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Friday, Dec 1, 2023

FORECLOSURES—Internet Foreclosure Company Hoping for Worse Times

While pundits debate whether the economy may be cooling, one company is gearing up to take advantage of the worst-case scenario. RealtyTrac Inc. has just rolled out a national program to provide brokers and homebuyers with foreclosure listings over the Internet. The Westlake Village-based company, which operates as RealtyTrac.com, has entered an agreement with DataQuick Information Systems, a large real estate information service in La Jolla, which will provide national listings of homes in, or about to go into, foreclosure. “(The information) hasn’t been readily available,” said Derek White, co-founder and chief executive of the company. “We’re the first mover in the pre-foreclosure market on the national level.” Foreclosures have always been attractive to homebuyers because these houses can usually be purchased at distressed prices. But in recent years, as the economy has soared, the number of foreclosed homes in California has reached an eight-year low, limiting the market for such properties. White and others believe that situation could change dramatically in the next few years. “We think (the number of foreclosures) is going to double,” White said. “Because the economy has been very good, people are overextended, and now that the economy is changing, if you bump these (mortgage) payments up you’ve got some major problems.” RealtyTrac.com operates like many of the real estate sites currently on the Internet. Users pay a “day pass” fee of $7.95 or a monthly fee that averages $60, depending on the region and the availability of properties in the area. For the price, users get access to the foreclosure listings. Lack of listings Buyers can search the directory by location and by characteristics of the property, such as the number of bedrooms. They can also access foreclosure specialists who will help to negotiate with the owners in default or with lending institutions, if it is a bank-owned property. Monthly subscribers receive e-mail updates on new listings. Since RealtyTrac first launched in 1994 with a database limited to Los Angeles and San Diego counties, the company has been hampered by a lack of listings. In the second quarter ended June 30, the number of California homes that went into foreclosure dropped to 21,400, 15.6 percent less than were foreclosed upon during the year-earlier quarter, according to DataQuick. In Los Angeles County, there were 3,331 home foreclosures in the second quarter, according to the Real Estate Research Council. RealtyTrac has been listing about 100 foreclosures a day in L.A. County of late, about one-third fewer than the 300-plus foreclosures the company tracked in the late 1990s. The waning market, coupled with the cost of starting up the operation, have left RealtyTrac operating in the red. “We’ve been through a lot of trials and tribulations,” White said. He would not disclose revenues or the number of subscribers RealtyTrac has so far attracted. But the alliance reached in February, making RealtyTrac the only Internet site with access to DataQuick’s extensive national listings, could help expand the company’s appeal and reach. RealtyTrac launched the national service late in July, after spending about $1 million on software and hardware enhancements, along with communications technology to handle the expanded services. White concedes there are other sources of information on foreclosures, but he said they are often very time-consuming or incomplete. Trouble on horizon? Don Parret, editor of The Daily Commerce, took issue with that assertion. The Daily Commerce, an L.A.-based newspaper published by the Daily Journal Corp., for decades has been publishing foreclosure listings for properties in Los Angeles, Ventura, Orange and Riverside counties. Redloc.com, the company’s Web site, publishes foreclosures within three to five days from the date of filing. Parret was not familiar with RealtyTrac, but he added that the service is not likely to impact his operations. “The Daily Commerce has been around for almost a century, and we’re the No. 1 newspaper that publishes these notices of default and trustee sales in the five-county area,” Parret said. “I believe we’re the most comprehensive.” Regardless of which is more comprehensive, RealtyTrac and The Daily Commerce may both soon have more foreclosure listings. The hot real estate market has made the supply of homes scarce, forcing prices up and leaving buyers with expensive mortgages. So far, the strong economy has kept the wolf from the door in most cases, but further interest rate hikes and, in the L.A. area, a possible screen actors’ strike in Hollywood, could deflate the earning power of some of these homeowners in the future, said Jack Kyser, chief economist at the Los Angeles Economic Development Corp. “There are a lot of people who have mortgages that are skating on thin ice,” Kyser said. “I think there may be a huge market (of foreclosed properties in the months ahead).”

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