So Many Behind In Mortgages ..

In response to the overwhelming amount of requests for marketing and collateral materials for our clients for short sales and foreclosure properties I began to a little deep digging into what is clearly one of the fastest growing segments and designation in the real estate industry of all times.

What did I learn? Most surprisingly, that the current national average statistic is that one in seven homeowners are not currently paying their mortgage. One in seven! What wasn’t surprising to me after more than twenty years in this business is the how so many talented real estate professionals are rising up with a passion to help protect and serve these distressed property owners with a unparalleled compassion.

To learn more about why so many agents are stepping up and stepping into this often challenging, but from what I’ve learned, altogether rewarding niche market, I tapped Alex Charfen, CEO of CDPE, or the Certified Distressed Property Expert program, a designation that has grown to 15,000 agents in just 23 months. I also enlisted the insight of Stacy Spickes of ShortSalesSolutions.biz, an industry expert who, along with her husband Michael, produce training programs across the nation. Look for their new Lifetime Television Series, piloting soon called Solutions for Homeowners Facing Foreclosure.

It was interesting to note that both Alex and Stacy share similar stories. Both fell into the business of short sales with spouses by their sides, as a need to better care for customers who were in need and a way to meet the demands and challenges of a declining market. Alex and his wife introduced CDPE less than two years ago and are currently seeing the demand grow weekly for additional training, tools and practical advice for agents eager to acquire the skills they need to work in this niche.

Stacy and her husband come from the Austin area which, of course, saw the technology boom – and later bust, and grew their training program from that experience of being in the trenches trying to help facilitate options for so many of their clients that found themselves upside down on their mortgages. I asked them both a series of questions to see if I could get some common perspectives to share with agents interested in jumping into this complicated market segment. Here is an excerpt of our conversations:

Question: Why do you believe that mastering the right training and tools are so critical when working with distressed homeowners in today’s market?

Alex Charfen: What we’ve found was that there were a lot of real estate agents out there working without a net or without prior training and skills. What they have to come to realize is that we’re no longer just talking about helping people buy and sell property; we’re dealing with their financial future of these consumers. Agents have to understand that the rules keep changing, and that there are right and wrong ways to help. Even the most well-intentioned agent, if they’re not properly trained can give the wrong message or advice to a consumer and cause long-term financial hurt.

I just read that Bank of America alone is taking 100,000 phone calls a day from homeowners in distress. That tells us that the bandwidth is just too constrained for these lenders to push all the paperwork through. That’s why agents have to really be on their game, and know how to put together the right packages for the right lenders to increase the success rate, not only for themselves, but certainly for that homeowner.

I’ll give you some stats from a survey we did of 9,000 of our CDPE experts. We tracked the time it took to process a short sale before training at 54 days, and after 27 days. That’s a 50% reduction in time it takes to get a short sale approved – and it’s all because you know the language necessary to get it through the lender. It’s no magic bullet – but understanding the process, what the lender is looking for and the language that needs to be spoken.

Stacy Spickes: First of all, these are very specialized transactions. In fact, what we found nationwide when we started developing our training was that the closing ratio for short sales was averaging less than 20%. That’s where you were hearing, and still hear, those horror stories of people still sitting on short sales for 15-18 months. The agents that go through our training program average an 89-91% closing ratio.

Now, we always say there’s nothing magic about it, but what closes that gap and makes that possible is that we know the kind of information a REALTOR needs to know to get the deal closed. I mean there are a lot of agents out there taking these listings and just don’t know what they don’t know. Their hearts are in the right place – they want to help – but unfortunately a lot of people are finding themselves in foreclosure at the hands of a REALTOR who just didn’t know what they didn’t know.

In our programs, we focus on the practical nuts and bolts substantive information agents must have to get the transaction closed and help save that homeowner from foreclosure. Components such as “Short Sale Math,” which is where we show them how to calculate exactly what the lenders have to net on each short sale so they know ahead of time and don’t submit packages that contribute to an already log-jammed system. It’s also important to make sure they itemized checklists so they don’t submit incomplete packages that are certain to sit in limbo indefinitely.

Question: How are your students finding their short sale prospects or better yet, how are these distressed consumers finding them in time?

Alex Charfen: One in seven homeowners are currently not making their mortgage payments, so there are plenty of them out there, it’s a matter of spreading the word and letting people know that there is help. More often than not, consumers don’t even realize that there are very real options available to them, and the fear and anxiety of the situation take over.

Many of our students use direct mail, which has been very effective, and advertising in both newspaper and the community newsletters that you see. Our best advice to agents is to tell them that they absolutely must engage with the people they know. We tell them to talk to their sphere. Let them know that you can help with distressed properties. Plus when you start with your sphere, there is already a built-in trust factor, and that’s critical when you’re talking about people in this situation. Postcards, calls, ads, homeowner seminars are all effective ways of communicating. Even if that person isn’t in trouble, chances are, they know someone who is and it’s a great comfort to know that someone has the ability to help.

When you understand that 70% of the people who lose their home to foreclosure are never listed with an agent you realize that there are just a lot of people who need a lot of answers and not getting them.

Stacy Spickes: Well, in so many regions where of the country you’ll find 50% of the listings are short sales just because they were the hardest hit markets. In other areas, we’re finding new agents are spinning some of their marketing such as utilizing direct mail postcards and choosing neighborhoods that have a higher turnover than normal.

Agent-to-agent referrals are big as well which certainly wasn’t the case three or four years ago, so it’s a reflection of the industry really coming together, which is great to see. It’s a realization by agents ill equipped to deal with the ramifications of giving the wrong advice now aligning themselves with other agents with those who can better handle them and serve the consumer. Two years ago we’d see agents with zero experience trying to put these together with sometimes devastating results for the seller. Now, in the last 18 months we are really seeing agents rise to the occasion and create a powerful referral network.

It’s really not hard to find them, what’s really important is to help them find you so that you can be the advocate they need.

Question: What’s your best advice for agents considering becoming a short sale specialist or Certified Distressed Property Expert?

Alex Charfen: My advice is that you must. When you look at what’s going on in this country, more and more homeowners are not making it and this is an industry trend that is not going to go away. Our courses provide the extensive, hands-on training you need to best service the homeowner and ensure a win-win for everyone involved.

Stacy Spickes: I think 2010 will see a significant emergence of agents who will have to choose this field to survive. Those agents who used to believe this will go away will no longer be able support that belief. I believe that of the now less than 1.4 million REALTORS out there, I would be very surprised if we didn’t see at least 5-10% choose this niche and those that will make it, will do so because they got the training and tools they need to do the best possible job for their customers.

Many thanks to both Alex and Stacy for their insight, ideas and expertise! If you want to learn more about how to become an expert in this growing field and how you can help those one in seven homeowners who need you, I invite you to visit their websites today at www.CDPE.com and www.ShortSaleSolutions.biz. Alex can be reached at 800-482-0335 and Stacy at 888-699-9222.


Published on Monday, January 4, 2010, 7:13 AM Last Update: 2 month(s) ago by Julie Escobar
Category: All Articles » REO's and Foreclosures