Saratoga Business Journal photo
By Christine Graf
During his 37-year career in real estate, Ballston Spa real estate agent Tom Trevett has worked extensively in the REO (real estate owned) sector of the industry. REO refers to property that has been foreclosed upon and is owned by a bank or other lender.
“I own a full-service real estate company serving commercial, residential, and new construction, but I seem to have found a niche in REO–real estate owned by banks and corporate entities like hedge funds and trusts,” said Trevett, an approved REO broker who works in nine counties throughout the region.
For the companies he represents—companies whose names he prefers not to disclose–Trevett works as the listing broker, a job he described as labor intensive.
“Corporate companies and hedge funds demand a lot from you as far as servicing their properties–weekly inspections, monthly status reports, and broker price opinions every ninety days,” he said.
The REO sector of Trevett’s business took a nosedive at the height of the COVID pandemic. During that time, the government along with many states put foreclosure moratoriums into effect. Although there was a surge of foreclosures when the moratorium expired, the number wasn’t as high expected due to the dramatic growth in home value that occurred during the pandemic. As a result, many homeowners were able to avoid foreclosure by selling their homes in the open market where bidding wars were the norm.
According to Trevett, it wasn’t until this year that the local REO market began to rebound significantly.
“Before COVID, about 80 percent of my business was foreclosures. This year, I’m finding that the inventory for REO bank foreclosures is increasing again.”
Trevett anticipates that foreclosures will trend upwards, a result of high interest rates and inflated home prices.
“With people are paying $30,000 to $50,000 over list price and high interest rates, I think we will see an increase in foreclosures—not immediately but in the future.”
On the non-REO residential side of his business, Trevett said demand continues to outweigh supply.
“Here in Upstate New York and the Northeast, we’re very fortunate. We’re still seeing multiple offers on properties. When I list a property, I have multiple offers coming in by the next day, and it usually sells $20,000 to $30,000 over list price.”
When attending a real estate conference in Dallas last month, Trevett learned that realtors in other areas of the country are not as fortunate.
“I spoke to a lot of other realtors and brokers from across the country,” he said. “They are experiencing a slowdown because of the interest rates and because of the new real estate laws.”
Trevett is referring to changes in real estate laws that took effect in August of this year, changes that are expected to reshape the entire industry. Sellers are now able to negotiate real estate commissions, no longer required to pay a commission to the buyer’s agent. As a result, buyers must sign contracts with their agents, ones in which they agree to pay a commission to their agent if the seller opts not to.
Industry experts predict that these laws could result in a 25 percent to 50 percent decline in real estate commissions along with an increase in flat-fee and discount brokerages.
“We’ll see within the next six months or a year how this works out for both the buyer and the real estate industry,” said Trevett, noting that FHA buyers are likely to be the most significantly impacted. “First time home buyers going FHA don’t have a lot of money, and if the seller is not willing to pay a commission to the buyer’s agent, it’s going to be difficult.”
When asked about the local commercial real estate market, Trevett said it has been lukewarm.
“The market has been impacted because more people are working from home. But if the properties are priced right, they usually sell. And again, Upstate New York area is unique because we’re not seeing a slowdown like the rest of the country. I’m happy to be selling real estate in Upstate New York because it’s still a very strong market.”