Truth in Advertising: One Realtor's Strategy to Sell Foreclosed Homes

OCEANSIDE, Calif., April 16, 2009— -- He calls himself simply "Jim the Realtor," and he's out to tell the truth about the houses he sells.

Jim Klinge, a Southern California-based realtor specializing in foreclosures, says that he's rewriting the realtor's handbook.

But in his version, you won't find effusive descriptions of vaulted ceilings, southern exposures, and natural light. Instead, you'll find words like "abomination" and "goofy" and "toxic."

"I don't know if this is a flophouse, brothel, retirement home, prison, fraternity..." Klinge announced on a recent visit to a bank-owned property in northern San Diego County, his home turf.

And this was a property he was trying to sell.

In a down market, Klinge is betting that unbridled candor will trump the usual realtors' tricks in moving properties that have already lost some of their shine.

His clients, increasingly banks trying to unload foreclosed homes, are impatient to make sales.

His main tool is online video. Every time he gets a listing he sets his point-and-shoot camera to video mode, presses "on" and lets his wicked wit fly.

Almost everything is fair game: décor ("Green walls! Lovely -- that'll keep you awake at night"), blemishes ("we've got a mold-like substance"), even placement ("We've got quite a backyard here. Hope you like your neighbors").

"I think I have the right attitude with my videos," Klinge said. "I roll up, I turn the camera on, I do two to three minutes and that's the end of it. I think my goal is to give an accurate perception of what's there without being glitzy or glamorous."

Glamorous? Hardly. More like brutal. And not like the usual pretty picture painted by other realtors.

Banking on the Truth

"The unvarnished truth is what sells," Klinge said. "People want the truth. They want to just see it the way it is and if you just give them that, that alone is a draw."

Over a 25-year career as a real estate agent and broker, Klinge has seen the ups and downs of the local market, enough to name and shame everyone he holds responsible for the current housing crisis.

Topping his list of culprits are careless banks who peddled sub-prime, flexible-rate mortgages.

"If they would have just funded loans with fixed rates and one payment, so when the buyer comes in and they read what their payment is going to be, and they can count on that for the duration, we probably would have been fine," Klinge said.

Lack of Education Hurts Homebuyers

He also lays some of the blame on over-ambitious buyers, and the realtors who greased the skids. They bear some of the fault, but not as much as the lenders, according to Klinge.

"You know, there's not any education about home-buying," Klinge said. "You could go through high school, you could go through college, and unless you really go out of your way to learn about home buying, how would you ever know exactly what to do when it comes to home buying?"

Klinge said he began focusing on the not-so-great aspects of homes he was trying to sell when he sensed the market was going south, sometime in 2004. And it just so happened that a new Web technology was about to give him a good way to get the unvarnished truth in front of an unlimited number of eyes.

"It made sense to me to give a better picture, once YouTube started, of what's being offered," Klinge said. "We had the ability to show the entire house just like you are walking through it. And it was a life-like tour."

John Harwood, a Los Angeles contractor, accompanied his client, Joella Thomas, on one of Klinge's real-life tours of foreclosed properties.

Like the many visitors who have found their way to www.bubbleinfo.com, Klinge's Web site of distressed properties, Harwood found the realtor's no-bull pitch to be appealing -- but admitted it could somehow all be a shtick.

"Seems like a real honest guy," Harwood said. "But you know, he's a realtor, so that could just be really, really good cover."

As they walked around the property, Thomas noted that the windows looked as though they had never been replaced.

"I don't think they've done anything to this place," she said.

"This probably needs to be around $150,000 to really be worth it," Klinge told them about one house on the market for $159,000. "Because once you put $50,000 into it, get it up at $200,000, that'd be around right. I don't think you're getting a lot more rent for this just because it's 1800 feet, because it's a bunch of goofy square footage."

Thomas said she appreciated Klinge's honesty.

"He seems to be real upfront with his information and seems like a real interesting guy," she said.

Tough on the Home Sellers

Klinge will tell it like it is to the home sellers, too. In what he calls our "microwave society," where "people know within minutes that you are on the market," if a property doesn't get offers in 10-14 days, he says it's time to lower the price.

"Lower early and often," Klinge advised."You ought to be lowering 5 percent until you get people coming."

That can be a bitter pill for a homeowner, who may not want to admit that their home could have lost as much as half its value.

But according to Klinge, in this market, "If [buyers] don't think you are giving [your home] away, they are not interested in paying retail."

He said his strategy to tell the whole truth and nothing but the truth has been paying off. Klinge said he makes a good living, and doesn't need to resort to pressure tactics to make a sale.

He closed 43 deals last year, down from the 61 sales and purchases he brokered during his peak year of 2004.

For a man who says the realtor's handbook needs a revision, he's making an awfully good case.