Tuesday, April 28, 2009

The Foreclosure Life Raft (And How to Get Your Cast Away Business Back on the Mainland)


By Ryan Moehring

If you are reading this, congratulations are in order! You have managed to survive one of the worst housing crises in several generations—a crisis, many believe, is beginning to subside. If you are like most of your fellow survivors, you have likely managed to carry on by subsisting on an unwholesome diet of foreclosures, short sales and real estate owned properties (REOs).

I liken the situation to Tom Hanks in the movie Cast Away. In the film, Hanks’ character, a Federal Express employee named Chuck Nolan, is stranded on a deserted island after his plane crashes while flying over the South Pacific. Chuck too, resigns himself to a less than ideal diet of crabs, fish, and coconuts.

Chuck remains on the island for more than four years, eventually becoming remarkably adept at spear fishing and other island survival skills. He even befriends a fellow crash survivor, a volleyball he affectionately names Wilson. Chuck grows accustomed to island life, eventually accepting the fact that he will never be rescued. However, of the few things he was able to salvage from the plane crash, one constantly reminds him of his home and his life—a single, undelivered FedEx package.

The metaphor is not sophisticated, but it is well-timed. Many of us who work in the green real estate industry have been side tracked over the past 2+ years just trying to keep our real estate businesses alive and profitable. Unfortunately, in order to do this, many have not been able to focus on green properties. Now that the market is turning around in many locations, it is time to focus once again on delivering our package—our goal to green the real estate industry.

This refocusing effort need not cause a 180° shift in your business plan. Just as Chuck didn’t transition from a sushi and coconut diet right into a Big Mac his first day back in the states, foreclosures and bank-owned properties will likely continue to be a part of your real estate “diet” for some time to come. The question is can you somehow combine your necessity and your ideology to make money and make a difference?

The port town of St. Lucie, Florida provides a hopeful example. The town, which has the 10th highest foreclosure rate in the country, received more than $13.5 million dollars in federal stimulus money to purchase some of its 10,000+ foreclosed properties. The Mayor of the town has decided to use some of the money to retrofit the homes to make them more energy efficient before putting them back on the market for purchase by low-to-mid income, first-time homebuyers.

The ingenious plan provides economic stimulus in at least three ways: 1) it takes bad notes off banks’ balance sheets, thereby contributing to the “thawing” process of the nearly arctic credit market; 2) it puts affordable housing within reach of thousands of new homebuyers, which ensures long-term economic activity in St. Lucie communities; 3) it creates jobs for the companies that provide insulation, windows, and other energy efficient building services.

All of this green activity embeds itself into the community, making green an integral part of the city’s identity, and laying the groundwork for even more green activity in the future. The last time I checked the city of St. Lucie still needs licensed real estate professionals to help them sell these retrofitted properties. I imagine that holding a green designation like EcoBroker® might make the difference between landing these listings and spear fishing for dinner. Your city is probably working on a similar program, and if not, they would likely entertain the idea if a motivated professional like you pitched it to them. There is a world of possibilities—what is needed is a shift back to our pre-Cast Away, aggressive mentality that we are going to transform the industry, no matter the obstacles.

I understand, really I do. You’ve been stranded on a 100 acre island for a couple of years. You’ve been exposed to the elements. You’ve had to hunt for your own food. You’ve survived in ways you never thought you’d have to. You will be forever changed by what has happened to you, and your industry will certainly never be the same. You’ve had complex discussions with volleyballs about the meaning of life, for goodness sake.

You will undoubtedly have to eat a coconut every once in a while just to keep your belly full, but you are back on the mainland. Houses are selling again. Life is good. And you have a package to deliver.

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posted by EcoBroker @ 11:22 AM   2 Comments