Have you been thinking about pursuing foreclosures as listings? Well, you’d better think twice!
In the unlikely event that your new foreclosure listing has somebody living in it, you may have to deal with the “Cash for Keys” program. Some companies will overnight you the money…others won’t. This can be the beginning of your cash output.
The next thing to consider is the cost of putting the utilities in your name. Are you prepared to put down the required deposits for electricity, water and gas? Once you get past that financial hurdle, there are the monthly bills you will have to pay…on time. That doesn’t seem too hard, but then you need to input your expenses into the “system” for reimbursement. Now, that can take 30 days to get reimbursed. The bills may not seem like they could be that bad, but consider your market. Hot markets will require the air conditioner to be on, and cooler markets will require heat. Hmmmm… Let’s hope that nobody touches your thermostats to raise your bill!
The next item to take under advisement is repairs. Not every foreclosure home is “market ready.” Depending on the scope of repairs, you may need to get several bids. Once the winning bid is selected, you may or may not be required to pay the contractor directly. Again, expect about a 30-day waiting period to see your money.
Meanwhile, while you are playing ATM for your foreclosure listing, you will spend time performing monthly reports, marketing the property and fielding phone calls from vendors, asset managers, agents and clients. This can go on for a few months unless you have received an offer on the home.
Just when you feel like you have a handle on things and are seeing some of your money coming back to you, 90 days have passed and… Well, it’s time for a different agent to pick up your listing. Was it worth it?
If foreclosures are selling, why not represent buyers instead of sellers? It seems like less hassle and less financial outlay for the same results. Not to mention the fact that happy buyers are more likely to send you referrals than asset management companies.
That’s just my two cents–and you didn’t have to wait 30 days to get it back!