Foreclosure crisis presents opportunities.
My, how that's changed. Now talk of real estate centers on auctions, foreclosures and short sales--cases when the bank agrees to accept less on a property than is owed.
When Denver Realtor Kelli Paddilla decided to start specializing in short sales in 2005, she had to fly to California to attend short-sale seminars because, she says, none were offered in Colorado.
Now she's a recognized distressed-property and short-sale expert. Last year Paddilla, managing broker at real estate firm Key Concepts, sold 42 properties that were either bank-owned or short sales. This year her office is on track to sell 75 to 100 such properties.
"Short sales are always a better alternative than foreclosures for the bank and for the seller," Paddilla says, citing one rare exception she oversaw firsthand. "I had one listing recently where the tenant burned the house down. There's no reason for that seller to continue the short-sale process."
But according to Denver attorney Sara Mobley, who deals with many loan modifications and short sales, about eight out of nine short sales nationally fail because they don't meet the guidelines that the lender must adhere to.
Paddilla also blames inexperienced Realtors for hampering the short-sale process by flooding banks with short-sale proposals that have no chance of being accepted. As an example she sites an agent in her own office whose short-sale packet Paddilla reviewed.
"The seller was a compulsive gambler," Paddilla says. "He's gambling away his life savings and can't pay his mortgage. He sends us a bank statement with everything blacked out on it. So my assistant, who's also a private investigator, holds it up to the window, and it's Blackhawk this, Blackhawk that. ... So someone's going to tell me that I should even hit the fax machine and send it over to Bank of America and waste their time? I don't think so."
The distressed real estate market demands different services, and Ryan Lantz, who is only 31 but has been in the real estate business about a dozen years, has tried to fill different needs as the economy and real estate markets have changed. He started out in commercial real estate in San Francisco, then came to Richmond American Homes where he worked his way up the ranks, becoming executive vice president of operations for the firm's Denver operations.
Then the market started turning south. "The market was only going to absorb so many units, no matter how creative we wanted to get," Lantz says. "It was hard to sell houses."
Lantz left Richmond American Homes in 2008. He and a partner formed a private equity firm with 17 investors to buy properties at auction and flip them. Out of their own efforts to identify suitable auction properties more efficiently, they developed the website ironscope.com to help auction-goers quickly identify properties that fit their investment criteria.
Later they decided marketing a similar product to Realtors would give them a bigger market than targeting the small number of auction-goers, so in late October they launched Short Sale ProLogic (ShortSaleProLogic.com) at a Colorado Association of Realtors event.
A subscription to the site costs $50 per month. The service and technology filter properties that have gone into default or are bank-owned, based on the requested criteria. Subscribers receive updates on properties via text message or e-mail.
Lantz should have plenty of time to put his product to the test in the distressed market. Mobley, the attorney, figures it will be eight to 10 years before some normalcy returns to the housing market. Lantz's outlook is slightly less grim.
"I'm hearing these alarming statistics," he says. "The most recent one that really raised my eyebrows is that there are 11 million homes in America in danger of going into foreclosure. I hope that's not the case, but I think we've got certainly a three- to five- or six-year runway with this thing."
Mike Taylor is the managing editor of ColoradoBiz. He writes about small-business money issues and how startups are launched. Read this and Taylor's past columns on the Web at cobizmag.com and e-mail him at email@example.com.
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|Title Annotation:||SMALL [biz]|
|Date:||Dec 1, 2010|
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