When I closed my first short sale in 1998 I had no idea that 10 years later I'd be doing them with any regularity. At that time, short sales were uncommon; they remained uncommon through 2006. Even in 2007, other agents needed to be educated about what a short sale was, how long it took to close, and what process the negotiation would entail.
Having closed dozens of short sales in the period since 2007 in Westchester and the surrounding counties, I now see a larger number of agents who are familiar with short sales. I also see a higher number of agents who bills themselves as "short sale specialists." In some cases, they have earned a designation. I applaud any agent who furthers their knowledge. However, designations can be misleading and may not help the client.
There is only one problem with an agent who calls them self a specialist these days, and that is this: they may not really be specialists. Designations mean nothing if you cannot successfully negotiate and close a workout. In Westchester, there are enormous numbers involved, and if a home seller cannot close on their short sale because their agent, well, stunk, they could be stuck with a lingering debt, or, worse, a deficiency judgment for tens of thousands of dollars. What's worse, if these sellers really knew how many short sales their "specialist" agent actually closed (often, between zero and one) they would be mortified.
The code of ethics strictly prohibits misleading clients as to the agent's scope of expertise. A special designation might circumvent an outright violation. But it doesn't protect a Westchester homeowner from huge problems if their agent can't get the job done. In many cases, the homeowner never asked the agent how many short sales they have actually closed. This is madness. I would never have eye surgery with a rookie doctor. Our obstetricians had decades of experience. The same goes for the guy that installed our pool table, water heater, and appliances. The reasons are obvious.
Yet people still do not ask their prospective agents how many short sales they have closed. You simply cannot be a specialist with no experience; I'm sorry. I don't care if you have a PhD or a photo shaking the Pope's hand. What they taught you in class simply isn't all it takes to handle the loss mitigation department of a lender. Sellers need to understand that if they hire an inexperienced agent to do their short sale, they do so at their own peril. I'd never want a surgeon cutting their teeth on my gall bladder, a lawyer apprenticing at the expense of my freedom, or an agent getting their feet wet at the expense of my finances.
Simply ask : "How many short sales have you successfully closed?" prior to listing your home. That will guide you far better than a patch on their arm. And if you are an agent who wants to get into short sales, work for someone who does them with regularity. I have often said that any agent can make money in short sales. However, 99% of them should be via a referral to a true specialist.
Originally posted at NY Short Sale Blog
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93 Comments on What Makes a Short Sale Specialist?
I like Chris #6, "what came first, the chicken or the egg".
It's important not to oversell and say you're a resource maybe. I'm in line with #1, it will take a big lawsuit or complaint to put others in check.
Short sales is a moving target, too.
Approval letters speak volumes. Until you get there, advertise your ability to be proactive, leverage knowledgeable resources and mitigate risk.
I can't say that I ever did any short sales prior to the current situation. OR, people just brought money to closing because that's the way it was done. You don't want an agent practicing on you!
I think it fitting that with all the short sale "specialists" with these designations behind their belt claiming they have all this knowledge which I find ridiculous as all scenarios are quite different and I am always learning with some success and not so all the time. I feel if I have a buyer placing an offer,,we as agents need an addendum to be able to speak to the bank to see how this is flying along. I have had more bad experiences with the so called experienced short sale specialists who did not service their service well but their pride kept them from asking or participating in the sale with the selling or buying agent. How ridiculous,,if I can use help from the coop agent let's work as a team. Pomposity out the door and let's salvage the deal. I am very leary about trusting deals with agents professing due to a designation they are specialists. I am always in training as I am always learning something new everyday!
I wish I could have hit the reblog on your post. I see a lot of agents advertising that they specialize in certain areas in Real Estate when they have only closed a couple of sales period. I feel for the public sometimes in not knowing what to ask agents when searching for someone to represent them.
I could not agree with you more. They should ask, how many short sales did you list, and how many of them did not close.
Great advice, J. Phillip! Know what you do not know and admit what you do not know.
I'm new at the Real Estate business and I'm beginning to wonder why I ever got into this business. The legal exposure is frighting in light of this conversation and Fair Housing ,etc. I watch my broker try to recruit as many agents as he can utilizing the spaghetti theory and wonder why there isn't some sort of apprentice program where a new agent could work under a proven ...honest,sucessful,knowledgable agent until they are competent enough to actually sell or buy a house for somebody with out harming them. I've been told to go out and find somebody who wants to buy or sell a house and they will help me. The legal exposure is paralizing me!!
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Fascinating thread. My company encounters the the SUPPOSED importance of certification and designation every day. We train realtors on short sales and they are far more concerned with adding 3 more letters to their business card than the knowledge they'll gain.
So, the million dollar question is... How does one move from a short sale newbie to someone who actually understands the complexities of the business of negotiating and closing short sales. If you have no experience negotiating short sales, you will always be a rookie until you close your first one. How can you gain the experience without jeopardizing the deal and exposing yourself legally? One word... LEVERAGE!
