In this current economic slump, I have been hearing people speak optimistically of all the opportunities that present themselves in such times. “What opportunities?” I find myself asking and getting annoyed at their statements, which seems to make everything seem ok, when in fact there are many who are having a very difficult time. It’s like getting defecated on by a bird and having someone reassure you that it’s good luck.
Well, for some there are opportunities in the form of affordability. Company shares, business-operation expenses, and buying real estate are all areas that people and businesses are able to capitalize on. But for most people and businesses, this is a time not so much of opportunities, but for adjustments.
In the Southern California real estate world, a booming, ever-expanding, bottomless pit of wealth just a few years ago, companies and individuals have had to face the harsh reality of the aftermath of the biggest real-estate bubble bursting in the history of our economy. For many, their way of doing business was shattered as there were no longer willing buyers knocking on their doors, and sellers were being forced to sell their home for less than it was worth. But there are those that have experienced this type of market before, and it are these individuals and companies that have adjusted their way of doing business in order to weather this economic downturn.
Carlos Aguilar, president of Team Aguilar in San Diego, is one such individual who has successfully adjusted to this new marketplace by selling REO’s. Real Estate Owned (REO) are properties owned by a lender, usually a bank, who retained the property after an unsuccessful foreclosure auction. And with all the foreclosure taking place in Southern California, REOs have proven the most consistent way to get a paycheck as a real estate agent. Banks are in possession of huge amounts of properties that need to be sold, and they will outsource the duty of selling these homes to real estate agents such as Carlos. “When I saw that the market was changing and it would be providing REO business, we changed hats and got into it last year,” Carlos stated. And it has proved successful as currently Axia’s REO division, www.TeamAguilar.com is bringing in 80% of his business.
But simply “changing hats” isn’t an easy option for many. The banks are unloading a lot of responsibility to those selling their REOs and they need to be certain their assets are in the hands of people with experience. Carlos obtained his experience selling REO’s in the early 90’s amidst the Savings and Loan Crisis and economic recession “Most companies involved [in selling REOs] that are having success know people in the industry. The REO industry seems to be fairly tight and the relationships I had in the past working for other operations are the big reason why I am getting business today.” And it’s not just experience that is required to sell REOs. It’s an entirely different beast than the average real estate transaction.
In addition to the usual marketing and negotiating required in a real estate deal, selling REOs involve other, less glamorous tasks. Frequently homes are left in horrible conditions and intense cleaning is required commonly costing upwards of $2000 to $3000. Ordering and maintaining utilities, managing evictions and re-keying properties, filling out the tedious and redundant Broker Price Opinions (more information on BPO’s search “Newsstand” at www.car.org), and keeping the banks or asset managers informed and happy. “Every bank requires different things, and every bank requires a sea of paperwork” Carlos adds regarding the downsides of REO work. “It’s by no means the most glamorous side of real estate, but in times such as these, we would be hurting for business without it.”
And so, depending on how one looks at things, transitioning from being a regular real estate agent to selling REOs might be a type of opportunity that Carlos and others in his field are taking advantage of, but this is an opportunity that is brought on by necessity and not a hope to strike it rich. As most of us are forced to position ourselves to weather the storm ahead, it is important to simply make the adjustments in our life and business necessary to get through these times. And who knows, maybe an opportunity is waiting to present itself to you.
Andrew Brentan is a contributor to Team Aguilar’s blog.