Phoenix, AZ – March 4, 2010 – (RealEstateRama) — Unsurprising to many real estate agents, short sales are expected to dominate the market in 2010 and 2011, with REOs declining in importance as lenders are discovering that they lose less money on short sale transactions.
According to Fidelity Senior Vice President Steve de Laveaga, trustee sales by bank-owned properties result in an average of $38,000 lost per transaction compared to a short sale. “The last three months of 2009 saw a 60% increase in short sale closings,” stated de Laveaga. “In 2010, you will see a number of lenders move to aggressive short sale programs.”
It is obvious to anyone in the industry that mastering the short sale process is critical to the success of an agent. So what does an agent need to know?
1. Putting the infrastructure and systems in place to manage transactions in an organized fashion is mandatory.
Because a high volume of communication and administrative work is required with a short sale, success will be very limited for the independent agent unless they are able to either partner or buy the support they need. It isn\’t a skill issue, it is all about having the right resources to manage the workload.
Agents new to short sales, or who manage only two or three short sales per month, should consider resources such as Fidelity\’s TransactionConnect – a per-transaction fee-based solution that pulls in necessary administrative help without requiring the addition of staff. Earning designations like the CDPE (Certified Distressed Property Expert) designation also provide agents with necessary processes, forms, tools and other resources.
To learn about the proper systems to put in place for short sales, agents should reach out to their title company and broker, as well as via classes and online resources. Because lender standards and processes are still being established, agents must continually monitor what is happening in the market related to short sales and continually educate themselves. It is not a one-time process.
2. Short sales require a team, with each person on the team acting as a specialist.
Many short sale offers listlessly sit for months on end and do not successfully close; therefore, agents should have many of them underway simultaneously.
Many agents proving to be most successful in the Phoenix market are managing their business more like a team-driven processing center than a traditional brokerage office.
Administration, marketing, sales, operations, negotiations – there is only so much time in the day and many are finding success by picking a single role in the process. Team offices where each agent works out of one location but does their own thing is proving to not work for the short sale market – it demands an environment where each person has chosen a specific specialty in a coordinated effort to maximize transaction volume.
Any independent agent that is serious about growing their short sale volume should aspire to a team set-up. As lenders become more “short sale-friendly,” having the right team and infrastructure in place will ensure longevity and smoother transactions.
Equally important, the agent must have a strong network of professionals on their team, including legal counsel with robust real estate distressed property experience, a CPA, a title company invested in the agent’s success, and more.
Agents not interested or able to manage the high volume of transactions required to be successful with short sales should consider developing a referral partnership with another agent, which would allow them to at least earn referral fees.
3. To build short sale listings, an agent must evangelizing and educate homeowners on the options available.
Interestingly enough, even as the percentage of short sale transactions are skyrocketing, many homeowners don\’t know their options when it comes to unloading a distressed property and they misunderstand exactly what a short sale is.
Most think that it is simply a fast sale, which is absurd considering the reality that a short sale transaction can take upwards of four to six months. Like many that are struggling to deal with real estate\’s new reality, lenders are still putting their own standards and processes in place, and the process is arduous.
Educating homeowners about their options in terms they can understand is important. Media and industry dialog is heavy with jargon and hype that just does not resonate with consumers. As more homeowners realized that they can sell their home for what it worth, even when they owe more, then agents will see more listings coming their way.
For now, they have to go out and find them by educating confused consumers; becoming their trusted counselor opens the door. Some agents are seeing significant success by offering seminars. Webinars are particularly popular because the homeowner can maintain their privacy.
4. Short sales are not easy, and listings are not going to fall in the agent’s lap. They take hard work, diligence and a close attention to detail.
In the past when the economy was less complicated, agents were accustomed to having decisive clients approach them knowing they were ready to buy or sell. Today, agents have to roll up their sleeves and buckle in for the roller coaster. They have to create a way to connect with homeowners.
As a title company, Fidelity works daily with top producing agents in this market, and we listen to what is working for them and what is not. While many agents don’t bother, good old-fashioned “door knocking” is proving to be a powerful way to get in front of homeowners and appeal to them from a person-to-person standpoint. Engaging the homeowner about their home\’s current market value often opens the door to discussing their personal issues, and launching a dialog about the options available to them.
Agents must be careful not to get caught up in an “analysis paralysis” of over thinking – they should arm themselves with the basics and just get out there. Tell people about their options.
Success with short sales requires more than experience as a Realtor® or agent. It requires a strong team effort, heavy marketing and high transaction volume. Even more than that, it takes strong communication skills.
As so eloquently spoken by Andrew Bloom, a top producing Realtor® with RE/MAX Excalibur, “It is critical to communicate the worst case scenario with the client. A short sale does not protect them from the Anti-Deficiency statute and including a real estate attorney and accountant is critical. They need to understand the ramifications, and it is the agents role to make sure they have a solid grasp of the consequences.”
He continued to say that getting the listing is not the number one priority. Acting as a counselor and educator to accomplish what they want will gain their loyalty – whether it is for a short sale listing today or a listing when the market improves.
About Bernadette Espinoza, Fidelity National Title
Bernadette Espinosa is a Sales Representative with Fidelity National Title of Maricopa County (www.fntarizona.com). She has eight years of experience in the title/escrow market, preceded by a background in technology marketing. Espinosa works with many Phoenix-area real estate agents, with a focus on short sales. She can be reached at bernadette.espinosa (at) fnf (dot) com.