Don’t Forget the Purell

Aside from the physical danger, the economics of the business are mixed. Foreclosure agents often pay cleaning costs and utility bills out of their own pockets; banks are supposed to reimburse them, but it often takes months. (Lazrak and DuRoss's banking clients currently owe them $30,000.) Deals constantly fall apart because of problems with financing or lack of clear title. "Each one of these deals is three or four times more work than a regular sale," says Michelle Fermin, who has represented buyers who've purchased some of Lazrak's listings. And even though foreclosed homes typically sell at lower prices than traditional homes, agents are still paid by straight commission of 5 or 6 percent, which they split with buyers' agents. So far this year Lazrak and DuRoss have sold 85 homes worth $16.2 million, but after expenses, each will barely break the $100,000 mark this year. "We're not rolling in dough," Lazrak says. To make serious money, big operators staff up and aim for large volume. Krein, whose Las Vegas-based firm has 36 employees, hopes to sell 1,500 foreclosed properties this year, and says some veterans pull down seven figures a year.

While some may see them as vultures feeding off misguided mortgage lending, right now they're serving a vital function in the economy. "As long as we're under this tsunami of foreclosures, the financial system and the economy are going to suffer," says Mark Zandi, cofounder of Moody's Economy.com. "We need to sell these properties quickly, and [I'd tell banks] to be very aggressive with prices." There are some signs that's starting to happen. Lazrak says as banks have become more familiar with their work, they've become more likely to accept her price recommendations, which often leads to quicker sales. Sales may also accelerate as the year winds down. In 2007, Lazrak sold 27 homes in December, one third of her annual total, and some think banks will be even more motivated this year. "At the end of the year, there will be a fire sale as everyone tries to clean up their balance sheets for 2009," says Glenn Kelman says, CEO of Redfin, an online brokerage firm.

Based on what they're hearing from banks, Lazrak and her partner don't expect the flow of foreclosures to slow down anytime soon. "We've got job security into 2009," DuRoss says. When the flow of listings does start to ebb, they hope to purchase a property or two for themselves to rent out as investments. They also look forward to making more transactions that don't originate from an ill-advised loan, and to selling houses to smiling buyers who aren't worrying about cockroach infestations and whether the water or electric systems really work, since they couldn't really inspect the house with utilities turned off. "If you got into real estate because you wanted to help people buy their dream home, [this] does not give you that fulfillment," Lazrak says. But in their own small way, even with the Purell, she and her partner are helping to drive the troubled housing market toward equilibrium—and each time her phone rings, there's a chance some money will follow.

© 2008