Many real estate agents are feeling the effect of the weak housing market and are no longer making the income they used to as a result of the economic downturn. Gone are the easy days of showing homes and accepting multiple offers. After the housing bubble burst in 2008, thousands of homeowners found they owed more on their mortgage than the value of their home. Since agents make their commission based on a percentage of the sales price, as housing prices fell, so did their income.
As a result of the downturn in the market, more and more homes sales are either houses that are upside-down, foreclosures, or REOs, which are properties owned by a lender after an unsuccessful sale at a foreclosure auction. When a house is upside-down and worth less than the mortgage, the homeowner often needs to arrange a short sale to avoid foreclosure. A short sale is more complex and requires more time than a traditional sale, leaving less time for the agent to find new business. Commissions are also much lower for REOs and foreclosures. As a result, many real estate agents have gone out of business, and those who remain are making much less than in previous years.
What does that mean for consumers? Buyer beware. A lot of agents are desperate for money – they may even be missing their own mortgage payments. Eighty-eight percent of real estate professionals have lost money since 2008 or are living off significantly less income, according to a recent survey from insurance company Entitle Direct. Nine percent have had to sell their homes, and nearly one out of ten real estate agents has lost their home to foreclosure, the survey showed.
Desperate agents may try to do sales for which they are not qualified or get away with unethical activities, so buyers and sellers should be on guard. If you are planning a short sale, look closely at an agent’s background and qualifications before beginning the process. You should never have to pay an upfront fee for a short sale – the real estate agent is paid by the lender – and you do not have to vacate your home prior to closing. If your agent tells you otherwise, you likely are dealing with someone who is trying to commit short sale fraud. Likewise, if your agent asks you to sign any type of deed or warranty as part of the short sale prior to the final closing, you should run the other way.
At Oyezz Real Estate, we specialize in short sales and have managed hundreds of successful short sales and other difficult real estate transactions. If we can answer any questions or otherwise be of service, please give us a call.