You may be asking yourself who Janet Yellen is? Well she is the President of the Federal Reserve Bank of San Francisco and she just happened to be in San Diego today to give a speech at the Burnham Moores Center for Real Estate University of San Diego 14th Annual Real Estate Conference.

I try to make it out to this event as often as possible. It’s usually a nice breakfast and for $30-40 bucks you get to hear from some of the financial big wigs we have in this county! Some of the talk can get a bit long and dry but I try to post a few of the points that stick out. Here are a few things from Janet Yellen as well as Real estate mogul billionaire Sam Zell who also gave his outlook on the future of real estate. He was fun and brought a bit of energy to the conference!

First, some of the questions that Janet Yellen commented on during her visit to San Diego. After her speech, she spent a few minutes answering some questions. Here was her take on several questions asked.

What is her take on the economy and what direction are wee headed in?

The finalcial system will, “take a long time to fully heal.” She expects economic growth of about 3.5% this year and 4.5% in 2011. “I’m afraid that the economy will continue to operate well below its potential throughout this year and next, even though the recession appears to be over, it does not mean that we are where we want to be.” She referred to the the economic growth being fairly postive but said it’s overshadowed by a poor unemployment rate of 9.7% which she felt would continue through the year and be reduced to 8% by 2011.

How does she feel about the future of interest rates and the possibility of raising rates?

“When the day comes to start raising rates again, we have tools at the ready, for the time being, the economy still needs the support of extraordinarily low rates.” Later she went on to state, “This is not the time to be tightening monetary policy, but eventually the economy will gain enough momentum and won’t need today’s extraordinarily low interest rates.”

The other interesting speech came from Sam Zell.

Some of this speech was a bit over the top but he made some interesting points especially if your an investor in commercial real estate. His opinion on commercial real estate currently underwater in mortgage balances is that, “If there are opportunities in distressed real estate, it’s in buying the debt in return for equity.” What he said makes a lot of sense. Commercial real estate allows you to be much more creative in a bad economy. You don’t have to wait around for a modification or short sale. Investors will go out and seek investments and search for property they can take a equity position in and work out their own deal.

As for the residential market? He noted that San Diego may be an area that would see a slower recovery. One interesting thing he noted is that whenever single family home owners exceeded 62%, we got into trouble. He noted that this time because of sub-prime loans that number rose to 69%. We are currently at 66% and he felt that we needed to get down to 63-64% before we have a sustainable, affordable single family market.

Alex Aguilar
Team Aguilar
Real Estate Agent, Blogger!
Alex@TeamAguilar.com
www.TeamAguilar.com
Real Estate Blog

If your looking for real estate in San Diego, Riverside or Imperial County you have arrived at the right place. Please feel free to contact us and please read our Real Estate Blog and leave your comments.

As more and more homeowners are going into default, it appears more and more are just walking away from their mortgage.

TEAM AGUILAR DISCLAIMER: Let me state that Team Aguilar or myself are not instructing anyone to walk away from their mortgage and ultimately the one that has to make that decision is you. VIEW THIS CALCULATOR AT YOUR OWN RISK!

There is a new calculator, may not be new to you but it’s new to me and I want to introduce it here. It may help people determine if it makes sense to walk away. The calculator is on the website, www.YouWalkAway.com, here is a LINK to the calculator.

Once you go through and start punching in the numbers it really gets you thinking. As an example I used a very typical scenario that seems very common here in San Diego.

I started by entering a home value of $300,000 with a 1st loan balance of $420,000 and a 2ND mortgage of $80,000. This is fairly common here in Southern California. Many people purchased a $500,000 home with 100% financing using an interest only loan that is NOW worth $300,000 in today’s market. After punching in all the numbers and using a rate of appreciation of 4% which I think is a very fair historical national average it would take approximately 16 years to get back to the break even point. The walk away monthly savings is approximately $700 a month along with a “Walk Away Cash Savings” of over $100,000.

What’s the bottom line? Well if you only planned on staying in your home for a few years to begin with, less then 10 it may make sense to walk away. If you know you are going to live in this home forever and be buried in the back yard then it’s likely that you will be just fine. It’s similar to your retirement account that are in the dumps right now with this market. If your close to retirement you may be in trouble but if you have time and years are on your side you will have to time to recover.

