The Cost of Being A Short Sale Specialist
By Cindy Jones on June 25th, 2008This post strays from my usual posts geared to buyers and sellers in Northern Virginia. The information may be of interest to you as well but it is geared to other agents who may think that they have found a new niche in today’s market
I just finished reading the umpteenth blog on how real estate agents should be marketing themselves as short sale specialists in order to generate more business. As an agent who has successfully completed a few short sales and have a few more in the works it seemed this might be a good time for a reality check.
Going back over the call logs on my current short sale listings started me thinking of all of the other components connected to a short sale that an agent stepping into their first short sale may not consider.
Time spent gathering and reviewing the short sale package
Time on hold with the loss mitigation department
Time on the phone with the loss mitigation department
Time spent of the phone with the negotiator
Time spent of the phone with the appraiser/BPO agent
Time on the spent with agents answering questions
Time on the phone with buyers explaining a short sale
Time spent talking to buyer’s lenders
Time spent gathering HUD-1’s to go with offers
Time spent processing offers
Notice the list doesn’t include the normal tasks associated with a listing which are required in order to attract buyers. Those tasks need to be added on top of the time spent specifically on short sale tasks. Add on top of this the fact that lenders are notorious for slashing commissions at the end of the negotiations process and an agent working with a short sale may find that instead of making X commission they are only getting Y for all of the extra hours of work.
Considering the National Association of Realtors® shows that the average agent earns $35,000 per year, deciding to be a short sale specialist means an agent seriously needs to consider the old adage time is money. Agents, especially newer agents, who might be considering advertising themselves as a short sale specialists might first want to get out their calculators and figure out the value of their time. You may be surprised that the time it takes to finish a short sale transaction only leaves you enough to fill your car with gas and not much more.
I`m working as a realtor in West Toronto area and I think if I take the courage to advertise myself as a short sale specialist the people just won`t believe me. It`s necessary for an agent to react quickly and solve problems in short time but along with these he must make profound job as the client`s future home depends on him. It`s a great responsibility although some tend to forget it.
Very interesting. So in your experience, how much more time does it take to successfully list and close a short sale listing? Could you estimate it in terms of additional hours or in terms of X percent more time?
The lender may ask you to reduce your commission on a short sale, but a REALTOR isn’t under any obligation to do so. But I’m curious: Are you finding that this doesn’t play out in reality?
Ben,
My experience says that you need to add at least 25% to your average listing for a short sale. Whether it is the listing agent or an assistant waiting onhold or processing extra paperwork either way it is costing you money.
So far I have not had been asked to reduce my commission. Perhaps it is an urban legand?
Jill,
I have encountered some folks who I believe truely qualify as short sale specialists. It takes time and I don’t think I would recommend it for a new agent. Everyone that I see who I would consider successful has systems and assistants to handle all of the extra work.
Don’t shy away from it if you think you have everything in place to make it work for you.
[...] related news, Cindy Jones says REALTORS® should factor in 25% more time to work a short sale listing, based on her personal experience (see the comments). What’s your [...]
[...] of becoming a short sale specialist? Before you do, please read this blog post by Cindy Jones, The cost of being a Short Sale Specialist. It’s not as glamorous as you may [...]
Experiance is a painful teacher. I am working on my first with a buyer. It is going to be a nightmare, he didn’t tell me until after we submitted the offer that the sale has to close in 30 days or he loses $25K in relocation help from his new employer.
Down here in South Florida, we are seeing more and more short sale homes. I try to only handle them for my very good clients. Otherwise, I would get bogged down with them and not be able to take care of the rest of my clients and business.
Michael,
If you are lucky it can happen. I had one that went from listing to closing in 38 days. So just push and see if you can make it happen.
Riley,
I’m not sure how many we have but just like you the number is growing. I won’t accept everyone that comes along and I have one now that is bogged down for reasons that are beyond me.
You definitely need one dedicated agent!