With foreclosure activity ticking upward, agents can learn from seasoned REO pros to build new streams of income during an economic downturn, Annette DeCicco writes.
Foreclosures are creeping back into the headlines, and with them comes a familiar question: Are we headed for another 2008 recession wave?
The short answer is that, while today’s market looks nothing like the housing crash of 2008, the signs of stress are real, and for agents, they may also signal a moment to diversify into a new niche[1].
While today’s economy isn’t teetering on a bubble, affordability pressures and high mortgage rates are fueling a slow but steady increase in foreclosure filings nationwide. Agents can capitalize on this shift by analyzing trending data, monitoring their local markets, and consulting with REO experts on strategies to convert distressed property owners into clients and generate a new revenue stream.
The numbers behind the noise
According to Attom[2], a leading real estate data firm, U.S. foreclosures have risen for six consecutive months.
“Foreclosure volumes are still running below pre-pandemic levels, but the ongoing rise in both starts and completions suggests added financial strain is emerging in this high-cost, high-rate environment,” Attom CEO Rob Barber said in World Property Journal.[3]
Wall Street players have an even larger concern. The current market is still juggling, with elevated interest rates, tapering growth, and inflation making it harder for many borrowers to stay current on their debts.[4]
A look back and a look ahead
The Great Recession’s foreclosure boom stemmed from predatory lending, no-doc loans and an oversupply of homes. By contrast, today’s uptick stems from high living costs, stubborn inflation and historically high equity gains that keep prices elevated even as budgets tighten.[5][6]
Where do we turn to learn?
In March, I profiled real estate broker Pam Taylor, who, along with thousands in 2008, exited Wall Street to a limited job market. With a successful career at Goldman Sachs behind her, Taylor packed up her sharp analytical skills to brave a new career in real estate as thousands of agents retreated. [7]
In 2009, Taylor carved out a role differentiating herself from other seasoned real estate licensees struggling in a suburban resale business by exploring the REO, real estate owned business.
As a rookie agent, Taylor got into the complex REO business, as short sales and foreclosures multiplied. It took discipline, sharp communication skills, analytics, and compassion to develop new income streams while helping distressed homeowners and lenders alike.[8]
2 profitable paths for agents
Taylor recommends a roadmap for agents interested in learning more about and capitalizing on the REO trend. The first path involves learning how to cut foreclosures off early, commonly referred to as short sales. The second path focuses on obtaining foreclosure listings after the bank that holds the collateral has reclaimed them.
1. Pre-foreclosure (short sales)
Homeowners served with a Notice of Default may be willing to sell to avoid foreclosure. Agents trained in short-sale transactions can:
- Help underwater homeowners price realistically
- Assemble the lender’s short-sale package.
- Negotiate approvals that minimize credit damage
- Guide sellers and buyers through a complex but rewarding process
Training tip: The National Association of Realtors offers the SFR certification (Short Sales and Foreclosure Resource), an ideal starting point for agents entering this niche.[9]
2. Foreclosure (REO listings)
Once a property reverts to bank ownership after an auction, it becomes REO inventory. Listing agents are assigned directly by the bank or Fannie Mae to prepare and market these homes.[10]
Success in REO requires:
- Accurate Broker Price Opinions (BPOs), short estimated value estimates of potential future properties that will be reclaimed by the lender. [11]
- Coordination with contractors for timely repairs
- Mastery of platforms like Equator for communication with asset managers
- Consistent, professional marketing — including video, photography and social media
Performance is tracked through scorecards measuring responsiveness, DOM (days on market), and BPO accuracy.
Agent as advocate: Compassion meets competence
Distressed homeowners often don’t open their mail, don’t know their loan balance and feel paralyzed by fear. The agent who approaches with compassion and a clear plan becomes a lifeline.
Start by reviewing unopened notices, clarifying what’s owed and explaining the consequences of delay. Offer both short-term solutions (rental planning) and long-term goals (credit repair and requalification). Agents can take the following steps to build competence to reassure distressed homeowners that they are the experts to help them.
- Get certified: Earn your NAR SFR designation to master short-sale and REO protocols.
- Identify distressed properties: Learn to use your MLS and other platforms to filter and search for properties.
- Network with asset managers: Apply with banks and government entities handling REO inventory.
- Refine your marketing: Treat REO listings with the same care as luxury listings.
- Leverage tech tools: Track every milestone using integrated systems. Lenders often have their own REO management platforms and software services that they use to manage their assets. One example is Equator.[12]
- Lead with empathy: Build trust with distressed homeowners through education and patience.
- Stay data-driven: Monitor regional foreclosure trends to target growing markets.
Opportunity, with a lot to unpack
Some real estate agents may equate pre-foreclosure and foreclosure properties as potential “deals on steroids,” more extreme than usual. They wouldn’t be wrong in the sense that there are many moving parts requiring a caliber of agents who can demonstrate and measure key performance indicators to track the progress and meet the core goal steadily.
There is even more for agents to unpack before adding the handling of these properties to their business stream — the human factor — the value of “agents with a heart and a drive” to help people in distress and to help the institutions, the lender-owners, to respect and bolster what was left behind, a home, and return it to the arms of the community.
Behind every distressed property is a story — and for those willing to learn from the best, there’s also a business opportunity waiting to be written.
Annette DeCicco is a real estate broker and director of growth and development at Berkshire Hathaway HomeServices Jordan Baris Realty in Northern New Jersey.
References
- ^ new niche (www.inman.com)
- ^ According to Attom (www.attomdata.com)
- ^ World Property Journal (www.worldpropertyjournal.com)
- ^ Wall Street players (www.wsj.com)
- ^ Great Recession’s foreclosure boom (www.inman.com)
- ^ no-doc loans (www.sfgate.com)
- ^ Pam Taylor (www.inman.com)
- ^ rookie agent (www.inman.com)
- ^ SFR certification (www.nar.realtor)
- ^ REO (www.chase.com)
- ^ Broker Price Opinions (www.investopedia.com)
- ^ Equator. (www.equator.com)