Voluntary defaults happen to be a brand new phenomenon in our society. With the recent collapse in housing, estimates show that as many as ten million families may currently be underwater on their mortgage.

UPDATE: So there seems to be some question about the You Walk Away organization. LET ME SAY that I know nothing about their services or service. I don’t know anything other then what I have read online on some different forums, blogs and message boards. I have no idea what value if any they can offer. I know that the mortgage calculator is unique and it may help you decide what to do. It’s fairly simple and you can create one of your own fairly easily. The bottom line is that you need to look at all of your options and decide what is best for you. Don’t rely on someone else or some organization to do this for you. You should take all the information you can gather, all the options available to you and decide what the best option is for YOU!

Also, a little rant and rave! Another issue really bothering me, LOAN MODIFICATION SCAMS. There are thousands of legal services offering loan modification services right now here in California and I am sure in many other states. The California state BAR is investigating hundreds of them right now. All of the services being offered by these companies are things that you can do on your own. It just requires a little bit of your time. Save your money, I can’t tell you how many times I talk to someone that forked over thousands of dollars just to have their home go to foreclosure with the modification company not doing one thing. I recently spoke with someone that contacted their lender just a few days before their foreclosure trustee’s sale only to find out that the lender had NO RECORD of the loan modification company ever contacting them.

Alex Aguilar
Team Aguilar
Real Estate Agent, Blogger!
Alex@TeamAguilar.com
www.TeamAguilar.com
Real Estate Blog

If your looking for real estate in San Diego, Riverside or Imperial County you have arrived at the right place. Please feel free to contact us and please read our Real Estate Blog and leave your comments.

How would you feel if you lost your home to foreclosure only to find out that someone working at the bank used it to entertain friends?

Newsstands have been buzzing about the recent scandal at Wells Fargo when a high-ranking executive was reportedly seen making herself and her family comfortable in the home of Lawrence and Linda Ellins, a couple that had to surrender their oceanfront home to Wells Fargo Bank to settle their debts.  The couple was one of the many victims of the Bernard L. Madoff’s massive fraud scheme.

Neighbors and residents of the exclusive Malibu Colony were puzzled at first when they noticed that someone was occupying the Ellinses home when they knew it was already vacant and that Wells Fargo has jurisdiction over it.  The Ellinses’ real estate agent Irene Dazzan Palmer was also surprised when Wells Fargo refused to show the house to interested buyers.

Cheronda Guyton, a senior vice president responsible for commercial foreclosed properties, was identified by neighbors spending time at the house over the summer.  The clincher was when she hosted a rather lavish party last August and people even had to be ferried across from a yacht.  Neighbors and residents became outraged.

Wells Fargo conducted an internal investigation on the matter and eventually concluded that “”a single team member was responsible for violating our company policies. As a result, employment of this individual has been terminated.”  This swift and direct action on the part of Wells Fargo indicates that they want to nip the scandal in the but and make it appear that what Cheronda Guyton did was of her own accord and not sanctioned by the bank.

After terminating Guyton, the bank immediately listed the house for sale at $21 Million.  Interested buyers who were eagerly awaiting the opportunity to buy this prime property were a little disappointed at the list price.  The house is 3,800 square feet and sits on an 8,700 square foot lot.  The property is believed to be worth between $12Million to $14 Million.

Really, how would you feel?

Update: 09-18-09 – Apparently this was not a true foreclosure, it was a negotiated settlement to settle other debt and the house was turned over to Wells Fargo to help satisfy the debt. Either way, the executive made a very poor decision.

My boss, Carlos Aguilar, real estate agent extraordinaire (he pays me to say things like that), receives countless emails and calls from renters whose landlord’s are being foreclosed upon, and they are left in the dark, trying to figure out what they need to do. One such email he recently received was from a woman who found out her landlord was being foreclosed on when the Home Owners Association for the complex called her and told her. And since the landlord was no longer paying her HOA fees, the HOA requested that the she pay THEM her rent.

