resulted from him knocking on doors. Although he knew the owners were in default, he was careful not to confront them directly about their predicament.
“Literally, both of them I went to their house and knocked on the door,” he said. “I introduced myself: ‘I’m a real estate agent, I specialize in finding properties for my clients and helping people in foreclosure. Do you know anyone that can benefit from that?’ And of course they said, ‘I can benefit from that.’”
Once the homeowner agreed to sell, Hunt’s next step was to contact any lenders who had loans secured by the property and negotiate what is known as a short sale — where the lender agrees to release the loan for less than the full balance owed. Short sales allow buyers to save money on the purchase.
Hunt said lenders in first position rarely agree to short sales because they typically receive the unpaid balance in full through the foreclosure process; however, lenders in second position are often interested because a short sale allows them to recoup most of their money without paying all the costs involved in foreclosing — which is not guaranteed to get them their money back anyway.
“The first (loan) you just pay off because they won’t negotiate usually. If the property has a second (loan), the second you negotiate down,” he said. “It’s better than them having to pay the attorney’s fees.”
Hunt thinks the buyers of both properties will probably fix them up and then rent them out. He contends the buyers made a wise decision to buy when they did even though home prices are not appreciating at a torrid pace.
“It’s the old saying: you sell when people are dancing in the streets and you buy when they are bleeding,” he said. “It’s a buyer’s market. It’s a great time to buy.”