Earl, if I were you I'd find a new broker immediately. Find a broker or a mentor with short sale experience (ask them just like Phil suggests the client asks an agent) and leverage their experience. Make your broker actually do something to earn THEIR split.
Next, leverage a real estate attorney who has experience closing short sales. Realtors have no business closing short sales. There are complex legal & tax issues realted to deficiencies and at the end of the transaction, the seller is presented with a legal, binding settlement letter from the lender. When the client asks you if they should agree to the terms, what is your advice? Any advice than comes from you is considered legal (or tax) advice and can land you and/or your broker in court. This is happening more and more these days, often times months or years after the deal when the lender pursues the deficiency, or the 1099 arrives from the IRS.
My advice- get a qualified attorney partner and a CPA partner who specializes. That's the fastest route to becoming "an expert." Let someone with more experience and negotiation leverage do the heavy lifting! there are a number of attorney models- fee for service to the client, Realtor contribution at closing, and srtaight contingency. A good short sale attorney gets paid by the lender, and that's our preferred model. We utilize and promote attorneys who charge nothing to the client and nothing to the Realtor, and we only work with ral estate attorneys who have closed a considerable number of short sales.
Right on, everytime this subject of short sale comes up it is a vent on the banks not having qualified people to make a decision. I always contended that maybe the short sale expert is not an expert. Then comes the lets have government regulate short sales. To me sounds like welfare for failing or greedy agents. My argument has been that the seminar short sale expert is an expert at identifying the person who is in distress and then they list procure the listing, from there then what. Most do not know what to do and how to negotiate let alone provide good data for the bank to make a quality decision. I get hate mail for calling these agents greedy but I have no other term for someone who is not willing to do the required work to accomplish the sale.
This article is right on the money regarding short sales experts. I have sold all short sale listings I had all were assigned me by the bank direct. I specialize in REO sals but my prior experience was as asset manager for a national lender. On this side of the practice I feel without any designation I am an expert, why? Not schooling but experience as well as an inner working knowledge of what the bank needs from the agent to make a decision. Reason why? I was that unqualified bank employee that the agents got frustated with when trying to put together a short sale. My experience is that most short sale experts are not well versed in putting together a logical and cohesive argument based on data and reason for the bank to make a decision. Most agents just think the bank is dumb, ignorant hiring unqualified people to make decisions.
The bank has too many files, sloppy work from lazy agents do not help them. The bank may not have hired you, the seller did but the bank is protecting its interest and they are the important element in the sale.
Short sales have been a headache for Real Estate Professionals, home owners in distress and buyers, due to the lagging servicer response time. To help the process. lenders are triying to become more proactive. Or so it seems... Some are contracting third party services. Bank of America has reportedly double their staff and, as many of us are experincing. they are pushing many of their short sales to their on-line manager, Equator. Wells Fargo is holding short sale educational seminars and entertaining new third party services. Citigroup is pushing special deed-in-lieu incentive programs and trying to expedite the short sale process.
Short sales are not an agents job. This is a team effort.
The best way to handle the volume of short sales that are coming is to have a team of experts working with you and that can handle the volume, you the agent will be producing. Your team must include Attorneys, title companies, accountants, negotiators, buyers just to name a few.
Don't try to do all the work yourself, find a reputable company to the the work for you.
Herbert Cortes
Real Estate Support Team
Quantum Leap Business Group, Corp.
888.SOS.QUANTUM
Ph 631.850.2220
E-Fax 888.777.5365
C 631.523.1411
Regarding this post, here are some very interesting facts:
1. Most Realtors who have a "Short Sale" designation have no idea what they don't know. It's more about "If everyone is doing it, I'll do it too!", or the prestige of the popularity of a particular designation, regardless of what is taught in the course.
2. Most of the designation programs currently on the market come from founders/co-founders (self-proclaimed gurus) that live or have lived in areas across the country that are mostly concentrated with conventional financing and not FHA or VA financing. The process for working a Short Sale is different based on the type of loan the Seller has. What this means is that most Realtors only have 1/3 of the training they need to truly be successful in Short Sales. A very large number of Realtors in America live in areas that don't have a high concentration of conventional financing, due to price points, etc. Therefore, the conventional model will not apply to them, which translates into a higher probability that many of their Short Sales will not close.
3. 98% of Realtors working Short Sales think they only have 0-20% control over the outcome of their Short Sale transactions. This is their first mistake!
4. 98% of Realtors working Short Sales think the banks control 80-100% of the outcome of their Short Sale transactions. This is their 2nd mistake! The only reason a bank is invloved in a Short Sale is because the Agents are procuring offers that net them less than what is owed in full and they must approve the terms of the sale. We have never talked to a customer service or loss mitigation rep that holds a real estate license, therefore, they would have absolutely no understanding as how to effectively guide an Agent through the process. If the Realtors are giving that much control to the banks on their Short Sales, you essentially have a blind man walking a blind dog, which leads to chaos!