I can imagine that it’s quite unnerving when out of the blue, you get a call from someone you don’t know telling you all this. It’s the kind of call where you hang up and say, “What the F*CK?” Then you try and contact someone…anyone who might have some information on what’s going on, and no one can tell you a thing. So, if you are a renter and your landlord is being foreclosed on, let me help ease your mind. This article is about what will happen and what you need to do.

Finding Out

A few days after the Trustee Sale (foreclosure) occurs, someone will be knocking at your door inquiring about whom you are and the names of any other occupants. This person represents the bank that now owns the property you are occupying. If you are not home, they will post a notice on the door asking you to contact them. This notice may sound harsh, and may even sound like an eviction notice, but it is not. It is simply an initial attempt to impress upon you the seriousness of the situation and to make you aware that the property is now owned by a bank and their purpose is to gather information.  The new owners need to know who you are and what your intentions are. For the most part, they will want the property to be vacant as quickly as possible. The one exception to that is Fannie Mae, who, if they are the new owners, may give the option to some tenants to continue to rent the property. But almost all other lenders are not willing to rent the property and will assign it to an eviction attorney to begin the eviction process.

Eviction Notice

The eviction attorney (or someone representing them) will present you with a notice alerting you that you have 90 days to vacate the property. Depending on how fast the eviction attorney begins the case, this notice may not come for weeks (sometimes even up to a month) after the house has already been foreclosed on. NOTE: Despite what your former owner’s HOA tells you, you DO NOT owe them any money.

Cash for Keys

The Bank, AKA the new owner, will usually offer you cash to entice you to move out and waive the 90 day eviction period. The sooner you move out, the more money the bank is willing to offer you to help with your relocation costs. Typically, if you agree to move out in the first 30 days, the bank may be willing to pay you a fee of $3000-$4000. If you move out within 60 days, this amount is reduced substantially, and if you move out towards the end of the 90 days, you most likely will not be offered any money. The reason the banks are willing to offer you a relocation fee is to offset the cost of having to pay legal fees to have you evicted. And the sooner you are out of the property, the sooner they can put it on the market for sale. And they are EAGER to sell those properties.

Whatever you do, don’t play dumb and pretend like nothing is happening (see The Life and Time of an REO Field Agent: Part III). Talk to the bank, let them know what you intend to do. Will you take the full 90 days to find a new place and move? Or will you take the cash for keys and move out sooner? Depending on how much the banks offer you in the form of cash for keys, it might make sense to get out fast if you are able. If the amount is minimal, it makes sense to use those 90 days of living rent free to search for a new place.

Any way you slice it, it’s not your fault that your landlord got foreclosed on. Don’t take the eviction as a personal attack. It is without a doubt a large inconvenience, but the sooner you address the situation, the sooner you’ll be living in a new place. And who knows, maybe you will even make out with a little extra cash in the process.

By Andrew Brentan

So you’ve finally found that diamond in the rough! After seeing 50+ foreclosed upon, bank owned homes, you found the home that you want and you are getting a great deal. You couldn’t be happier, and the bank will finally have that damn thing off its books. It’s a win-win. But something you may not know about that home you are about to buy, is all of the work that went in to getting it ready for your real estate agent to bring you on by to check it out. And despite what others might tell you, the unsung hero who is largely responsible for all of that work is the elusive and rare breed of employee: The Field Agent.

We all know that the banks in this country are inundated with properties that they were forced to take over and now have to try and sell. And like I said, there is a lot of work that goes in to the selling of bank owned homes. So much work that asset management companies get involved as well as local real estate companies. I work for one of those local real estate companies and I have remained curious by this system of what seemed to me to be an excessive allocation of work. So, in order to better understand what exactly goes in to getting a bank owned home ready for you to buy, I spent three days over the past two weeks, shadowing Team Aguilar’s field agent, Cory McGilvery as he made his rounds from property to property to learn a thing or two about a thing or two.

