Stoking consumer hopes at the expense of Realtors

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.

Sean

No Comments

  • Mike33 says:

    I found your article very interesting. I have bought 10 foreclosures myself, and I always used a Realtor.

  • calves says:

    Sean,

     

    Great article.  It was nice meeting you the other day at the training you did for us in Modesto.  Yea, it’s nice to have a breath of fresh air to cut through all the hype out there.  People need to go back to the old school of treating real estate like a longer term investment.  While there are still some flipping opportunities out there, this is hardly the market for flipping.  Now is the time to buy smart and low, sit on our investments, and continue to work hard as this market corrects itself.  I look at the defaults and I see we still have a ways to go, but on the bright side, affordability is back and we are doing to done of transactions right now.  Buyers are coming out of the wood work and gobbeling up REO opportunies. 

  • Anonymous says:

    Frankly, most realtors are totally clueless morons whose sole motivation is their own greed (and who could truly not care less how much money the client overpays / loses). The barriers to entry in the realtor profession is virtually non-existent; it’s usually a fall-back career for someone who cannot make money doing anything else.

    Indeed their interests are directly in conflict with the interests of the client: due to the commission, the more the client pays, the more the realtor earns.

    In late 2005 I was running into realtors who would argue with me that I was an idiot for not buying a home b/c prices would “keep going up”, and I have yet to find a realtor (except for one) who honestly will say, “prices are likely to drop” when you ask them about an outlook for the market.

    In general, realtors make used car salesmen look honest and sanctimonious.

    I think you’d have to be an idiot to rely on the advice of most realtors, and on top of that, pay them their ridiculous commission.

  • a_madrone says:

    Yes, I can see that it is very complicated.  I’m especially confused about how to determine the starting price for the auctions.   I see a  sale amount, but no opening bids.  Are there any documents that explain the catagories?  thx

  • Sean says:

    Well anonymous, there is no doubt that lax licensing requirements as well as unrestrained cheerleading during the housing boom will now haunt this profession as times turn bad. But that does not change the fact that purchasing a home is the single largest financial purchase most people will ever make and that most folks REALLY NEED professional help. I’m a real estate investor and yet despite being a broker myself I have resold almost all of my properties using carefully selected Realtors that without any doubt made me far more money than they ever cost in commission.

    I’d love to see requirements for Realtors be similiar to those for CPA’s or attorneys. Until then, lets not start to believe that consumers should be trying to complete real estate transactions on their own just because there are some clueless agents. Clearly there are some bad attorneys, but would you represent yourself at trial?

  • Sean says:

    For starters see our help it explains what each of the fields mean. Also feel free to ask questions in our forums.

    Opening bids often aren’t posted by the banks until the very last minute. You can estimate them by looking at the sales results in Track to see how much things are typically being discounted in your area. You can then deduct that same percentage from the Sale Amount to take a guess at the likely opening bid.

  • real estate websites training and lead generation…

    […]Stoking consumer hopes at the expense of Realtors | ForeclosureTruth | Foreclosure News, Opinions and Analysis[…]…

  • parapharmacie en ligne…

    […]Stoking consumer hopes at the expense of Realtors | ForeclosureTruth | Foreclosure News, Opinions and Analysis[…]…

  • Andres says:

    Good article. I’m dealing with a few of these issues as well..

X
X