RISMEDIA, June 2009-RISMedia’s 4th Annual Power Broker Forum at NAR Midyear began with a question for the more than 400 real estate professionals in attendance: “Are we an industry that influences decision-making and consumer behavior?”
Posed by Allan Dalton, president of RISMedia’s Top 5 in Real Estate Network®, the question underscored Dalton’s belief that real estate professionals must become thought leaders and problem solvers in order to correct the current distressed property marketplace that is gravely impacting both the housing market and the economy at large.
RISMedia President and CEO John Featherston set the stage for the Forum, entitled “Maximizing Distressed Property Business,” with the most recent statistics: a foreclosure rate that is 46% higher than a year ago.
“Working with homeowners and buyers in distressed property situations will be a significant part of every broker and agent’s business for the foreseeable future,” said Featherston. “We must be prepared to address this segment of the market in order to help homeowners confronted with this hardship and restore the overall health of our industry.”
Forum Draws Standing Room-Only Crowd
The timely topic drew an audience of more than 400 real estate professionals on May 14, 2009, during the Midyear Conference. Panelists at the Forum were: Featherston, co-moderator; Dalton, co-moderator; Rich Sharga, senior vice president of marketing, RealtyTrac; Rei Mesa, president and COO, Prudential Florida Realty; Steve Piccirilli, assistant vice president, Default and Retention Operations for Wells Fargo; Tami Bonnell, president of U.S. Operations for Exit Realty Corp.; and Ken Baris, president of Jordan Baris Realtors.
Sharga started the panel discussion with the most recent statistics surrounding the foreclosure market. According to Sharga, the real estate market will be a “buyer-driven market for the foreseeable future,” with 30% of the market representing investors. This presents real estate professionals with a unique opportunity.
“Sixty-five percent of homeowners in foreclosure don’t know they have options,” said Sharga, “and 50-60% of buyers are looking for a foreclosure. Prices are being kept artificially low because of all the foreclosures. Now is the time to find a way to help buyers with what you do.”
Sharga also added that just-breaking (at press time) government policies supporting short sales-including cash incentives and stricter process timelines-will make short sales an even more lucrative option for distressed homeowners and those real estate professionals who serve them.
While distressed properties represent opportunity for many real estate professionals, not every agent is properly prepared to effectively handle this type of business, and brokers must be involved. Mesa issued a warning to brokers in attendance at the Forum: “Brokers are not in the center of the short sale and REO transaction,” he explained. “Agents are going directly to the asset managements companies; agents need to know they can’t do that.”
He also advised that foreclosure sales are not for every agent and should be embarked upon only by those real estate professionals with the necessary knowledge and skills, however, “Having an REO buyer’s agent is an idea whose time has come,” said Mesa.
Piccirilli agreed. While understanding that “someone is always moving our cheese,” he also believes it takes a special breed of real estate professional to pursue distressed property sales.
“You have to be able to knock on doors and talk to people about something unpleasant,” said Piccirilli. “We’re not selling foreclosures or REOs-we’re selling homes.”
Piccirilli emphasized that the most important goal from the lender side currently is to shorten the timelines involved in short sale and foreclosure transactions.
Elevating the Human Factor
Discussing the risks involved in distressed property transactions, Bonnell advised real estate professionals to take on the role of information provider.
“We have to be careful that we’re not telling distressed property owners what to do, but giving them enough information so that they can make the best decision,” she explained. “I believe these consumers aren’t coming to us because we’re not giving them what the want…information.”
The shaky state of the housing market and the economy makes this a critical time for real estate professionals to play a positive role, said Bonnell. “The unknown is making this country volatile; people are looking for certainty in uncertain times.”
Baris echoed Bonnell’s sentiment. “Show me a distressed property and I’ll show you a distressed person. We’re in this business because we like to help people. We have to have empathy-empathy goes a long way.”
Baris also advised that real estate professionals working in distressed properties build strong relationships with asset managers. “Great asset managers move up and then have people under them who can move the business along.”
Solving the distressed property dilemma in our country will take time, as will the rebound of the real estate industry, panelists agreed. But proactive and positive steps taken by real estate leaders could shorten that window.
The message must be, said Baris, “If you are looking to upgrade to a more expensive property, buy now; prices are artificially low and people will follow leaders.”
“We could fix the industry if we all promised, starting today, not to take another overpriced listing,” said Mesa. “As leaders, we need to over communicate and be sincere optimists.”