I felt like a real journalist, pen and paper in hand, as I met Cory for lunch before we embarked on his Wednesday route to visit 16 properties in the southeast part of San Diego. “Before we leave”, I said, “can you please tell me what the hell a field agent actually does?” I’ve known Cory for a few years, and had never fully figured out what it was he was doing every day. “You’ll see today.” He said with a sly grin, “and it will blow your mind.” I imagined visiting some property that was home to packs of wild abandoned dogs, or crack-heads who were too drugged up to realize they were being evicted, or a crazy old woman who answered the door with a shotgun pointed at my head. Of course, he was being completely sarcastic, but I couldn’t help letting my imagination run for a brief moment.

The work required from the time a bank forecloses on a property to the time it is sold to a new buyer is almost entirely grunt work.  And at the heart of the grunt work, is the field agent. The first day driving with Cory and visiting bank owned properties, I came to the conclusion that the job of the field agent was not dissimilar to shoveling shit. It gets you outside, it’s repetative, and sometimes when you’re not expecting it, you get blown away by something that smells…well… like shit. We went into one property towards the end of my first day with Cory to do an initial inspection, and I was appalled by what we saw. There were piles of partially eaten food all over the place. KFC buckets, microwavable burritos, melted popsicles, opened cans of corn, dirty dishes stacked high in the sink, refried beans sprayed against the wall, flies were swarming, and all of this combined to create a super-hero odor that could leap tall buildings and bring a mere mortal such as myself to my knees.

Despite the obvious downsides, Cory likes this job for the most part; it gets him out of the office, driving around, and offers ample opportunities for taking pictures (Cory’s true love is photography, and he’s damn good too). Our first 4 stops consisted of Cory literally just walking in the home, making sure no one was squatting there and then leaving. “Until we sell them, they need to be checked once a week.” And has he ever run across someone actually squatting on a property? “A couple of times. Usually they’re not there when I come by but we can tell someone has been in there and we just change the locks on them. But a couple of times, I’ve walked in on some people who are quick to yell at me for trespassing (even though I have a key), claiming that they’ve been renting there for months when just a week ago, there was nothing in the house.”

As we made our rounds around El Cajon, La Mesa, and Alpine, I finally got a grasp on how the whole process works. Here’s a rundown:

- Bank forecloses on a property
- Bank hires an asset management company to deal with it.
- Asset Management Company hires a local real estate company to sell the place.
- Local real estate company has a field agent who:

1. Visits the property once a week
2. Takes pictures of the home, and anything left behind. If there is over $300 of personal property left behind, the real estate company has to hold onto it, and publicly post the property in hopes the owners will come to claim them
3. If the owner is still living in the home, provide notice that they have 3 days to leave
4. If there is a renter, provide notice that they have 90 days to leave
5. Hires a company to clean the house
6. Provides and replenishes marketing materials and signs
7. Fields phone calls and inquiries from real estate agents regarding the property
8. Reports back to asset management company about each property each week

- The home gets sold, the local real estate company gets the commission, the asset management company gets a flat fee from the bank, and the bank gets the remaining funds from the sale.

Deal with all of that for 65 properties per week located all over San Diego and a few outside of San Diego, and you’ve got yourself a guy shoveling a ton of shit.

Stay tuned for the conclusion of The Life and Times of an REO Field Agent two part series when we meet with the Sherriff’s Department to give an eviction notice to a guy who took his free ride just a bit too far and pays the price.

With banks owning more and more properties as foreclosures continue to grow, renovation loans have become a great option for buyers and are helping the banks lighten their books.  What, you may be asking, is a renovation loan? Well I’m glad you asked because I was about to tell you.

A lot of the bank owned properties on the market were left in shambles by their former owners. Fixer-uppers is usually the term used, and investors or prospectors are often the ones who buy them, put some money into “fixing them up” and then sell them, hopefully for a profit. Renovation loans enable non-investors to enter into the picture as prospective buyers who want to purchase a home for cheap but might not have the money to fix it up. John Sway, National Renovation Manager for Wells Fargo Home Mortgage told Diane Eastabrook on a PBS Nightly Reports that, “what we’re dong is we’re increasing the pool of buyers, so we’re getting more buyers to look at a property, so we may end up selling it for a couple percentage points higher than we would to an investor.”

