Q & A with short sales expert Alex Charfen
Alex Charfen says he feels like he’s “on a mission.” After seeing what foreclosure has “done to families, done to marriages, done to relationships between parents and children,” Charfen wants to train real estate professionals to stave off as many foreclosures as possible.
Stopping one foreclosure, he claims, is enough to raise property values in a neighborhood by 9 percent. He founded the Boca Raton, Fla.-based Distressed Property Institute in January 2008, and he trains brokers around the country to deal with distressed properties, issuing trained brokers the institute’s Certified Distressed Property Expert qualification. The Real Deal caught up with Charfen to find out what he sees happening in the short sales market.
What are the qualifications needed for a short sale?
[There are] three major qualifications for a short sale: hardship, shortfall and insolvency. The [seller has] to have some kind of a financial hardship — something that has changed between today and the day they got their mortgage. Number two is [that] the bank’s going to want to see that they have some kind of monthly shortfall or that they’re going to have a financial shortfall. The other one is they want to see that the person does not have the money to pay down their mortgage.
So what are you seeing in terms of the short sales market right now?
What we see in the market is that about 12 percent of all short sales are actually closing …we’re getting numbers between 8 and 14 percent; we think it’s right around 12 percent. [Brokers who have done the Certified Distressed Property Expert training are] reporting back to us that they’re getting about 80 percent closed.
The general public opinion is that short sales are impossible and they’re not getting closed. If you have the right information with a good package and you submit it to the bank … short sales aren’t only closing, they’re closing quickly. An agent [we heard from] turned in a short sales package and had an approval in eight days.
And what about short sales in New York specifically?
New York hasn’t seen a dramatic increase in these types of deals, but [they] just started happening in the past few weeks. Recently [we did] training in White Plains, [and] they’ve seen the number of short sales double in the last six months. We know that the trend is going to be that short sales and foreclosures are only going to increase in the New York market.
What advice do you have for brokers about doing short sales in the current market?
Very few short sales are closing these days [because] agents don’t know how to qualify the homeowner. They need to understand that no deal is impossible as long as the person’s qualified.