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Short Sales Gold Rush

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We can Teach You…

Every day in my inbox, there is someone offering to certify me to make short sales or handle REO properties for lenders nationwide who need my services, if only I get certified by the sender. Now I have been selling REO properties for the past 20 years, and I have never heard of the people offering most of these courses and certifications, but their emails assure me that there are thousands of properties just waiting for me to list as soon as I sign up for their service or complete their course.

And if REO properties are not my forte, then they offer to teach me how to identify potential short sale opportunities, and obtain a certification from them that will enable me to cut through the Gordian knot of the short sale process

Is Truth Important?

I have a Google Alert on the term ‘short sales”. One of the links that appeared was a “press release” entitled :Real Estate Agents Must Understand the Short Sales Process”. The lead paragraph of the release quotes Thomas Mitchell, Senior Vice President of RealtyU (which just happens to offer a “Short Sale Certification”) who states. “Residential real estate has so many areas of specialization that unless real estate agents take specific courses to improve their skill set it is impossible for agents to know how to best serve their clients” – Now I may not be the sharpest tool in the shed, but it seems to me that this individual just said that the real estate business is so complex that without taking his course, agents won;t know what their clients need. To me this statement is a lot broader then the headline of the article would indicate.

In the next 2 paragraphs  Mr. Mitchell then says, “With the latest flurry of Short Sales taking place throughout the country agents need to understand new terms; for example Notice of Default (NOD). This refers to a recorded document which officially starts the foreclosure process.  In most cases the lender can file an NOD on the 16th day that a borrower is late making the mortgage payment.  However, in my experience, 99.9% of the time it is filed after the borrower is 90 days late.

Not the kind of information you just casually know, says Mitchell.”

It Just Ain’t So

Now I really have a problem. The Notice of Default is something that starts the process in states that use Non-Judicial Foreclosure (unlike my the Commonwealth of Pennsylvania, my home state). And in our state, the difference between Judicial and Nonjudicial foreclosures is taught in the Real Estate Fundamentals course that all licensees in our state must take prior to taking the licensing exam and becoming a real estate agent.

I’m not sure what constitutes, “casually” knowing something – perhaps that means you weren’t formally introduced to the fact, but you can at least say “hi” to it if you pass it in the hall on your way to the library. Whatever – The point here is that while consumers might not be familiar with the foreclosure process, it is something that everyone in my state is expected to know prior to getting their real estate license. Now I think Pennsylvania is a great place to live but I do believe that many other states have similar standards for new licensees. Therefore it would seem to me that  understanding the basics of real estate finance, pledging property for the repayment of a debt, and what happens when you don’t pay that debt are pretty basic information for agents to have.

Then I have a second problem with this ad. Mr. Mitchell talks about the timing of this specific occurrence and shares with us his experience with it – except he doesn’t share with us what his experience is.  Who is this guy who wants to certify us as specialists in a specific area of our business, and makes inaccurate statements to show real estate professionals why they need to pay him for a certification? Why should we listen to him? What weight is the designation he offers us? What reliance should a consumer put on a real estate agent with that “certification”.

I don’t want to keep pointing out inconsistencies in the article, or pick on RealtyU in particular (since there are a number of other “unwarranted”designators out there) , but I do have an issue with this obvious exploitation of the confluence of several bad situations. The challenging real estate market where some agents are looking for quick fixes combined with the number of people across the country in financial trouble who are faced with a variety of situations where they might be losing their homes.

So What’s the Problem?

I know that I really concentrated on short sales here, but I don’t want to forget the REO certifications. There aren’t any that Lenders (the sellers you want to impress) recognize or care about. They want people that have actually done the job, and know the risks and issues that are part and parcel of this specialty.

 I know that schools need to make money. I know that schools like RealtyU are just looking to expand their offerings to compete with other schools for the dollars of real estate agents. And I know that if a designation grows to a point where a large number of agents want the designation, and there is a perception that it is an important designation, there can be BIG MONEY in selling the program to large national organizations, and an immediate pay day. But shouldn’t there be a requirement that such a designation have a thoroughly vetted curriculum and substantial course content?

I don’t think there are any short cuts to short sales, but I do think that a struggling agent might think this is a great way to increase their income. And I think that a scared and stressed consumer, who is told that an agent is “Certified” to solve their problem might place unwarranted confidence in such an agent and that unwarranted confidence might lead the consumers into a stressful and disappointing situation without the expertise they though was guiding them.  Just reading a recent post by Matthew Rathburn entitled Loss Mitigation Officers, Gone Wild tells the honest issues raised by the Short Sale process, and points out issues that I’m afraid this type of course will not help an agent or more importantly, the consumer avoid.