With traditional loans, the lender typically requires improvements/renovations on a home to be finished before a long-term mortgage is made. After all, loan security generally comes from good condition and value of the property and lenders of course want to minimize risk. With renovation loans however, the loan is based on after-repair value and includes an escrow account to complete the repairs needed to bring the house to a condition that lenders prefer. This makes buying properties in need of repairs much more feasible and eliminates the need for people to run up their credit cards and/or take out additional lines of credit.

So for example, say there is a property in need of repair, and as a result you can get it at a great price of $285,000. After further inspection, you learn that the work to fix it up will cost you $45,000. A renovation loan will allow you to buy the place for say, $340,000, and then have a “Renovation” Escrow account of $55,000 with which you must repair your home. There are, of course, contingencies in the contracts that state that you must perform specific renovations with that money, so you can’t go all Bernie Madoff on the bank and run away with their money. Any money left over after the renovations are complete go directly towards paying down your mortgage balance.

Downside to this type of loan? Well, the rates, though very competitive and reasonable for the most part, are slightly higher than a conventional type of loan. And there are usually caps placed on the amount the banks are willing to lend for renovation. As a result, there are those like Jim Wheaton, Deputy Director of Neighborhood Housing Services of Chicago, also interviewed by Eastabrook, who don’t think this type of program does that much to help. “You know, $25,000 or $30,000 sounds like a lot of money, but when you start talking about home improvements and construction, it doesn’t go very far.” Valid point. But renovation loans have helped many get into a home and fix it up in one fell swoop. My advice? Never hurts to ask your bank or lender about this type of loan. Especially if you’re in the market to scoop up a foreclosed home for cheap.

By Andrew Brentan

We all know what happens when a bank forecloses on a home. It is a nightmare for everyone involved: the defaulting homeowners who lose their home, the banks who lose money on their loan, and the neighbors whose homes decrease in value. But what happens when a developer gets foreclosed upon? Back in January, CBS4 in Florida City reported on the Florida Keys Townhomes, a residential community development that has recently learned exactly what can happen, and the results seem like they could be a good story for a Steven King novel.

A year ago, it seemed like a great plan. Buy a new home in a residential community where you could raise a family and enjoy the basketball courts, pool, barbeque pits, playgrounds and the other amenities provided by the development. Even though the development wasn’t fully completed, it was only a matter of time, so you signed the papers and moved in.  A couple weeks later, on a stop to City Hall, you find out that the entire development was being foreclosed upon. This is what happened to Jorge Pichardo and his family, one of only ten families that bought homes in the Florida Keys development. “We’re paying. We can pay.” Jorge told CBS4 Reporter David Sutta. “The thing is that we didn’t foreclose. The developers foreclosed.”

Jorge and the other ten families are now stuck, living in an unfinished, undeveloped ghost town of sorts. The story reports that there are “rows of empty townhouses [that] sit on blocks of paved roads being devoured by weeds”. Of the 614 promised units, only 70 were ever built, and only the ten families living in the community purchased homes. Well, this situation is a real doozey indeed. Is anyone else picturing a Lord of the Flies power struggle between the ten families, war breaks out, and one day, the National Guard enters into town seeing these people acting as savages, and then everyone starts crying etc?…..

Ok, that’s taking it a bit far. But what is going to be next for these people? They obviously can’t rent or sell their homes. In fact, according to the CBS4 report, their “community” barely even exists. The U.S. postal service doesn’t deliver mail and there are no street lights. When thieves began ransacking the homes, Jorge called the police and they couldn’t even find them in the system. “They transferred us to Homestead Police. Homestead couldn’t find us. We got transferred to Miami-Dade police. Miami-Dade finally said ‘You know what? This address and this zip code actually belong to Florida City’”. Well at least now, the Florida City police are regularly patrolling their streets, but that’s about the only respite the ten families in there are getting from their dire situation.

The people of Florida Keys Townhomes may be the only example of when not getting foreclosed upon can bite you in the ass harder than if you were. I’m fascinated by this situation. I can’t imagine how eerie it must be to live there. Is there any sense of normalcy there? Upon completing this blog, I’m going to my boss to see if he’ll fly me out there to do a full story on this foreclosed upon community. Then I can go there and report back first hand, just how restless the natives are getting, and what is happening in the every day life of the families that lost their community but not their homes.

