News from the Short Sale Rumor Mill

Short Sales continue to be a huge part of our business, and while I hear little of the ‘I wouldn’t touch one with a ten foot pole’ attitude common a couple of years ago, they remain a challenge.  I consulted a team of experts about the current condition of this part of the business yesterday . . . ok:  I talked with Ken Kopcho and Maurine Grisso . . . and here’s what I learned:

Banks are getting easier to work with.  It’s as if they finally realized that, as remedies go, a foreclosure can cost them upward of $50,000 more to accomplish than a short sale.  It’s taken a long time, but they seem to be getting their processes organized so they can move more quickly in legitimate short sale situations.

Wachovia was the first to become more reasonable.  They have been easier to work with for months.  Recently Bank of America and Welles Fargo have followed suit.  Chase seems to remain ‘difficult,’ sometimes becoming non-communicative.

Bank of America’s Equator system – which was a bear when initially introduced – seems easier to navigate.  It is unclear whether this is the result of a system adjustment or the growing familiarity of broker-users.  (!)

While many short sale attempts don’t work out, there are things a broker can do to increase his or her conversion rates.

Spend time on legitimate short sale candidates only.  Remember:  being upside down by itself does not qualify a homeowner for a short sale; there has to be a real, legitimate hardship: loss of a job, medical expenses, lost income . . . something.

Don’t take short sale listings unless you think you can get it done.  Seems simple, I know, but Maurine – whose conversion rate on short sale listings is remarkable – says she walks away from almost as many as she takes.

Don’t forget about the non-short sale candidates who are still in trouble.  For example, Maurine is targeting homeowners who are 30-60-90 days late but who still have a little equity.  They may not be short sale candidates, but they probably do have a problem.  Plus:  they have some ‘skin in the game,’ something to lose if they don’t get the problem solved.  The broker becomes the solution.  (By the way:  if you don’t know how to find homeowners who are late on their mortgage payments, but who haven’t yet received a Notice of Default, ask me).

It’s January 2011, and real estate market indicators continue to improve slowly.  Pending home sales are rising — they’ve been doing so since October — and even new construction is showing a little life.  Meanwhile I hear that a lot of agents, faced with a fat Board Dues statement and nothing pending, are getting out of the biz.  That’s sad.  (But for the survivors, it’s good:  less competition.)  The sad part is: they’re probably getting out just when things are turning around.

This is a time to squeeze a little more, pay your Board Dues and get busy.  Hold open houses, find 4 or 5 legitimate new buyers to work with, get your blitz signs out and start reminding people you are here to help them save some money.  2011 will be a year of More.

Un-Dumbing the Industry

I am very encouraged today.  A little elated, actually.  Yesterday, John Powell and I met with seven members of the Help-U-Sell family in San Diego and Riverside Counties.  Our conversation was free-wheeling but seemed to focus mostly on marketing and deal-doing strategies.  As we got into the realm of Short Sales I had to sit back, and I started to smile to myself.  These guys, the survivors, know their stuff!

Short Sales are complicated things.  There are dozens of lenders, each with their own requirements, varying industry and government regulations to consider as well as the vagaries of investors on the secondary market.  To work them and work them in a way that makes them worthwhile, there is a huge volume of information a real estate professional must know and manage.  The level of detail, understanding and street-wise know how I heard when these folks talked about what they’re doing was astounding.

It took me WAY BACK (I mean, way WAY BACK) to 1982, when interest rates edged close to 17% and the only way you survived was by knowing financing, contracts, and sales strategies inside and out.  We called it ‘creative financing,’ but it was really just knowing your business so well you could make things happen even under impossible circumstances.  It was a great time to be a REALTOR, a time of pride, because you knew if the person sitting across the table from you had a REALTOR pin on their lapel and an HP 12-C calculator cranked up, he or she was probably just as smart as you and the two of you were going to put that deal together.

The boom years were a fun ride, like the latest offering at Six Flags.  But, like that Six Flags ride, the pace was fast and the lines of people pressing to get in on the good thing were long.  Few practitioners took the time to learn their business. Most just gripped the safety bar and screamed.   We (as an industry) got dumber and dumber.  It was almost cartoon comical . . .

Picture the agent and buyer standing outside the house that’s just been toured.  The buyer says, ‘So, if I put 20% down, what would my payment be on a 30 year fixed?’  The agent hems and haws, scratches his head and finally answers, ‘I don’t know . . . let me call my lender.’ That was 2005.

In the churning and collapse of our markets, the weaker ones, the ones who didn’t learn how to put a and b together to make c, fell by the wayside.  They didn’t have the depth of knowledge they needed to make it through this mess.  That’s why the ranks of REALTORS across the country are way down.  The survivors are a wonderful bunch of very sharp people.  Many are hanging on by their wits and their toenails waiting for the wheel to turn but from what I see, their grip is tenacious and they will make it around that bend.

Suddenly, the REALTOR is a hero again.

Accessibility Toolbar