For me, I think I’ll continue to sell REO properties and negotiate short sales without getting one of these certifications. What about you?

Bill is an unusual blend of Old & New - The CEO Century 21 Advantage Gold (Philadelphia's Largest Century 21 company and BuzzBuilderz (a Social Media Marketing Company), He is a Ninja CEO, blending the Web 1 and 2.0 world together in a fashion that stretches the fabric of the universe. You can follow him on twitter @Billlublin or Facebook or LinkedIn.

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14 Comments

14 Comments

  1. Glenn fm Naples

    April 23, 2008 at 5:45 am

    Bill – I have not been in real estate as long as you, but it sure becomes quite obvious to a newbie that there is always some “magic pill” process or course that will elevate real estate agents to unparalleled success in the profession.
    The question becomes who recognizes and endorses the certification program?
    Did Mr. MItchell in his article or literature specifically mention those lenders that endorse the engaging of “certified” short sale expert?
    One last item, information about REO’s and short sales is out there, but isn’t it much easier to be spoon fed rather than research?

  2. Matthew Rathbun

    April 23, 2008 at 6:15 am

    Bill, we knew it was bound to happen. We knew that at some point, we just weren’t going to agree. So, let me start by saying that REALTYU’s presentation is self-serving in that they are making statements to sell a product. All Realtors also make statements regarding their client’s lack of knowledge as a means to sell their services.

    My broader point is that I full disagree with the premise that pre-licensing adequately covers the intricate nature of this type of representation. Largely because I spend a great deal of time sharing and meeting with educators all over the US and I’ve yet to meet anyone who feels pre-licensing is truly preparing a practitioner for ….well, practicing. Pre-licensing is more of a means to acquainting the learner with a new language. They can be conversant, but it’s not till the learner saturates themselves with this language do they become fluent.

    Following your argument that pre-licensing properly prepares someone to handle short sales properties, would mean that we could abandon all designation and post license education. After all didn’t we teach Code of Ethics when they first got in? Didn’t we teach agency when they were first licensed? Why then is ABR one the highest recommended training opportunities among Brokers? On-going and specific education is completely necessary. The market changes, new challenges arise. Frankly, the my experience from managing in the past and lecturing has been that the more “seasoned” the agent the worst their client care, habits and knowledge of current law and policy. (nothing to do with age, mind you) The newer the licensee, the more hyper-vigilant the practitioner in many cases.

    Do I think that a REALTYU Course is absolutely necessary to practice? No, but I do think some special mentoring, coaching and training is necessary. Frankly, most Brokers don’t provide time or resources for this skillset.

    I’ve recently taught a 8 hour ABR Foreclosure class to a class with many agents who had greater than 15 years experience. It turned out that my new agents, who I have been working with over the past year knew WAY more about the short sale issue than these veterans. The large number of complaints that we hear at the association level, education level and in broker meetings have to do largely with the distressed property segment and the agents who don’t know what they are doing. Maybe it’s just that Virginia is for dummies, and not lovers.

    I don’t think that we can trivialize that the difficult market we are currently enduring in Central and Northern Virginia creates some unique challenges and therefore by it’s very nature requires a higher emphasis on education.

    However, you can discount everything I say here, since I also believe that agents should have to hold specialized licenses in Commercial, Residential and Property Management and not one license to do with what they please. So, I may just be an extremist in the sense that Realtor education is far from sufficient for today’s needs. Pre-Licensing is simply not enough. In neither a Title Theory nor Lien Theory state is a Short Sale or Foreclosure a simply process, nor one that many agents have been involved in.

  3. Matthew Rathbun

    April 23, 2008 at 6:18 am

    Ok, so I wasn’t done with my rant… sorry….

    I want to be clear. I worked distressed property sales before doing to work for the Association. I learned it all the “hard” way and through trial and error, however if there is a way that I can relay those experiences to a group of students to save them and their clients some heartache, I’ll be happy to do so and happy that they are there.

    Education is critically important – we may like the venue or sales approach.