By Andrew Brentan

There was a comment to the previous article earlier this week that mentioned she and her husband were planning on waiting about a year for home prices to drop even further before considering buying a home. Not a bad plan by any means considering the fact that many areas will indeed continue to drop in home prices. But it occurred to me that there may be other things one might consider before officially putting off buying a home for a year. For example, have you seen what mortgage rates are at these days? They’re absurdly low! So I thought I’d briefly discuss some things that I have been reading up on this week regarding the issue of whether to buy now or to wait.

For starters, I want to discuss home buying as opposed to refinancing because refinancing is a slightly different beast than buying a home; Mainly because it heavily involves the equity (or lack thereof) in your property. That being said, there is a different train of thought that goes with when to refinance and when to wait.  And so, without further ado……….

James Hagerty of the Wall Street Journal reported this morning that Jay Brinkman, chief economist of the Mortgage Bankers Association, said “rates on 30-year fixed rate mortgages for borrowers with strong credit scores are likely to be in the range of roughly 4.6% to 4.75% at least through the summer.” This dip in rates came after last Wednesday’s announcement by the fed that they were committed to buying an additional $750 billion in mortgage backed securities (in addition to the 500 billion already committed). So this begs the question: How long can rates possibly stay this low? Peter Thompson of Illinois Mortgage Rates and News wrote a great, in depth article on this and he goes into the three schools of thoughts on what will happen going forward:

1. “The Fed buying will push rates steadily lower, possibly into the mid to low 4s. This is the view you hear in the media.” He goes on to say, ” This may happen, but it will take a lot more than just the Fed buying to get rates this low, and with lenders still near capacity, they are keeping more of the profit for themselves instead of passing it along to consumers.”
2. “Rates will stay low, but closer to the range we are in now. This means rates will stay affordable longer, but may not go a lot lower.”
3. The law of unintended consequences kicks in and instead of rates dropping, fear of inflation and the devaluation of the dollar drives rates higher than they were before. There are a lot of inflation hawks out there, and I agree that down the road we are going to have to deal with inflation. But that is in the future.”

For #1 to happen, banks would need to start cranking out loans at a ridiculous rate, which most likely isn’t going to happen. And #3 may be in the cards, but not in the immediate future, so I, like Peter, think that #2 is the most likely result. So that’s good news for homebuyers looking to hold off buying for a little longer.

The bad news is, low rates don’t make getting the loans any easier. Banks have yet to loosen their grip on the lending guidelines that have been tightened almost to the point of strangulation after the sub-prime mortgage disaster. Only borrowers who can make sizable down payments, have plenty of assets, a steady job, and impeccable credit, are getting the loans at these low rates.

So even if you are waiting for a certain market to bottom out or mortgage rates to dip even further, it cannot hurt to look into the matters of financing now. That way, when you do wish to buy, you will know what you qualify for before looking to find that perfect home.

“Problems are only opportunities with thorns on them”, said author Hugh Miller. And the economic crisis that has inflated over the past several weeks has, for many, revealed opportunities amidst a global financial downturn. In Southern California, much of these opportunities are coming in the form of Bank-Owned Properties.

Bank owned properties offer a low-cost solution to investors and first-time home buyers. According to data released from real estate research firm, MDA DataQuick, the median home sale price in Southern California was $308,500 in September, down 7% from August, and 33% from a year ago. And prices are sure to continue to drop, creating great deals for those who are looking in the right places. Christopher Thornberg, principal of Beacon Economics, a Los Angeles consulting firm is predicting that home prices will bottom late next year, with the Southern California median sale price falling to $250,000.

When home owners default on their mortgage payments, banks will take ownership of the property and as a result of this widespread housing downturn, bank’s are taking ownership of more properties than they can handle. Banks are seeking to sell these houses as quickly as possible to recoup the money from the mortgage, and this in turn, creates an opportunity for great deals on home purchases.

