On June 12, 2007, Reuters reported that “U.S. home foreclosures in May jumped 90% 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 in June declaring the current foreclosure crisis and presaging worst times to come.

Real Estate professionals probably find these headlines more than a little scary, but just think how scary they are to homeowners, 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 if you are a Real Estate professional, 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 Real Estate operation 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

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.

My latest article is now posted on RealtyTimes.com. Here’s a preview:

To Fail at Flipping
By Ralph R. Roberts, CRS, GRI
Co-Author: Flipping Houses For Dummies

How do you earn mega-bucks flipping houses? You line up your financing, plan in advance, build a solid support network, over-estimate costs, under-estimate profits, work hard, and with a little luck and a lot of sticktoitism, you’ll probably earn a good profit. Is is that easy?

Here are ten sure-fire ways to fail at flipping houses:

• Convince yourself that it’s too hard. Flipping houses is difficult, time-consuming, and risky, but it’s not impossible. If you talk yourself out of it before you even try, your flip has already flopped. Pursue your dreams, plan well, stick to it, and you’re very likely to succeed.
• Convince yourself that it’s easy. If you start flipping houses thinking that you just hopped aboard the gravy train, you’re going to be very disappointed. Any venture in which you can potentially earn a high profit requires hard work and sticktoitism and carries some risk.
• Speculate on the housing market. Assuming that housing values are going to rise ten percent annually is likely to lead you into offering too much for a house. Make sure the house you buy today is one that you can sell tomorrow for 20 percent or more than your total investment in the property.
• Get emotional. When you buy a home to live in, it’s okay to get a little emotional and perhaps pay a little more. When investing, deciding which house to purchase and how much to pay is purely a business decision. Make the offer with your head, not your heart.

To read the rest of this article, please visit RealtyTimes.com.

Mark Ellis of The Columbus Dispatch provides great coverage of why flipping the right way for profit takes patience in cold market:

The chill in real-estate sales hit Larry Dickson in June when he tried to sell a North Side home. After running into “the coldest market,” he waited only 30 days before pulling the house that he had renovated. Dickson doesn’t renovate and sell houses for a living but has tackled a half dozen houses in Clintonville in recent years. “I’ve always turned a profit and been satisfied,” he said. The practice of buying homes for renovation and sale, usually within a year, is sometimes called “flipping.” The speculative pursuit has declined as the overall real-estate market has slowed, experts said. But prudent and patient investors can still prosper.

“Seeking a good opportunity has never gone out of style,” said Pat O’Neil, of Century 21 C.R. O’Neil and Co. on the North Side and president of the Ohio Association of Realtors. “It’s still out there. It’s not being done nearly as much.

“You’ve got to know what you’re doing.”

Dickson, who runs transportation services for Battelle, invested about $25,000 in materials and long hours of work in his house…

The house went on the market for $334,000, but Dickson came up empty and withdrew the house. He figures he missed the boom market by about four months.

He was contacted later in the summer by real-estate agent Kevin Sullivan, of RE/MAX Premier Choice in Worthington, and put the house on the market again, asking $319,000. The current asking price is $269,900, and the house is in contract…

Investors in today’s market must be prepared to hold properties longer and must be able to absorb the extra costs of holding a house, Ford said.

Holding costs are typically about $100 a day, said Ralph Roberts, a Michigan real-estate agent and author of Flipping Houses For Dummies (Wiley, $21.99).

“When flipping houses in a down market, you want to stay in the business,” Roberts said.

The market will improve, he said.

“It’s still the best investment anybody can make.”

But slow the pace, he advised. “If you flipped six houses last year, maybe you flip four houses this year.

“Don’t let the inventory grow on you,” he said. “You’ve got to have a plan B. Rent it if you have to.”

To read the full version of the article, visit The Columbus Dispatch

My apologies for sharing this information so close to the time it’s scheduled to occur, but in about 30 minutes I will be interviewed by Matthew Bronson, host of AM 920/WMEL’s “At Home” in Melbourne, Florida, about flipping houses. If you have enjoyed my writing and would like to know what I sound like, or if you’d like to hear more about the tips, strategies, and warnings covered in my new book, Flipping Houses For Dummies, you can tune in at around 11:30 a.m. Eastern Standard Time this morning by visiting 920wmel.com.