Because of this, most Realtors working Short Sales only close 17-20% of their Short Sales, which is the very reason why Realtors generally hate the Short Sale process. It is because they haven't had the proper training in learning how to gain majority control. The degree to which you can keep the lender out of your Short Sale transactions will only increase your closing ratios and decrease the amount of frustration, obstacles, and issues typically associated with most Short Sales. Only get the lender involved when they need to be involved!
5. 9 out of 10 3rd Party Negotiation Companies do not know there is a difference in shorting FHA, VA, and Conventional loans with 1 or 2 mortgage liens, nor do they know the specific net thresholds for FHA-insured, VA-guaranteed, or even conventional loans with PMI. The negotiation phase of the Short Sale is a very small part of the process and if Agents want negotiation companies to do this for them, then so be it. The proper facilitation of the Short Sale prior to achieving an offer is key and no Short Sale program on the market is teaching this, except the CDRS Certification Program.
What is the take-away? In truth, we don't care what you call yourself, as long as you are humble enough to realize that there is a lot more to learn about this topic. Too many Agents have drunk the coolaid and are under the spell of a particular designation and are unfortunately very defensive about thinking there is more to learn than what they've already spent their money on. There are so many Agents that say "I am a ___________!" What exactly does that mean?
Have a great day everyone!
America's Home Rescue
"We're not about being the biggest... We're about being the best!"
www.ShortSaleSolutions.biz
There is so much to know regarding short sales. Not just how many closings, but do we have the ability to sit down with someone in failure mode and listen without judgement and help them not to feel so horrible about themselves. It is about being educated, knowing the ins and outs, caring about the clients, being patient, on and on and on. I would be frightened if I were a broker of letting anyone handle short sales other than those who are experienced, compassionate and aware of all the legal ramifications. I see by the amount of comments that there are a lot of opinions about this. A satisfied seller is the most important opinion of all.
There is another side of the coin here, Phil. What about agents who write offers for their buyers on short sales when they've never done it before? I was involved in a deal with a rookie buyer's agent a while back. His buyer signed a short sale addendum that allowed the seller to continue marketing the property. Seller received an offer the day after we sent rookie agent buyer's offer to the bank. Seller authorized me to send the new offer as well. Couple of months go by, rookie agent buyer's short sale addendum expired. Bank chose offer #2. Rookie agent blew a gasket, theatened to sue.
That rookie agent might want to worry about the buyer suing HIM. When he wrote that offer, he had a fiduciary responsibility to his buyer to know what he was doing, and he failed to protect his buyer. He should not have written an offer on a short sale without knowing the nuances of the short sale addendum. He let the addendum expire, and he didn't remove verbiage that essentially gave the seller the total right to kick him out of the contract by letting the bank choose the higher offer. Furthermore, short sale listing agents don't work for the buyer.
Buyers should choose short sale buyer's agents carefully as well.
AND...Then there's the latest warning from C. A. R. about violating the RESPA rules by allowing buyers to pay the $9,000 fee that junior lenders have been demanding for their release to complete a short sale.
Sell a Short Sale........Go to Prison? is my latest blog post.
http://activerain.com/blogsview/1551956/sell-a-short-sale-go-to-prison-
Great information
Elizabeth- That was always one of the other challenges with short sales- the inept buyer agents who didn't get it. The agent you refer to should shut up and sit down.
Great post I agree!
I was just going through my AR archives, and found that I missed this great post. It's so true-- too many agents take a little artistic licensce and call themselves "specialists", when in fact they have little experience. Being s specialist has to mean more than earning a designation. It has to entrail extensive reading and education on the subject, an understanding of the whole process, actual hands on experience, and a willingness to work absolutely diligently on the seller's behalf. There is so much at stake in a short sale: credit report, possible deficiency judgments, closure, and of course, their dignity. Is it really worth risking someone's dignity and long term legal and credit standing because we want to label ourselves as an expert when we are not? Not in my book. Short sales are something I specialize in, but I do not market myself as a "specialist."
Great post, and I couldn't agree more. I also started doing short sales before the market crashed, and with pretty good success. I can't say I was doing it as early as 1998 because I had just graduated high school, but I did my 1st short sale the year I entered real estate in 2002, and have been doing them ever since.
I've also closed dozens and have 40 more active right now, and I agree with you about designations. A lot of people who are "certified" have absolutely no clue what they're truly doing. Even though most agents have been educated on what short sales are, so many more are still absolutely ignorant of the process.
As with anything, I know the learning curve is different for everyone, but if you're at the beginning of the curve you should do everyone a favor and stay away from the term "specialist." Thanks for the post!