    Bil, I may have just not read your post as intended, because honestly I was surprised at your approach to this…

  4. Bill Lublin

    April 23, 2008 at 6:20 am

    Glenn- I hope you know that there really is no magic pill for anything in our business – I hate to sound like a spoil sport but our business is like the old joke

    Question: What’s the Best Way to get to Carnegie Hall?
    Answer: Practice, Practice,Practice

    Since there is no uniform process in the lending industry for adressing potential short sales, the process becomes one of experience in dealing with lenders, understanding who you’re talking to , getting to the right departments, understanding the process, etc, etc, My concern with these certifications, is they only serve IMHO to make money for the certifier, and possibly to mislead the consumer to believe that the agent who advertises this certification has some special ability to resolve their issue (and maybe to allow the agent to delude themselves into thinking that they know more then they really do).
    In terms of the REO process, I can tell you that there is no course that can do more then prepare you to learn about that process. And then you learn what to do when you enter a flea infested property, or talk to a former mortgagor about when they are vacating the property, or a hostile tenant who has to move even though they’ve paid the rent for the month , or dealing with,… Well, you get the idea – There is a universe of potential issues that aren’t going to be covered in a 3 day course (or 4 days or 5) but need you to gain practical experience before you can effectively deal with the challenges that may be thrown at you.
    And yes, it is easier to be spoon fed then to research – It is just not better or even as good.
    🙂

  5. Matthew Rathbun

    April 23, 2008 at 6:25 am

    Glenn, You’re right there is no “silver bullet” other than what YOU do with the education that is out there. We are loosing the “gate keeper” status of MLS and lockboxes, so all we’re left with is knowledge, wisdom and it’s application for the benefit of the consumer.

    The designation is not going to help you, but the information training will – it’s you’re call.

    As far as who recognizes and endorses the designation…. NAR only endorses what they make money off of. It’s all in how you use the little letters after your name with client interaction. There are numbers out there that relate to the clients level of appreciation for the agents training; but the agent needs to be able to get in the door first – then show the relationship of the education. I don’t know of anyone who got a listing because of the letters after their names. I’ve never had a consumer ask me who sponsors or approves the designations.

    Consumers rarely care… until you show them why it’s important to them.

    (geez, you’d think with all my comments I would get 25 points or something…)

  6. Bill Lublin

    April 23, 2008 at 6:54 am

    Matthew, Matthew, Matthew –
    You’re right – You didn’t read it correctly , Probably my fault for not writing it correctly 🙂

    But at the same time (see the whole Ying AND Yang thing here?) you are wrong – We don’t disagree yet – I just obviously didn’t make the point I was trying to make.

    Following your argument that pre-licensing properly prepares someone to handle short sales properties, would mean that we could abandon all designation and post license education.

    I am not saying that someone is prepared to do short sales when they receive their license. Like you, I realize that there is much much more education that is required. And I’m not suprised that a new agent working with you or taking a course from you knows lots more then an older agent with no practical experience in the arena of negotiating for a potential short sale.

    My point about the definition was that there were inaccuracies in the press release made by the company that was going to “show the agent they way to succeed in short sales”, which indicates to me that they are not the appropriate people to offer that sort of course. After all, if they can’t communicate the issue properly in a press release where they all the time in the world to think about what they want to be quoted as saying, maybe they don’t understand the process as well as they would have you believe they do.

    I’ve recently taught a 8 hour ABR Foreclosure class to a class with many agents who had greater than 15 years experience. It turned out that my new agents, who I have been working with over the past year knew WAY more about the short sale issue than these veterans. The large number of complaints that we hear at the association level, education level and in broker meetings have to do largely with the distressed property segment and the agents who don’t know what they are doing.

    Once again we agree – potential short sales and REOs are areas requiring substantial research, education, and experience. I just want that to be good education – not some specious certification. You and I have both earned that experience, and I would be more comfortable with an agent working through a potential short sale after he spoke with you on the phone about a specific case then if he tried to work the transaction after taking a course like this. And I agree that some appropriate courses are needed and if they don’t exist, should be developed and offered, but (IMHO) an ABR course (with a well qualified instructor) covering this as part of what a buyer agent should know, or a CRS course (with a well qualified instructor) as preparation for a seller’s agent, or even a general course (with a well qualified instructor) introducing agents to the process is not the same to me as “selling” a new certification which purports to impart an expertise that I don’t believe is acquired solely in the class room. THAT was the point I succeeded in not making.