For an archived version of Saturday’s interview, visit Matthew Bronson’s Featured Programs for Replay page, and click on the “Missed a show or want to hear it again” link.

Robert “Bob” Bruss–a California Real Estate attorney/broker and the former director of the National Association of Real Estate Editors, but best known as a respected and widely syndicated writer and consumer advocate for all things Real Estate–just reviewed my latest book, Flipping Houses For Dummies. From Bruss’ weekend column:

Realty Broker Reveals How to Profit From Flippers
By Robert Bruss
Sunday, December 17, 2006

In good markets or bad, real estate broker Ralph R. Roberts reveals in “Flipping Houses for Dummies” how he acquires run-down houses, fixes them up, and then either “flips” (sells) them for a profit or holds for long-term investment. Roberts, a highly respected real estate author, trainer and broker, shares his techniques along with advice on how to minimize the tax bite on profits.

Every serious real estate investor who wants to earn large profits needs to understand the methods Roberts uses because he has perfected flipping houses almost to a science. He thoroughly understands and explains all the critical aspects, including locating the properties to determining if they are suitable, negotiating a successful purchase, supervising the fix-up work, and making a profitable resale.

As a longtime real estate broker, Roberts knows all aspects of the home brokerage business and he doesn’t hesitate to share his insider secrets. For example, he says, “Nothing on the MLS (multiple listing service) is the gospel truth. Sellers and real estate agents alike often estimate room sizes or make mistakes when entering details. Approach all prospects with a discerning eye.”

Even if you are not interested in “quick flip” real estate profits, this is a great book to study because the author shares so much of his real estate knowledge which he gained, starting at age 19, over more than 30 years in the real estate business.

Maybe Roberts is getting a little “salty” in his old age, but he exposes secrets most Realtors would never share with their clients. Examples include how to obtain a “listing history” of a property, how to determine what the seller paid, how long the property has been on the market even with more than one listing, and if the property is difficult to “unload.”

This is a “fun read” book in the usual dummies style, which includes features such as tips, warnings and even several sanity checks. Along the way, Roberts shares many personal examples to illustrate the topics, making the book extremely valuable so the readers don’t make the same mistakes he made.

Throughout the book there is heavy emphasis on what to look for in a potential flipper house, how to locate them, how to acquire them, and how to finance them. Roberts provides valuable insights about the importance of borrowing funds. “As a real estate investor, good debt gives you leverage,” he advises, meaning you control the property with little of your own cash.

Along the way, there are several excellent checklists such as the “profit projector” and the “home inspection checklist” so no important aspect is overlooked when evaluating a possible flipper candidate.

Especially valuable is the chapter on “The Art of Haggling: Negotiating a Price and Terms.” Having sold thousands of homes at his real estate brokerage, Roberts is a “pro” when it comes to negotiation and putting sales together. His negotiation strategies are priceless. I especially enjoyed the part about “digging up pertinent information about the seller.” If you are a serious real estate investor, this chapter is a “must read.”

Foreclosures receive extra attention because they offer special flipper profit opportunities. Acquiring these properties can be tricky, but Roberts simplifies the process as much as possible without getting bogged down in details. Of course, it helps that he has a full-time associate who specializes in acquiring these distress properties.

This book is designed for realty investors who want to profit from buying below market, making cosmetic improvements to add value, and then quickly reselling. But real estate agents and home buyers should also study it because of the valuable insights offered by a longtime, very successful real estate broker. On my scale of one to 10, this superb book rates an off-the-chart 12.

Flipping Houses for Dummies, written by yours truly and Joe Kraynak is now available in bookstores across the country and can be ordered online from Amazon.com. Additionally, if you would like to talk with my office about having me speak at your next event or gethering, please click here or call (586) 751-0000.

