Foreclosure information services are not new. Some local services have been in business for more than twenty years. Surprisingly though, there has been almost no innovation in this space since the dawn of the Web. These service providers do little more than collect and distribute foreclosure notices that are available free from the County Recorders Office.
Most of these services share another trait: the not-so-subtle scent of hucksterism. Promises to get rich quick, save 50% on your next house, or buy with no money down are rampant. Recently, this has produced a counter-trend, so called “white knight” investing. But the chivalry is only skin deep. Many who would train you to be a white knight will also tell you to press homeowners for at least 30% off, and talk in shrill tones about all the money you can make.
Give me a break.
Stoking consumer hopes to get rich or buy homes cheap is big business. You don’t have to look far to find one of these services; any major real estate portal will do. Yet the consumer experience is terrible, usually just some teaser data until you pay up. And, once you do there is often no one there to help make sense of the information presented. Most Realtors find foreclosure transactions difficult – can you imagine a consumer trying to buy a foreclosure on their own?
Some of these services will connect the consumer to a Realtor … one they have no relationship with, and who may or may not know anything about foreclosures. They just happen to be willing to pay for a “lead”. This isn’t about delivering value to consumers or promoting Realtors. In my opinion, it is about extracting as much revenue as possible from both consumers and Realtors using a list of foreclosure notices.
And it’s worse for Realtors, many foreclosure data services send a clear message that consumers don’t need them, that buying foreclosures is easy, and that they shouldn’t use a Realtor if they want a bargain.Here are some actual quotes taken from popular foreclosure sites:
“Why You Want to Find These Deals Without the Help of an Agent: … Most will steer you towards houses that everyone else is working on the Multiple Listing Service (MLS.) … Most don’t have the time to find you below market deals not on the MLS. If they did, they would want to keep them for themselves. … Lastly, most don’t know HOW to find and DO discounted pre-foreclosure deals.”, and “…before you cash in, you have to know where to find them. Look no further than [service name]…you’re sure to find a great bargain home – at up to 50% below market value!.”
Their message is working—millions of consumers are going to these sites, instead of their local Realtor, to chase bargains. They do not believe Realtors can help them.
I personally consider this a disaster – for both Realtors and consumers. I’ve bought more than 150 foreclosures, and know first hand that buying them comes with real risks. I’m a pro, but even I still lose money occasionally.
Consumers should not buy foreclosures without the help of a competent Realtor. Period.
It’s time for a change. Foreclosures are not going away anytime soon; and, the desire for bargains is not going way either. It’s time for Realtors to stand up and let the consumer know that they can help. And its time for new foreclosure services that deliver the tools professionals need, rather than prey on the hopes and dreams of consumers at the expense of Realtors.