Imagine that you're a Realtor looking for listings of foreclosed properties in your county. You won't find them on MLS listings, so how do you obtain this information? If you don't have access to the Internet, you're in for a tedious afternoon. Consider this: In Los Angeles County alone, between 150 and 250 default notices are filed every weekday.

The traditional method of gathering information about local foreclosed properties -- called "distressed" properties -- meant heading to the county recorder's office, where you'd sift through an unedited microfilm reel (one is released each morning). That's assuming, of course, that someone else isn't already using the reel when you arrive at the office. This tedious process can consume two to three days -- and that's just to research 10 to a dozen properties. Before you say "Never mind," there's an easier way to obtain access to this "hidden market." A nearly 5-year-old Web site called RealtyTrac contains 180,000 distressed property listings in California (80,000 are current, and 100,000 comprise the archives section), a state that has experienced a relatively high number of foreclosures in recent years, a domino effect of the real estate recession from which the state continues to recover in great strides. The site's mission is simple: "We're just trying to save everybody time and money," says RealtyTrac CEO and founder Derek White.

RealtyTrac receives a monthly average of between 3,000 and 5,000 visitors. Traffic comes from all segments of the real estate profession and its related fields: agents, brokers, title companies, attorneys, bankers, mortgage brokers, appraisers, and investors. So why are some agents itching to get at these listings?

An agent has several options with a foreclosed property. First, he may contact the owner of a home on which a default notice has been filed and offer to list the home. It's a tempting opportunity for the owner; his credit might be restored, and in the best-case scenario, he might even make a profit. Second, an agent may renegotiate the owner's loan and receive a commission for his effort. Or third, he can propose an equity purchase contract, often in conjunction with an investor or group of investors. In this case, the agent/investor(s) pays the default, and the owner signs his equity and property over to the agent/investor(s). The owner often makes monthly payments, and in the event that he defaults, the property goes back to the agent/investor(s). Other agents obtain information about trustee sales/auctions for investors -- such as auction date and minimum bid -- and obtain a commission for their efforts. And in the case of REOs (Real Estate Owned by lender), an agent approaches a lender after that lender has taken back a foreclosed property, and offers to list and sell that property, proposing a profitable, win-win scenario for both lender and agent.

All of these options represent a lot of effort, but agents who successfully use these strategies are reaping large financial rewards. "About 20 percent of the agents are making between 80 percent and 90 percent of the money," White says. "Some agents make in the high six figures doing this, as opposed to the $30,000 range. Both buyers' and sellers' agents should be interested in doing this."

So why aren't more agents getting on the bandwagon? "It comes from complacency," White explains. "A lot of people are doing real estate on the side. Or they just don't have the tools to obtain this information. If real estate agents have the patience and they want to make money, they can get the inventory in this hidden market."

Considering that foreclosed properties represent nearly 30 percent of many U.S. markets, agents looking for an extra edge would be well-advised to do the necessary homework to obtain information on distressed properties. In California, at least, that process has certainly become easier. Realizing the demand for this type of service throughout the country, White says that by the fall of 1998, RealtyTrac hopes to provide coverage for 100 counties nationwide, servicing 75,000 users. While that's a big project, the company is already well on its way to realizing that objective, continuing to forge strategic partnerships and alliances with companies in real estate markets throughout the United States. That's quite a coup when you consider that White and his wife, Kimberly, started RealtyTrac Information Systems out of their home in Arizona in 1993. The couple moved the company to Santa Barbara, Calif., in 1994. Along the way, they've added 18 shareholders, 10 employees, and five outside consultants, and they plan continued additions to their staff in 1998. White adds that RealtyTrac is "gearing up to go public" soon, as well.

"We're trying to put together a hub for distressed properties," White says. "Our users will be able to get core information, do property evaluations, see a map of the area, and get demographics on the property without even leaving their offices." And White has another prediction for the future: While distressed properties have been commonly referred to as the "hidden market," RealtyTrac is working to bring foreclosed properties into the mainstream. Are these properties real estate's best-kept secret for both agents and consumers? "I wouldn't say it's the best-kept secret," White says, "but it's one of the best."