By Annie Goeller, Daily Journal of Johnson County staff writer
Abandoned homes, some with light fixtures and sinks torn out, might not look like much to a homebuyer. But they mean job security to some real estate agents.
As home sales dropped in a sluggish economy, some real estate agents have turned to foreclosures as a big part of their income.
The bank-owned homes were once a way to make extra cash, but now they make up about 50 percent of some agents' business.
"That's part of what's keeping us in business is the foreclosure market," said Joe Bottorff, owner of Doc Real Estate in Greenwood.
In the past five years, he estimates the number of foreclosure sales has doubled for his office and now make up more than a third of their business.
Foreclosures used to be a way for Jarvis Realty Group managing broker Tony Nally to pick up a few extra sales here and there. Now, they make up about half of his sales, he said.
Locally, throughout the state and the nation, the number of foreclosures has been rising, with people losing their jobs, facing high medical bills or unable to pay their mortgages when interest rates or taxes increased.
In 2008, Johnson County hit a record high of foreclosures with 1,077 filings, a 21 percent increase from 2007.
The foreclosures and sluggish economy have helped produce a slow housing market, where values are dropping and some people are reluctant to buy or sell.
Some real estate agents said they also struggle to sell homes because of the deals many buyers think they can get if they buy a foreclosed home.
"How can you touch that? You really can't. That's what's hurting the total market right now, and it's going to continue until we don't have so many of them," United Realtors agent Tim Young said.
Some real estate agents said the number of foreclosures on the market isn't much higher than usual, and they aren't focusing on that market, which could fizzle out.
Instead, they point to a total of 25,000 home sales in central Indiana in 2008 as a sign that the housing market is rebounding.
They say now is the perfect time to buy a house, with the dropping mortgage rates and the low home prices, and a good time to sell with the housing inventory at a low, said Mike Watkins, who owns Mike Watkins Real Estate Group and is part of a group of local real estate agents called the Southside Alliance of Realtors.
But a perception of foreclosures as a moneymaker has led more real estate agents to try to break into the business of selling bank-owned homes, agents said.
But foreclosures aren't the easy sale some hope them to be and often can become a big hassle.
Century 21 Realty Group agent Kyle Johnson tries to drive by or have a friend or co-worker to pass by one of her 50 to 100 listings at least once a week. But she still often pulls up to the home and finds snow more than a foot deep or windows broken by vandals or thieves.
That means she has to track down the contractor or company hired to maintain the properties and get them to clear sidewalks or make repairs so the home is ready for a showing at a moment's notice, she said.
And the costs can pile up.
Sometimes agents must to pay the contractors hired to maintain or fix properties.
Often, real estate agents are responsible for the utility bills on the home, which banks can take weeks or months to reimburse.
Plus, they sell for an average of 20 percent below market value, sometimes reaching discounts of 50 percent or more, agents said.
Sheri Maar, a licensed assistant with the RE/MAX Select Rob Campbell team, has seen homes that most recently sold for $75,000 go for as little as $20,000.
That eats into an agent's commission, which is typically 7 percent of the sales price, along with fees some agents pay to get the listings and banks that want to lower the commission rate, she said.
"It's twice as much work, and they don't pay off," Maar said.
But some agents said they don't have a choice but to sell the homes. One reason is the decrease in business with the slow market.
Without the foreclosures, their income would suffer significantly.
"I don't want to say we would have gone out of business, but we would have seen much more of an impact (without foreclosure sales)," Bottorff said.
Plus, foreclosures are becoming more frequent in agents' listings.
A few years ago, Johnson County would have about 40 to 50 foreclosure listings come through in a month, Johnson said. Now, some months have topped 100, she said.
With those listings comes a flood of phone calls from buyers looking to find a bargain, agents said.
"It's like we don't have a choice anymore," Maar said.
In recent showings with clients, she estimates that easily half of them have been in foreclosure.