NEW YORK — The short-sale market is not dying down anytime soon, and if real estate professionals hope to delve into that niche, they should educate themselves thoroughly. That was the message from two short-sale specialists who spoke at Real Estate Connect Thursday.
"We’re looking at five to eight years conservatively (of high short-sale volume)," said Holly Maloney, a certified short-sale specialist and a Realtor at Huff Realty in Cincinnati, Ohio. "It’s a market that’s going to be there. You either learn how to do it, educate yourself or work with someone who knows how to do it, otherwise you’re going to be giving business away."
Travis Waller, a certified residential specialist at RE/MAX Advantage Plus in Teaneck, N.J., expects negative equity to trigger a second wave of foreclosures "that no one is even speaking about."
More than one in five homeowners with mortgages — nearly 11 million borrowers — owed more than their homes were worth during the third quarter, according to the latest numbers from mortgage data aggregator CoreLogic.
"Until unemployment gets better, the market’s not going to get better," Waller said.
Real estate agents generally don’t go into short sales because they want to, Maloney said, "it’s just our market."
She carries about 100 to 125 listings for her market area alone and has stopped marketing because she gets so many word-of-mouth referrals, she said. It usually takes 60 to 90 days for a short sale to get approved, she added.
Maloney also co-owns a short-sale training site, Three Blondes and a Short Sale, and partners with agents across the country to handle the short-sale process for them, freeing them to do "what they do best," she said.
The National Association of Realtors’ Code of Ethics states that "Realtors shall not undertake to provide specialized professional services concerning a type of property or service that is outside their field of competence unless they engage the assistance of one who is competent on such types of property or service, or unless the facts are fully disclosed to the client."
Agents that try to do short sales without the proper knowledge can be "more harmful than helpful" to a client, Waller said.
"Many short sales are lost to foreclosure because of the inexperience of the listing agent. Sixty to 70 percent of short sales are lost to foreclosure. You’re working under the gun as a short sales agent, and if you don’t know what you’re doing the time is literally ticking away," he added.
Waller personally guarantees his clients short-sale approval in 60 days.
"It really comes down to presentation of your documents to the banks. The banks recognize who has experience and who doesn’t," he said. He generally represents sellers and carries between 15 and 25 listings in a month.
Agents should know exactly the documents to request from the seller and how many liens are on the property, he said. The latter is important because anything beyond a first lien is generally a recourse loan, which means the lender can come after a client in case of default.
Waller said he doesn’t take listings with more than two loans or if the loans come from two different banks. Any seller he takes has to sign a disclosure form that indemnifies him of liability if a home goes into foreclosure while in the short-sale process.
"Get comfortable with listings and the short-sale process. Become the expert for short sales. Most Realtors have no clue," Waller said.
Both Waller and Maloney recommend distressed property certification courses such as CDPE.com or NAR’s SFR program. They also say it’s important to keep up with market conditions and government regulations and programs.
Both also offered agents this tip: Get the e-mail address for the loss mitigation officer you’re dealing with. "It expedites the process because at that point you can start e-mailing (him or her) PDFs," instead of sending them faxes, Waller said.