Distressed real estate can be a tremendous way for real estate investors to access off-market deals often at discounted prices, but distressed transactions can be difficult to execute particularly if the home is in some stage of foreclosure. A foreclosure specialist can help homeowners and investors navigate the foreclosure process and help negotiate payoffs, prices, and more. Find out if working with a foreclosure specialist as an investor is worth the cost and effort for your next investment property.
What is a foreclosure specialist and what do they do?
A foreclosure specialist is a real estate professional who specializes in working with real estate foreclosures. They help their client -- whether it be a homeowner, investor, or company -- understand the foreclosure or sale process, identifying potential problems or solutions throughout the foreclosure or sale process, and advocate or negotiate on behalf of the client or company.
While many homeowners choose to work with a foreclosure specialist after they fall behind on their mortgage payments, investors can choose to work with a foreclosure specialist to help facilitate the purchase of a foreclosure, short sale, or pre-foreclosure property. They may do the following:
- Communicate with the lender, bank, or servicing company.
- Review sale or foreclosure documents confirming or verifying any liens that may impact the sale of the property or become the buyer's problem to resolve.
- Help review or request appraisals, inspections, or insurance for the property before closing.
- Potentially negotiate terms with the bank or selling party based on this information.
A foreclosure specialist should have undergone some sort of training to help them understand state and national foreclosure procedures and laws and have experience managing foreclosure cases.
How much does a foreclosure specialist cost?
Foreclosure specialists earn an income in several different ways, which varies depending on the market they operate in. They may earn a salary, charge a flat rate fee for their service, or get paid through a real estate sales commission. Most real estate mortgage-related companies will have a foreclosure specialist in their office to help maintain any current foreclosure assets or client relationships. Salaries for this position range from $38,000 to $39,000 a year.
Homeowners who want to hire a foreclosure specialist to advocate on their behalf and help them understand their foreclosure alternatives will likely pay an up-front fee, which can vary. Interested homeowners can call the foreclosure specialist to get a quote. Investors who want to work with a foreclosure specialist will want to find a real estate agent who is also a foreclosure specialist, in which case their fee is earned through a sales commission when the property is bought or sold.
Is working with a foreclosure specialist worth it?
Since most investors work with an agent to view or make offers on a real estate owned (REO) property, it's a good idea to find a real estate agent who is also a foreclosure specialist. Working with an Realtor who has experience selling a foreclosed home means they understand how to better communicate with the bank, know the protocols for closing, and can help coordinate essential aspects of the transaction that may go beyond a normal agent's scope of experience. Foreclosure specialists may also have connections with lenders that allow them access to foreclosure listings that aren't publicly available for sale on the multiple listing service (MLS) yet.
It's definitely a good idea for newer investors, or those who may not have as much experience or knowledge of buying an REO property or foreclosure property, to work with a foreclosure specialist at first. Call around to different brokerages or real estate firms asking for their best foreclosure agent, or specifically ask if they have any agents who are also foreclosure specialists who can help you as a buyer. Most brokerages have at least one agent, if not several, who have extensive experience in this field.
Experienced investors who have a long history of buying foreclosure properties may not need to work with a foreclosure specialist, but since real estate sales commissions remain the same despite having an agent who has a foreclosure specialist resume, it really doesn't cost anything extra to have the added benefits of having a specialist on your side.