“There are bank-owned homes of all shapes and sizes out there, and there are indeed great deals to be had,” says Carlos Aguilar of Axia Real Estate Group in San Diego who specializes in bank owned properties, “but there is also a lot of competition for these homes, and it is important to work with someone who has experience in dealing with Bank Owned properties.” Carlos has more than thirty years of experience in Real Estate and Loan Brokerage, and though he’s never seen a decline in home prices quite like this in his lifetime, he’s been through enough real estate cycles to know the value of buying at a time like this. “Two years ago, many people couldn’t have afforded a home that they can now buy in this market. And with lower sale prices, buyers can have more money to put down up front or buy new furniture.” First time buyers may also qualify for a first time buyer tax credit for up to $7500.

To Learn more about bank-owned properties, first-time buyer tax credit, or to set up an appointment, contact Carlos Aguilar and his team of professionals at 619-209-5538 or email him at Carlos [at] TeamAguilar.com.

In this current economic slump, I have been hearing people speak optimistically of all the opportunities that present themselves in such times. “What opportunities?” I find myself asking and getting annoyed at their statements, which seems to make everything seem ok, when in fact there are many who are having a very difficult time. It’s like getting defecated on by a bird and having someone reassure you that it’s good luck.

Well, for some there are opportunities in the form of affordability. Company shares, business-operation expenses, and buying real estate are all areas that people and businesses are able to capitalize on. But for most people and businesses, this is a time not so much of opportunities, but for adjustments.

In the Southern California real estate world, a booming, ever-expanding, bottomless pit of wealth just a few years ago, companies and individuals have had to face the harsh reality of the aftermath of the biggest real-estate bubble bursting in the history of our economy. For many, their way of doing business was shattered as there were no longer willing buyers knocking on their doors, and sellers were being forced to sell their home for less than it was worth. But there are those that have experienced this type of market before, and it are these individuals and companies that have adjusted their way of doing business in order to weather this economic downturn.

Carlos Aguilar, president of Axia Real Estate Group, Inc. in San Diego, is one such individual who has successfully adjusted to this new marketplace by selling REO’s. Real Estate Owned (REO) are properties owned by a lender, usually a bank, who retained the property after an unsuccessful foreclosure auction. And with all the foreclosure taking place in Southern California, REOs have proven the most consistent way to get a paycheck as a real estate agent. Banks are in possession of huge amounts of properties that need to be sold, and they will outsource the duty of selling these homes to real estate agents such as Carlos. “When I saw that the market was changing and it would be providing REO business, we changed hats and got into it last year,” Carlos stated. And it has proved successful as currently Axia’s REO division, www.TeamAguilar.com is bringing in 80% of his business.

But simply “changing hats” isn’t an easy option for many.  The banks are unloading a lot of responsibility to those selling their REOs and they need to be certain their assets are in the hands of people with experience.  Carlos obtained his experience selling REO’s in the early 90’s amidst the Savings and Loan Crisis and economic recession “Most companies involved [in selling REOs] that are having success know people in the industry. The REO industry seems to be fairly tight and the relationships I had in the past working for other operations are the big reason why I am getting business today.” And it’s not just experience that is required to sell REOs. It’s an entirely different beast than the average real estate transaction.

In addition to the usual marketing and negotiating required in a real estate deal, selling REOs involve other, less glamorous tasks. Frequently homes are left in horrible conditions and intense cleaning is required commonly costing upwards of $2000 to $3000. Ordering and maintaining utilities, managing evictions and re-keying properties, filling out the tedious and redundant Broker Price Opinions (more information on BPO’s search “Newsstand” at www.car.org), and keeping the banks or asset managers informed and happy. “Every bank requires different things, and every bank requires a sea of paperwork” Carlos adds regarding the downsides of REO work. “It’s by no means the most glamorous side of real estate, but in times such as these, we would be hurting for business without it.”

And so, depending on how one looks at things, transitioning from being a regular real estate agent to selling REOs might be a type of opportunity that Carlos and others in his field are taking advantage of, but this is an opportunity that is brought on by necessity and not a hope to strike it rich. As most of us are forced to position ourselves to weather the storm ahead, it is important to simply make the adjustments in our life and business necessary to get through these times. And who knows, maybe an opportunity is waiting to present itself to you.

Andrew Brentan is a contributor to Team Aguilar’s blog.