GenXYZ Top Five: Karl Falk, Summit Mitigation Services
Air Force Academy grad applies lessons to real estate niche
Karl Falk, 37, thinks his Air Force experience has helped him in his current career, which is negotiating real estate short sales. Falk is president and CEO of Summit Mitigation Services, which helps title companies and real estate brokers handle negotiations of short sales. A short sale is a property sale in which the proceeds are not enough to cover the balance of the mortgage. It’s a preferred alternative to foreclosure, and one that involves working with others toward a goal.
"In any industry there is a wide variety of ethics and personal beliefs, and coming from the Air Force Academy there is a strong sense of ethics, and having a vision, and leading other people to believe in that vision," says Falk, who graduated from the Academy and then served in the U.S. Air Force for six years.
The "other people" are 28 contractors for SMS, who work in virtual offices nationwide, plus the title companies, listing agents and banks working to develop a solution when a property is approaching foreclosure.
"We are good at navigating the jungle," Falk says. "We are very good at getting to the real core of the issues and creating a transaction."
Some of the issues center on the disagreement of how much a property is worth. Certain lenders, Falk says diplomatically, are more difficult than others. Other times the borrower has taken out several loans, making the process more complex.
Every short sale is different. To help predict the degree of difficulty of a short sale process, Falk developed a mobile app, MyShortSaleScore. The tool gives real estate professionals the ability to predict the amount of difficulty of a short sale transaction, and also allows the user to manage the short sale business wirelessly via the cloud.
Falk initially designed the app as an internal tool to help determine whether to assign a short sale to a new negotiator, or to one who is more experienced. The team looked at 2,000 short sale transactions and came up with criteria that predicts the short sale’s difficulty. "Not every short sale is created equal," Falk explains. "There are some that are very hard to negotiate, and some are very rudimentary."
SMS was launched in 2010. Business has grown, and the company has a high average closing ratio. "Karl and his team close well over 80 percent of the short sales they negotiate, significantly higher than the national average of less than 50 percent," says Jessica Henley, a friend and public relations professional. "More home closings mean less homes going into foreclosure, which is a win-win situation for everyone: Realtors, buyers, sellers and the entire Colorado economy."
Falk wants others to learn more about short sales and other real estate details. He is a policy adviser to the Distressed Property Coalition, a Washington, D.C.-based organization that worked with the Federal Housing Finance Agency to develop new guidelines for the short sale market. The new guidelines, which will take effect November 1, are designed to provide clarity to borrowers and servicers on the complexities of short sales that have a pending foreclosure or auction date.
Falk, who lives in Monument, volunteers with Pikes Peak Boy Scouts Council. He also works with Homes for Heroes, a program that provides veterans with real estate education and reduced rates to help them with the transactions related to the purchase of their homes.
Falk hopes to have about 40 negotiators by the end of the year. "Someone said we are a lighthouse in the short sale market," he says. "There is so much information out there about short sales, and some
of it is misleading. We are able to cut through all of that to help people."