Demand Surges on Foreclosure Sites
Even some of Wall Street's biggest bears were taken aback by a recent report showing a surge in second-quarter home foreclosures. But the dour news was no surprise to Mark Britton, who runs Avvo.com, a Web site that lets users rate attorneys. Searches for foreclosure lawyers on Avvo had skyrocketed eightfold in six months. "A lot of people are hurting out there," says Britton.
Effects of the housing bust are showing up all over the Web. As the number of foreclosures has increased—they're up 53% in the past year, says online real estate database RealtyTrac—consumers are scouring the Web for help navigating the subprime mortgage morass. In June, there were 1.82 million searches for the term "foreclosure," according to research firm comScore (SCOR), which launched a search marketing tool last year to track searches. That's an increase of 117% from 12 months earlier.
Among the most popular online resources are those aimed at helping people sell distressed properties at a discount. Foreclosure.com, a decade-old database of distressed real estate, is among the most visited sites in the category, comScore data show. More than 14.5% of those who searched for the term visited the site, according to comScore. That's not surprising given that sales of foreclosed homes are up nationwide, particularly in states such as California and Nevada (BusinessWeek.com, 7/25/08). Other sites receiving tons of foreclosure-related traffic include RealtyTrac, which also tracks foreclosed properties, and real estate search engine Trulia.com, according to comScore.
Web surfers are not simply searching for bargain properties, however. Much of the spike in foreclosure-related traffic is also for resources to avoid bankruptcy or homelessness. Traffic to HUD.gov, the official site for the U.S. Housing & Urban Development Dept., is up sharply. According to comScore, HUD.gov is among the top 10 sites visited after searching "foreclosures." And in the past three months, Hud.com (which is not affiliated with the government office) jumped 228 spots in a ranking of most visited sites tracked by research firm Alexa, which is owned by Amazon (AMZN). Vistors to Hud.com can pick up timely tips. For instance, the site suggests people collect an itemized list of all assets that could be sold to avoid foreclosure and bankruptcy. Another tip: Find out if you qualify for government assistance. Military personnel and disaster area victims, for example, are eligible for special government loans to avoid foreclosure. The site also provides government assistance to subprime borrowers with adjustable-rate mortgages.
When the government can't help, a good lawyer sometimes can. The attorneys seeing the largest spikes in business are those who help homeowners handle foreclosures or assist banks and property owners in collecting unpaid mortgages. Eric Appleton, a foreclosure attorney in Tampa who is among the most highly rated in his field on Avvo.com, had more foreclosure cases in a single day recently than he had seen in a whole month last year. "People are most definitely going online to find lawyers to defend themselves against foreclosures," says Appleton, who often represents condominium associations. "It's not uncommon for us to get 10 to 15 mortgage foreclosure [cases] in a single day."
Part of the reason for increased lawyer searches is the complexity of foreclosure laws, which vary by state. In Florida, for example, unpaid common charges on foreclosed apartments are divided among the mortgage-paying tenants. Tenants can see their common charges increase 40% in a year thanks to a few neighbors defaulting on their home loans, says Appleton. "The bad debt expenses get passed on to the people who pay," he says. When that happens, the paying tenants typically sue in hopes of forcing the bank or the buyer of the foreclosed property to shoulder some of the cost.
Amid so many searches for foreclosure attorneys, however, Avvo founder Britton sees a bright spot. More people are still looking up business attorneys to help close deals and file documents than those who can help them avoid bankruptcy. "It's an interesting commentary on the American spirit," says Britton, adding that even in tough times "more people want others to help them run their business."
See BusinessWeek.com's slide show for a look at top-rated foreclosure attorneys.