There was a time when the first words a REALTOR® would hear from a new client was, “What kind of foreclosures are there out there?” Those days are gone, but foreclosures, short sales, and trustee sales are still an active submarket. There are not as many of them as there used to be. The pickings are not always as good as they were when the market first began clawing its way out of the black hole of the Great Recession. Foreclosures are still a Tri-Cities option for bargain-hungry buyers – and investors.
Last year produced 440 foreclosure sales, according to the Northeast Tennessee Association of REALTORS’® (NETAR) Trends Report. That is about 6% of all transactions. That is just those that were on the local Multiple Listing Service (MLS). A quick check of the web-based sites that specialize in foreclosures is proof enough that there are still quite a few foreclosure opportunities out there. During January, there were 113 new foreclosure filings. That number is up from last year.
While this can be a target-rich area, it is not a real estate submarket for inexperienced buyers. Negotiations are a very different thing than they are in the broader market. You are dealing with a lender or their agent whose prime interest is recovering the money they lost in the foreclosure. It is a different landscape than negotiating with a private seller.
The Number One recommendation for those who are interested in testing these waters is: Find a local REALTOR® who specializes in distressed sales. A short-cut to finding one of these local experts is to check for REALTORS® who have a Short Sales and Foreclosure Resource certification (SFR®). They have completed a core course where they learned in the ins and outs of these types of transactions.
There is a lot a stake – financially and emotionally – so shop for your buyer’s agent like you would for a doctor or a lawyer. Do not hesitate to do an interview. Outline your goals and with what type of communication you are comfortable. Do you prefer e-mails, texts, or phone calls? Also, ask about his or her experience. What kind of track record did they have last year? How do they see the local market and its opportunities or red flags? Ask for references from previous clients. Once you have made your decision, seal it with an Exclusive Buyer Representative Agreement to move the relationship to a higher level.
Here are just a sample of why a buyer’s agent will be a valuable resource.
Your agent is a fiduciary who acts in the buyer’s best interest with lenders who often insist on lengthy, technical contracts designed to protect the bank or mortgage company.
The buyer’s agent is a crucial resource about the all-important inspection process. Lenders often have no idea about the condition of the property. A local REALTOR® is well-versed in working with inspectors and helping to identify problems and assisting when you decide to buy a property “as is” or walk away.
These are just a few considerations. A professional REALTOR® who specializes in distressed property sales can and will deliver a comprehensive strategy for his or her clients before they plunge into the murky waters of the local distressed property market.
NETAR is the voice for real estate and is the largest trade association in Northeast Tennessee. It represents over 1,300 members and 100 affiliates involved in all aspects of the residential and commercial real estate industries. Pending sales, monthly Trends Reports, and the regional market analytics are available on the NETAR website at https://netar.us/voice-real-estate-northeast-tennessee.