Crye-Leike Inc. has signed an exclusive agreement with a firm that specializes in facilitating residential short sales in a move to capture a bigger piece of that growing market.
Insight Securities Inc., dba Insight Short Sales, is a year-old firm that came to the attention of Crye-Leike's executive team after helping its brokers in Little Rock and Northwest Arkansas facilitate some deals, says Crye-Leike's Steve Brown, executive vice president and general manager, Memphis Region.
The number of short sales nationally has been largely stagnant the last few years, making up about half of all distressed sales, but Brown believes with the right education and technical assistance, short sales could be hot for the next couple of years.
Brown says an informal polling of Crye-Leike agents found that many were turning down listings because the seller was upside down on his mortgage, that is, owed more than the appraised value of the property. That meant they were walking away from potential business because handling short sales is time consuming and can be frustrating for all parties, he adds.
"The reality is agents have not, or prefer not, to do all of that legwork," Brown says, noting that anecdotally he's heard that six in 10 agents who try to execute a short sale give up.
To fill that niche, the Memphis-based real estate company looked for an entity with short sales expertise that didn't charge customers until the sale closed.
"They get paid on performance just like a Realtor," he says.
Crye-Leike signed an exclusive deal to use Insight Short Sales in the Tennessee market. The partnership kicked off in Memphis about two months ago, Brown says. If successful, it could roll out to Crye-Leike's other markets, he says, which includes 141 offices in eight states. Residential sales for the firm in the Memphis region have dropped from $1.3 billion in 2008 to $1.23 billion in 2009, and down about 7.9 percent through November. The company has 950 agents in Memphis, down from 1,330 a year ago.
Since its founding in 2009, Insight Short Sales has facilitated about 200 short sales totaling $15 million worth of property, says co-founder and senior partner Mark Hill. In December, it closed on 14, he says.
The key to Insights' software-based approach is how many times it reaches out to lenders to keep the process moving, Hill says, with the average being 38 touches from when the short sale process starts through approval, with an average process time of 90 to 120 days.
Because the process is so laborious and avoided by the industry, Hills says homeowners are generally not aware it is an option, which is why its use has been somewhat small but is expected to grow.
Research from the National Association of Realtors shows short sales have comprised 11 percent to 18 percent of all distressed property sales in the last two years, with foreclosures about double that.
Currently, it is estimated that about 7 million homeowners are behind on mortgage payments, Brown says. If short sales can be a viable option in foreclosures, that's business for Crye-Leike, he says.
"We've got to figure out a solution for agents to take that listing," he says.
Crye-Leike Inc. GM, Memphis Region: Steve Brown Address: 6525 Quail Hollow Phone: (901) 756-8900 Website: www.crye-leike.com.
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Crye-Leike inks deal-to hike short sales - Memphis Business Journal
December 24, 2010