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Tuesday
Sep072010

The Pros Can Close!

RE/MAX Chairman and Co-Founder Dave Liniger shares his thoughts about short sales in a column for the July edition of DSNews magazine, a premier trade publication for the default-servicing industry. The essay, headlined "The Pros Can Close" and highlighted on the magazine's cover, promotes the idea that education and experience factor heavily into an agent's ability to close short sales. The column:


The Pros Can Close: When It Comes to Successful Short Sales, Agents with the Highest Levels of Experience and Education Lead the Way

 Short sales are gaining very real momentum, which is encouraging news for those of us who see them as a key part of the housing recovery.

 With the Home Affordable Foreclosure Alternatives (HAFA) guidelines effective in April and the Fannie Mae and Freddie Mac policies announced inJune, the pieces seem to be in place for short sales to increase significantly.

I'm seeing signs everywhere. Consumers are growing more aware of their short sale and deed-in-lieu options. Tech vendors are fine-tuning their systems to enhance communication and coordination among the parties involved. Servicers, lenders, and investors are recognizing the value of the approach. And real estate agents are embracing training opportunities and closing more sales.

Indicators of a trend
According to Campbell Communications, short sales accounted for 17.3 percent of all residential transactions in May. That's down a bit from April, but for the most part short sales have been rising in the study since last November, when they represented 12.6 percent of the total. Campbell also reports that time on market for a short sale has declined significantly. It was 20.5 weeks in February; now it's 17.9.

Another indicator is Equator's report that 215,000 short sales have been initiated through its system since it launched late last year. That's a huge number. Equator's online platform, which is widely used within RE/MAX, streamlines the process a great deal, and its certification program helps agents become even more proficient.

The trend toward more short sales is certainly promising, but the transactions themselves remain complex and challenging. A lot of things must fall into place for a short sale to close. The real estate agents, the servicers, the lenders, the investors and the consumers involved all need to feel as though their interests are being served. That's not an easy task.

Keeping things on track
Much of the work rests with the listing agent, who must have the skills to conduct an effective price analysis, manage the emotions and expectations of the sellers, market the property effectively, and submit a comprehensive short sale package with no holes or flaws. And that's just the beginning of the job.

Keeping things on track is critical. One of the very best short sale specialists in the RE/MAX organization, an agent in Arizona, says a key to success after submitting a short sale proposal is something basic but too often overlooked: professional courtesy. She treats the people on the other end of the phone with respect and expects the same in return. It's a small thing, but it works – and it makes the processors view a file as though it's their own.

It helps that this agent, a 17-year veteran, is a sharp, well-trained expert who soaks up education and understands every detail of the process. The servicers and lenders who encounter her quickly realize they won't be wasting their time.

This is the kind of agent who creates confidence and trust among the other people involved in a tough transaction, effectively mitigating the frustrating, confrontational tone that kills many of these deals. It's the sort of thing you learn to do over time.

NAR report shows correlation
It's interesting to note that more experienced agents, like the Arizona star, are involved in short sales to a larger degree than newer agents. According to the 2010 National Association of Realtors (NAR) Membership Profile, 41 percent of the country's Realtors closed at least one short sale last year. But the figure dips to 23 percent among Realtors who have been in the business two years or less.

That doesn't suggest newer agents aren't capable of handling these transactions, but it does support the idea that experience provides an edge in short sales, just as in every other sector of real estate. Education plays a large part in that because experienced agents – especially top producers – are more likely to have invested in professional designation courses during their careers.

Education has fueled the exponential growth in short sales. Agents are investing in distressed property classes at a pace I've never seen in my 40 years in real estate.

In addition to the Five Star Institute's suite of excellent classes, training courses such as Certified Distressed Property Expert (CDPE) or NAR's Short Sales & Foreclosure Resource (SFR) provide the skills that agents need to succeed in this historic market.

Credentials and confidence
Professional designations also help lenders and servicers identify which real estate agents are willing to commit time and money to learning this part of the business. If I were a servicer looking at a stack of short sale files, I would have much more confidence in the ones submitted by a top-producing agent with a CDPE, SFR or Five Star certification. Likewise, if I were an asset manager assigning REO properties, I would look for candidates with the best credentials and track records.

In any segment of any profession, the cream always rises to the top. A year from now, the 2011 NAR Membership Profile will undoubtedly show an increase in the number of agents successfully closing short sales and other distressed property transactions. It's a safe bet that those with the highest levels of experience and training will be leading the way.


© 2010 RE/MAX, LLC. RE/MAX Affiliates may share this article, provided they do not charge for it and this notice is included. All other rights reserved.

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