Although buyers remained on the sidelines for quite some time, when prices on foreclosed properties reached incredible lows, they were finally prompted to enter the market and start snapping up properties. While many of these buyers are simply real estate investors looking for the deal of a lifetime, a good number of them are also first time home owners who couldn't afford to buy a home under normal circumstances.
But most of the people who buy foreclosed properties are simply looking to flip them. This means that they buy homes at below market prices; clean them up a bit, and sell them when the market improves. This is a practice that is viewed with great disdain buy many respected real estate agents, especially in light of the current crisis. These ''flippers'' are essentially the vultures of the real estate market.
What are brokers to do?
The truth is that they really don't have any other options. As housing prices continue to fall, sales have not increased, and even when they do sell a home, their commissions are significantly smaller than they were in the past. Right now, the only growing market in real estate is in foreclosures.
The problem, however, is that most real estate agents don't know very much about housing foreclosures. Since foreclosures have never been a significant part of the business, they never had to learn. But now that their very livelihood depends on helping clients locate good deals on foreclosures, many real estate agents have had to learn fast and become overnight experts in the midst of this crisis.
Though many agents are not particularly fond of selling homes people have been kicked out of, they still have to put food on the table. And, as we mentioned, the foreclosure market is the only one that can currently provide them with a steady income.
How bad has it gotten? According to reliable statistics, the number of housing foreclosures in the US increased by more than sixty percent from 2007 to 2008 and though they have slowed a bit, the market is still growing.
Another reason real estate agents don't like to be involved in foreclosures is because it is a difficult process that requires quite a bit of work in a short period of time. Agents must be cognizant of all local foreclosure laws and processes, because even a slight mistake could land them in hot water. These laws can vary from state to state, even from county to county.
When bidding on a home at an auction, potential buyers do not get to look inside the residence before they place a bid, which means that the knowledge of the real estate agent is crucial. If the agent has not done his research, he could be responsible for a person buying a home that is damaged and needs repair work.