    I still don’t get where this instructor gets to be the expert (except they say he is in their video) – And maybe he is, but I didn’t see that as the thrust of the publicity pieces here. What I saw did not indicate to me that these people had your background or mine (or that of many other experienced and competent practitioners) nor that they were saying ,”The is a tough process and we can teach you the basics to go and have a handle on where you begin the process” , What I saw as their point was that they could see you a magic pill. I think we would both agree that such a magic pill (or magic bean) does not exist (though if one did I would trade my cow for it willingly). I think your 8 hours probably had more substance then their whole course (based solely upon their ads and videos) but even so I’m not sure you would feel comfortable in certifying your students as “Short Sale Specialists” after that one 8 hour course-

    So I hope that once again , we stand should to shoulder in the cause of “get these people trained and educated now and continually” –
    🙂

  7. Bill Lublin

    April 23, 2008 at 6:57 am

    Matthew:
    Enclosed please find 25 points redeemable for a drink, ice cream, or the confection of your choice in DC at the Mid Year Meetings

  8. Teresa Boardman

    April 23, 2008 at 7:01 am

    My first short sale was a challenge. I ended up calling an agent friend of mine who specializes in them. I would tell her what I was doing or what I thought I should do and ask her if I was serving my client correctly. Not sure I could have done it without her. I have some experience at it now but I don’t like working with the banks so I refer the business to the friend who helped me. She has an entire team the works almost exclusively with foreclosures and short sales. her job consists of negotiating and working with banks, that is all she does now.

  9. Matthew Rathbun

    April 23, 2008 at 7:09 am

    Ok, Ying and Yang, followed by my free ice cream, got me laughing in my office like an idiot…..

    Ok, it all become more clear to me now, I obviously fixated on the few issues and looked over the marketing of the course.

    One of the qualities I like most about many designations is that they require proof of production in that area, before you’re qualified as a “specialist”. In this case, you can’t be a specialist, unless you have actually proven that you learned something in the class….

    It’s hard to promote education. Most agents will only take it, if they think that it will make them money. Very few will take it because they need to or it will help them in the long run.

    Tough sell…

  10. Glenn fm Naples

    April 23, 2008 at 8:09 am

    Bill – I hope my comment about the “magic pill” formula was not taken incorrectly. What I had hoped to express was there is no easy way to make money in real estate – it takes work, educating ones self, and experience. Further the point I was making is that real estate agents or anyone for that fact needs to work at being successful, it just does not happen, we have to create opportunities.

    Wasn’t it Edison that said “99% perspiration and 1% inspiration”?

    Sometimes these “magic pills” remind me of the late night info commercials – just bugs me.

  11. Jay Thompson

    April 23, 2008 at 2:13 pm

    Do I need a “designation” to do short sales?

    No.

    Do I need experience?

    To quote my dear Grandma, Yer darn tootin’.

    Of course that presents the “chicken and the egg” conundrum. How do you get the experience while still properly representing your client? Do you “practice” on some poor soul, hoping it all works out?

    Education is the answer. But that education can come in a variety of flavors. Seminars, books, research, mentoring with a more experienced agent or broker, etc.. I’ve seen an abundance of “short sale seminars” cropping up of late. They range from outstanding to worthless. Often you don’t know where in there it falls until you attend.

    Personally, I love haggling with the loss mitigation guys. Many would rather slit their wrists (and I’ve come close to doing just that on occasion). Short sales are not for everyone, just as land sales aren’t or commercial, luxury, first-time buyers, whatever. No single agent is the be-all-to-end-all agent for every type of transaction. Those that think they are are fooling themselves and quite likely poised to hurt a client.

    But I don’t think I need any particular “alphabet soup” after my name, or some shiny certificate suitable for framing to gain the real-life practical education and experience needed to help a client through a particular type of transaction.

  12. Bill Lublin

    April 24, 2008 at 12:32 pm

    Jay –

    Do I need a “designation” to do short sales?

    No.

    Do I need experience?

    To quote my dear Grandma, Yer darn tootin’.

    You had a smart Grandma 🙂

    No single agent is the be-all-to-end-all agent for every type of transaction. Those that think they are are fooling themselves and quite likely poised to hurt a client.

    And she had a smart grandson!

  13. Erie PA

    September 4, 2008 at 8:35 pm

    My wife does only short sales. Were we live in Pennsylvania there is a lot of business. I can tell it is very hard on her. She is a caring person and does her best to protect the selling party. Some nights she is very upset not b/c of the deal but b/c she feels for the people. I lost my job about six months ago so we have been considering a short sale for ourseleves. I wish all parties involded the best of luck.

  14. Bill Lublin

    September 5, 2008 at 3:06 am

    I understand your concern and sympathize with your current situation. Just one tip when you try to negotiate your short sale. Freddie Mac has takena very strong position with the lenders they work with regarding short sales. Ask your lender in your loan is a Freddie Mac loan. If so, they may be a little more flexible in negotiating your potential short sale.

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