Of the many industries affected by foreclosure, few were harder hit than construction and real estate.
Now, professionals from those fields are finding new ways to ply their trades — many in the burgeoning business of repairing, cleaning and evaluating homes taken back by lenders.
“I’ve had a number of people approach me about getting into the business,” said Tom Cono, who started American Property Management in 1981.
His Westminster-based company completes thousands of work orders annually, cleaning and servicing homes up and down the Front Range.
“We do locksmithing, lawn work, repairing windows and winterizing homes,” he said.
The company employs many “jack-of-all-trade” types in up to a dozen crews at a time.
Business has been booming as the state continues to contend with a skyrocketing foreclosure rate. Public trustees reported 39,915 new foreclosures in the state last year, a 40 percent increase from the previous year, according to the Colorado Division of Housing.
Contractors hit pay dirt
Tim Doehner, executive director of the National Association of Mortgage Field Servicers, said the industry is seeing big growth nationwide.
“Most of our members have seen volume at least double in the past 12 months,” he said.
The group’s 400-plus members include several national and regional firms that typically subcontract with local operators such as Cono. Beyond that, there are innumerable mom- and-pop shops and individual contractors who aren’t members of the association.
While the work is plentiful, conditions can be brutal.
“It might be 100 degrees out, and we’re cutting down 6-foot weeds in a neighborhood that isn’t particularly safe,” Cono said.
The field-services business exists in two parts, according to Cono. Half are the “real-estate-owned” foreclosure properties held by banks. The other half consists of homes reclaimed by loan-guaranteeing government agencies such as the Federal Housing Authority.
Complex paperwork
Cono does business on both sides. Some field servicers avoid FHA work because of the complex rules and paperwork, he said.
FHA rates for services tend to affect everyone. Replacing a lock, for example, brings in about $40 from the FHA.
“The banks want to pay no more than the government is paying,” he said.
Some of Cono’s past employees, skilled at maintenance work, failed because they couldn’t do the paperwork properly.
“It’s blue-collar work done with a white-collar mentality,” he said.
There are no precise industry figures on the survival rates of newcomers.
“What I’ve heard is that they last about 16 months on average,” Cono said.
Brokers’ business
While service contractors do property-preservation work, real-estate agents provide another service that’s vital to lenders. Valuing of homes in foreclosure (or approaching it) is done en masse by real-estate brokers across the city.
The usual procedure is a called a broker price opinion. It’s a quick kind of property valuation, less detailed than a full-blown appraisal, yet in some ways more useful.
“If I had to guess, I’d say there are 5,000 brokers in Denver doing BPOs,” said broker Kelli Paddilla, who owns Key Concepts, a real-estate firm.
A typical BPO requires price information on three comparable properties currently listed and three that recently sold.
If “comps” and “solds” aren’t available, the BPO broker needs to estimate the value based on historical trends.
Paddilla does hundreds of BPOs per year, charging $50 or $75 apiece.
“It’s very hard way to make money,” she said.
Nonetheless, it is a welcome source of income to many brokers whose business has fallen sharply.
BPO agents, like field-service firms, may not work directly for lenders. Operating between the two parties, in many cases, is an asset-management firm striving to find buyers and close the deals.
The firms employ real-estate agents, attorneys and property portfolio managers.
One such firm based in Denver and serving clients nationwide is the AssetOne Marketing Group. Another national firm, Fidelity National Asset Management Solutions, is based in Westminster. It automates purchase offers for REO homes at .
A dirty job
“Whenever I think I’ve seen it all,” says Tom Cono, a cleanup contractor for 27 years, “I turn around and there’s something worse.”
Here are some of the situations he’s encountered when dealing with homes in foreclosure:
• For weeks, the sound of a barking dog could be heard from inside a nice, newer home near East 99th Avenue and Tower Road. When a crew entered the property, they found the animal, home alone. The resentful owner had left it behind, with food, apparently to ward off inspectors.
• In Colorado Springs, a man was found sleeping soundly on the couch. The county sheriff who was carrying out the eviction recognized him as an escaped convict and snapped the cuffs on him.
• An attractive, well-dressed woman occupied her equally well-appointed home, which she was losing to foreclosure. Inside, she had installed traps — nails sticking up from the floorboards — to prevent entry by “demons and jackals.” She was so well-spoken, says Cono, “she almost had me convinced.”
• A crew approaching a modular home had been warned about dogs and found more than 60 of them. Many were dead, their bodies rotting in trash bags. The crew wore respirators and hazmat suits to complete the cleanup.
