By Douglas Katz – 09/14/2023
With over two decades of experience in the lending industry, I have done worn a lot of different hats and done most type of residential lending deals out there. This involved specialization when necessary and one group of borrowers that I became enamored with was that of divorcing clients. In a job that can sometimes be too heavily driven by the need for sales volume and profitability, it was an unmatched opportunity to really help people at one of if not the toughest point in their lives. This drove me to dedicate significant portion of my career to helping divorcing couples navigate these critical housing decisions. However, the way I provide support has evolved over time, and I want to share why I transitioned from divorce lending with some advisory to a dedicated professional services model that provides the best possible divorce housing advisory and support.
The High Stakes and Lengthy Timelines of Divorce
Divorce proceedings can vary in duration, spanning from a few months to several years. This can mean hours and hours of work in support of these clients in activities that range from helping wordsmith the real estate portion of a marriage settlement agreement to best align with loan guidelines to running large numbers of scenarios to fully flesh out the options and help during negotiation.
In the past, I offered divorce advisory services to clients in preparation for a mortgage transaction. However, due to regulatory restrictions, I could only get paid when and if a deal actually occurred which meant until that time, the hours and hours of work were essentially pre-sales support to win the deal. Since time is finite, this also meant that the support cannibalized efforts seeking out and working with clients for whom a deal is more likely. So you can see how the traditional model posed a significant challenge because, in many cases, deals didn’t materialize, leaving me with unpaid hours of hard work regardless of the value that I provided them.
It is important to remember that during this time, divorcing couples face numerous critical decisions regarding their housing arrangements. They need quality divorce housing support and their needs are great. Unlike other lending situations that fit neatly into a real estate box, divorce comes with exceptionally high stakes, both emotionally and financially. They need the support, so it’s a process that cannot be taken lightly or addressed casually. It cannot and should not be an additional duty or add-on.
The Limitations of Providing Free Advice
It is even worse for clients with non-viable for mortgage transactions. Like any lender whose job is to write loans, I could only provide some basic advisory help with a heavy time limitation. This was not due to lack of desire to help, but good intentions do not pay the bills and since I had no way to recoup my time investment, I could not provide what they need. This might sound harsh, but as a lender, my primary role is to facilitate successful transactions, not offer endless free support. In fact, the business objectives of companies for whom I worked would preclude my ability to devote time in this manner. They hired me to originate loans, not consult.
Even when a deal was on the table, there was no guarantee that the client would ultimately choose me as their lender. External factors such as the influence of friends, family, or the other spouse could interfere with the client’s decision. Sometimes, despite my stellar performance, clients were pushed to select a different lender, causing me to miss out on compensation. I was always amazed at the times when the “forgotten” friend or family member who happens to be a lender enters the picture at the finish line once the client is fully prepared for the deal and the hard part is done. I even had multiple times when one spouse would demand the use of their lender as a condition of agreement to a scenario that I consulted on. None of these were vindictive, but the nature of divorce is unpredictable and sometimes it is just because a different lender represents closure from the one who was associated with the divorce process.
Sometimes even when I did exceptionally well as a consultant, my skill as a divorce housing professional cost me the deal as the lender. I once had a client who was prepared to use my services and was approved for a loan. However, as we explored their unique circumstances, it became clear that a nesting solution—where they shared the home through rotational occupancy and the children did not bounce from parent to parent—was the best option for the client’s specific needs. While I suggested this optimal solution, it came at a cost of thousands of dollars in lost compensation. This scenario vividly illustrates how many situations in divorce housing advisory can result in no pay, making all the hours spent seem like sunk costs.
The Shift to a Paid Advisory Model
Realizing the imbalance between my generosity and the need to sustain my business, I decided to shift to a paid advisory model. This shift aimed to address the needs of divorcing couples more comprehensively. It allowed me to provide neutral, objective advice, free from the pressure of securing a mortgage deal. It also offers huge benefits for the clients that hire me.
- Neutral Objective Advice: Without the need for a deal, I can focus entirely on providing unbiased advice and the best solutions. I can even assist clients in selecting the most suitable lender and collaborate with them to serve their best interests. My neutrality allows me to mediate housing resolutions effectively.
- Proper Focus: In the advisory role, my sole mission is to offer the best advice and support. I am as committed to the effort as other divorce professionals because I am one. As The Divorce Housing Pro, my focus is on providing housing and lending knowledge, not just lending support. This shift ensures that compensation aligns with the job.
- Optimizing the Advisory Process: With my time no longer tied up in transactional lending efforts for non-divorcing clients, I can devote more resources to refining my advisory practice. This approach allows me to offer holistic advice that goes beyond the lending aspect.
Conclusion: The Value of Paid Advisory Services
The shift from offering free advice to charging for advisory services benefits both divorcing couples and professionals like me. Free advice often comes with hidden costs, such as unfavorable outcomes and missed opportunities. It’s essential to recognize the value of expert guidance and the role it plays in ensuring a smooth transition into post-divorce life.
Many individuals may initially seek free advice, but they may discover that the benefits of paid advisory services, such as those offered by The Divorce Housing Pro, far outweigh the potential pitfalls of going it alone. By investing in professional guidance, divorcing couples can make informed decisions that set them on the path to a more secure and stable future.
In a world where the stakes are high and the path to resolution is often complex, paying for expert advice can be a wise investment in one’s post-divorce well-being.