Real estate “flipping,” or buying a property cheaply, renovating it to add value, and quickly reselling it at or near market value for a profit, is on the rise. With the growing popularity of hit television shows like “Property Ladder” on TLC, Discovery’s “Flip That House,” and “Flip This House” on A&E, it’s no secret that people are eager to learn more about the flipping investment strategy. If you want to get in the game, or you’re already in it and want expert advice and tips to become more successful, the newly published, first edition of Flipping Houses For Dummies (written by yours truly and Joe Kraynak), can be your guide.

My no-nonsense book gives you the start-to-finish scoop on buying, renovating, and selling property, with plenty of time- and money-saving tips, strategies, and warnings to keep you on budget and on schedule. Flipping Houses For Dummies will show you how to:

• Find properties to flip
• Project your profits
• Secure financing
• Draw in buyers
• Work with contractors, agents, and other real estate professionals
• Steer clear of legal gray areas, including cash back at closing schemes

Flipping Houses For Dummies will also make you aware of savvy strategies for negotiating deals, modernizing for maximum profit, marketing flipped properties, avoiding common blunders, and staying afloat in a slow market. Also included is coverage on negotiating, property inspections, mortgages, taxes, and working with contractors, brokers, and real estate agents.

Like all ‘For Dummies’ books, mine concludes with a “Part of Tens,” including chapters titled “Ten Renovation Cost-Cutting Strategies,” like hiring students over the summer and buying overstocked or discontinued building materials, and “Ten Common House Flipping Blunders” such as failing to inspect the property before closing on it. The “Cheat Sheet” in the front of the book provides lists of signs of attractive fixer-upper and potential money pit, as well as check lists for home staging and cosmetics.

Flipping Houses For Dummies is available at bookstores all across the United States, and from Amazon.com.

My 1997 book, Walk Like a Giant, Sell Like a Madman, is a summary of the techniques that made me a successful real-estate sales professional, and a trusted source when it comes to understanding the fast-paced world of sales. This book, above all the others I’ve written, offers the best advice for beginners, along with a solid review for pros who hope to advance, and a primer for entrepreneurs who need sell their products or services and themselves.

By relating personal experiences and those of other super-sellers, I shows you specific practices–such as maintaining client databases, investing in cutting-edge technology, and engaging in appropriate self-promotion–can make the difference between failure and success.

If you’ve recently read Walk Like a Giant, Sell Like a Madman and would like to ask me a question or share a thought or two about how the book’s content is making a difference in your career, please feel free to leave a comment or question below.

My co-author, Joe Kraynak, recently received the following message from our Project Editor at John Wiley & Sons:

Hooray! You did an amazing job; thanks very much for your hard work. Now that all the files are cleaned and ready for the proofreader, you and Ralph are now officially done with the editorial process. I just want to tell you that it has been an absolute pleasure to work with you. [sic: We] thoroughly enjoyed working on the book, and we’re confident that it will be a big hit! You and Ralph should be tremendously proud of your work.

Flipping Houses For Dummies (ISBN: 0470043458) will be published this November!

In related news, Wiley has agreed to publish another book by Joe and myself, but due to confidentiality rules, I’m barred from talking about it for at least three or four more months. Trust me though, it’s going to be another best-seller!

As I mentioned a few weeks ago, 100 percent of the manuscript for Flipping Houses For Dummies has been turned over to our publisher, John Wiley & Sons. Now, thanks to David Hobson, our book’s marketing coordinator at Wiley, we’ve been given a sneak peak at the latest version of what the front cover will look like:

To see a larger version of the cover, click on the image above.

Last week, after many months of hard work and collaboration, my co-author, Joe Kraynak, and I turned over to our publisher the final chapters and elements for our forthcoming book, Flipping Houses For Dummies. Here’s a picture of me working on one of the final chapters (this was taken on a plane ride back to Michigan from a speaking engagement I had out in California):

According to our editors, Flipping Houses For Dummies should be available in bookstores nationwide (and internationally, too) in late-November or early-December.