This summer Reuters reported that "U.S. home foreclosures in May jumped 90 percent from a year earlier, reflecting a poor spring housing market and foreshadowing even higher levels later in 2007." And this was only one of dozens of articles I read declaring the current foreclosure crisis and presaging worst times to come.

As a real estate professional, you probably find these headlines more than a little scary, but just think how scary they are to homeowners in your area, a majority of whom are probably a layoff or an accident away from foreclosure themselves. And think how scary it is for homeowners who have already received a missed-payment or foreclosure notice.

The good news is that you are in an excellent position to help these homeowners while creating a new revenue-generating division in your team or brokerage and generating some very positive PR. Early in my career, I lost one of my first homes in foreclosure. I fell behind on the payments and was too embarrassed to ask my parents for assistance. By the time they found out about it, it was too late to save the property. Some good came of this, however; I realized that nobody in my market was serving the needs of distressed homeowners facing foreclosure. Sure, a few shysters in the neighborhood were pouncing on foreclosure victims like helpless prey, but nobody was informing distressed homeowners of their options and offering viable exit strategies.

Shortly after becoming a real estate agent and opening my own brokerage, I decided to launch a separate division to handle foreclosures, and it has become one of the most rewarding and profitable divisions for my business. I encourage you to do the same.

Why start a foreclosure division?

I encourage you to add a foreclosure department to your real estate business for several reasons, including the following:

• Working with people in foreclosure will generate an incredible amount of business for your organization, including listings, buyers, cash acquisitions, land contract sales, and renters for company-owned properties.

• You gain the opportunity to help people who are in foreclosure -- people who probably don’t know what options they have available to them. You could be the one who offers them one last chance to get their life back in order.

• You can offer one option that most foreclosure investors cannot offer -- the option to place the house on the market and sell it for the distressed homeowners. If the owners choose not to sell the property to you as an investor, they may hire you to list it, in which case, you profit from the commission. Either way, you win.

• A foreclosure division provides your entire organization with recession insurance. Even when the U.S. economy is booming, a minimum of four to five percent of all homes in America are in foreclosure or facing foreclosure. When the market tanks, you have even more opportunities.

Getting started in the foreclosure arena requires some attention to detail. You can lose a lot of money if you are ill prepared and fail to do sufficient research. Your preparation must include the following:

• Secure financing (most foreclosures are cash buys).

• Brush up on foreclosure laws and regulations in your area.

• Prepare a foreclosure packet informing distressed homeowners of their rights, options, and deadlines.

• Network with loan officers, bankruptcy attorneys, title insurance companies, and other real estate professionals who can assist homeowners facing foreclosure.

• Network in the neighborhood to find leads on pre-foreclosure opportunities.

• Follow foreclosure notices published in your area.

• Research documentation on foreclosure properties, including the title and any liens against the properties.

• Inspect the properties with your own two eyes before making an offer or bidding on the properties at auction.

Tip: Consider setting up a cash-buy division in your business, as well, so you can move quickly to seize great buying opportunities. Your cash-buy division can purchase properties that are listed at bargain basement prices, unlisted properties, and pre-foreclosure and foreclosure properties.

When you step into the foreclosure arena, be careful. Study up on the foreclosure market in your area and invest with integrity. You deserve to earn a fair profit from your work, but you should always inform homeowners of all of their options and do what you sincerely feel is in their best interest. Don't withhold valuable information just so you can get a better deal. My most recent book, Foreclosure Investing For Dummies, shows you how to invest with integrity.

Published: October 10, 2007

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Ralph R. Roberts, CRS, GRI is an award-winning and internationally recognized real estate agent, author, coach, and speaker. Throughout his career, Ralph has proven his commitment to helping other real estate and sales professionals build upon their past and present success, grow and expand their businesses, and provide a rich and rewarding future for themselves, their customers, their employees, and their families. As president and CEO of Ralph Roberts Realty, Ralph has personally helped thousands of consumers realize their dream of homeownership. While selling over 10,000 homes (and buying and selling over 3,000 investment properties) throughout his 30-year career, Ralph has made the time to mentor and coach hundreds of professionals in real estate, sales, and a host of other fields. Ralph is a recognized authority on Real Estate and Mortgage Fraud; Residential Real Estate; Personal Salesmanship; Sales Force and Office Management, Motivation, Design, and Team Building; and Foreclosure Self-Defense and Loan Modification, fields in which he has demonstrated his commitment to preserving the American Dream of Homeownership. Ralph's numerous websites, blogs, seminars, and speaking engagements engage, entertain, and educate both consumers and professionals. Ralph is also an accomplished author with several successful titles to his credit, including: Power Teams: The Complete Guide to Building and Managing a Winning Real Estate Agent Team Financing Real Estate Investments For Dummies (John Wiley & Sons) Mortgage Myths: 77 Secrets That Will Save You Thousands on Home Financing (John Wiley & Sons) Foreclosure Self-Defense For Dummies (John Wiley & Sons) Protect Yourself from Real Estate and Mortgage Fraud: Preserving the American Dream of Homeownership (Kaplan) Foreclosure Investing For Dummies (John Wiley & Sons) Foreclosure Myths: 77 Secrets to Saving Thousands on Distressed Properties (John Wiley & Sons) Advanced Selling For Dummies (John Wiley & Sons) Flipping Houses For Dummies 52 Weeks of Sales Success (John Wiley & Sons) Walk Like a Giant, Sell Like a Madman (John Wiley & Sons) Cross-Cultural Selling For Dummies (John Wiley & Sons) To learn more about Ralph, visit AboutRalph.com, check out his daily insights on real estate and mortgage fraud prevention at FlippingFrenzy.com, or visit his latest blog dedicated to helping distressed homeowners fight foreclosure, KeepMyHouse.com. You can reach Ralph at or by calling (586) 751-0000.