Property Management, Rentals and Short Sale: The New Niche

From the time we sign up for real estate school, to the most experienced agents with 30+ years under their belt, we have all heard that to be successful in real estate, we need to find our niche. Well, I am here to say that’s a bunch of hog wash. I would go as far to say that by “finding your niche” you’re a signing, your own business’s death certificate. Many of our colleagues found out in 2007 – 2008, when the real estate bubble burst, having a niche meant you didn’t know how to work in a shifting market place. I understand that for most all of us, real estate was steady and predictable so, this niche thinking was rampant, accepted and promoted amongst our ranks however, now we have learned that being a niche Realtor means certain death as real estate become more and more volatile each day.

Now, I say all this but, let’s be honest, REO is definitely a niche, I like to think of it as being the undertaker of the real estate world. Yes, by extension, that means I am a housing mortician. As such, we see highs and lows and we are extremely sensitive to fluctuations in the market place. For some, that’s just fine, we have learned to work with these convulsions and have shielded our lives and business from times of drought however, a vast majority of us ended up in the foreclosure lines ourselves when the real estate market heard those fateful sounds, snap, crackle and finally….POP!

As a Realtor and full time Broker, I have found that taking a more diversified approach to my business offers me and my family a more stable outlook to my career. This means, I have done away with the niche and expanded my income streams to include things like; Property Management, Rentals and yes, Short Sales. I do have some other things I do in real estate like, investing however, that is another conversation for another time. Let’s stay focused on the whole “niche” thing.

True, you can say that each of those three I just wrote about are niches amongst themselves and, you would get no argument out of me here however, all together as a part of your service portfolio, they become more, much more. All together they become an inoculation of sorts, from the market place unpredictability. By adding more services you can offer, you are riding out the waves of instability in the market place by being able to quickly and effectively shift your business to more profitable ventures. Ok…yes, you are still working the “distressed property” niche so…..yeah, it’s still a niche but, it’s a niche with diversification.

Right now, many markets are seeing short sales take over and even outpace REOs however, we don’t see a flood of agents clamoring to do short sales like we did with agents clamoring to get REO assignments and, why is that? Have you thought about that? If not, why not? My argument is, the skills you learned to be a kick ass REO agent are really the same skills you need to be a kick ass Short Sale Professional. I would go as far to say, no real difference exist between the two required skill set that would stop any outstanding short sale agent from being a outstanding REO agent and vice versa.

Granted, short sales are much more time consuming and require much more paperwork but, these things shouldn’t scare you away but, should entice you to add short sales to your service portfolio. Let’s face it, if you can close a complicated short sale, you can close any REO. My bigger point is, due to the complex nature of a short sale, becoming a Short Sale Professional will build on skills you already have or at least, develop skills you don’t have and therefore, making you better in the long run.

Don’t be afraid of short sales, they are fast becoming the new REO. As REO agents, you already have the basic and even advanced skills to be a great Short Sale Professional so, grow a pair and get to work. Your area has hundreds or even thousands of homeowners who need the help of an experienced distressed property agent who knows the front and back of the foreclosure process so that they can avoid the foreclosure if at all possible.

As an idol of mine says, “You beda weeerk!”

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Comments

  • You are right. I do not say no to any income producing activity. I actually I have done well with short sale. All I do is list and Prepare documents and hand them to title co that I trust knowing what to do. Thank you.

    Jesse. What is the best source to getting REO Listings ?. Any Suggestions? Please. Thanks

  • With much deference to Jesse's experience in REO, business accomplishments, and world class entrepreneurial skills, I am going to do my best to present a counterpoint.

     

     

    While I completely agree that survival in business is based on an ability to adapt and anticipate changes ahead of time within the confines of that I must say there is something to be said for a dedication to a niche. Dedication to a niche through the ebbs and flows lends credibility to your professionalism. I am glad my doctor does not practice law and my attorney does not practice medicine. If they did, I would question their skills at either and both. For those that remember Al Bundy - his insurance company is "Jim's Fish, Chips, and Insurance." Sound like an insurance agent you want? You get my point.

     

     

    I believe that if you do what you love then you will be damn good at it. I broke into REO in '09 when everybody and their mother wanted in. I have always wanted to be in REO, but all the way until then the big talk was "banks in real estate." I knew it was a tough nut to crack but after that failed to become law I jumped in and have not looked back.

     

     

    I am one of the blessed few who prefers Mondays over Fridays. I like analyzing a house that has garbage piled half way up the wall. I go through withdrawal if I haven't done a BPO in a few days. I like MMRs, walking through my assets, working on the platforms, and even cranking on the music and doing some invoicing. Yes, maybe I am not quite right in the head. But after 3 years, 16 clients, several vandalisms, and field service contractors that make you want to put your head through the wall, I am quite sure the honeymoon was over a long time ago. This is my calling.

     

     

    I have often told my wife if we ever hit the lottery, which we don’t ever play until it starts making the news, I would still probably do REO. Ok, maybe that would change if I actually did. But the point is if you don't like what you do than chances are you're not going to be very good at it. Or not going to be enthusiastic. You're not going to be the best you can be. I have done some property management and short sales. I don't really like either. I don't like dealing with tenants, they lie, you chase rents, they damage property, and in my state it’s a regulatory minefield. Even big brokerages are letting their CTAs go just so they don’t have to deal with it. With short sales there is so much more out of my control. Erratic occupants, I don't have a relationship with the negotiator like I do with my AMs, unrealistic BPOs and AVMs, and your properties look like garbage if they're vacant because no one is maintaining them!

     

     

    I'm not dogging short sales or property management. There are people who love doing those niches just as much as I love REO. They have their own reasons. And there are people who don't really like doing REO and are leaving in droves now that the market's returning. Everybody has their own preferences.

     

     

    So does my stodgy devotion to REO mean I'm going down on the REO ship? Let’s begin with a premise. If there's no market for what you do, then you won't get paid no matter how much you love it. If your calling in life is picking roadside daffodils, then there better be somebody who is willing to pay you. With that said as long as there are mortgages, there will be default. 1)Focus on local or regional lenders and credit unions. They are often exempt from the Washington baloney and are not having to do the dog and pony show for the government with the mods and shorts. I see a future stream of business going to them resulting from a competitive advantage in being exempt from the Washington baloney like Dodd Frank in many cases. 2)working with institutional and local investors. Some of the intuitional investors use the same platforms and/or outsourcers we are already familiar with. 3)Patience. As soon as a new whipping boy replaces the banks, and they no longer have to do the dog and pony show, it will be back to business as usual. In fact some preliminary information trickling in indicates this may be just starting to begin as banks are realizing more with the increasing market. http://www.nuwireinvestor.com/articles/us-short-sales-stats-slip-60.... Do you recall when the market was red hot your fellow agents saying something along the lines "since the banks have finally learned how to lend, times will be like this for good?” Also do you remember when the market was crashing those same agents were saying "it will never be the same again." In my observation things behave more like a pendulum. And now what are they saying about REO?

     

     

    In conclusion I think there needs to be a balance between focus and diversification and above all whatever you do whenever you do it, love what you're doing.

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