Losing a buyer on a short sale
I attended a local Realtor® summit last week, and I had the opportunity to share thoughts and ideas with hundreds of agents and affiliates. Two affiliates that I chatted with quite a bit are employees of Equator. You remember Equator, right? That’s the online platform that is used by many lenders in order to process short sales and REOs.
My Equator friends related to me that after surveying agents throughout the nation, the largest concern with respect to short sales still appears to be the fact that the buyers lose their patience with the short sale process and walk away from the transaction midstream. As a short sale listing agent, that’s something that I personally put the kibosh on in 2008.
And, it’s not that difficult to stop a buyer from walking away. Not only that but following these easy steps will not only help you to retain buyers for your short sales but it will also help you to be the best listing agent ever.
Methods to keep the train on the rails
Here are four easy ways to avoid losing a buyer for your short sale transaction:
- Create a bulletproof addendum that the buyer must sign before the short sale package is submitted to the bank. On this addendum, outline all of the possible items that the bank may not approve as part of the short sale. Make clear that if the bank does not approve these items, the sale will still move forward. Some examples of items that may not approved include home warranty, past HOA dues, pest control, and septic pumping among other things.
- Require the buyer to deposit the earnest money NOW, and not when the short sale approval arrives. Each state may have different policies about how this might work. However, when the buyer provides the actual earnest money check to escrow (or to the broker trust account or to the title company), the buyer shows the seller that s/he is “all in”. (It also seems more likely that the buyer will not continue to shop around for other properties since s/he has a deposit in on yours.)
- Provide weekly updates to all parties. Even if not much happens during a given week of the short sale process, you should always provide a weekly written update to the buyer’s agent (and also to your sellers). Hopefully, the buyer’s agent will convey the information to the buyers. I’ve learned that buyers will appreciate the regular communication and will note that small steps towards short sale approval are being made.
- Set expectations accordingly. It’s a good idea to provide all of your buyers’ agents and buyers with a document about how you manage the short sale process for your client. In this document, discuss time frames and methods of communication. In this way, if the buyer or the buyer’s agent has not participated in a short sale before, you can be certain that both are aware that approval is not always fast and furious.
If you are among the many folks that often lose buyers on their short sales when you are in the midst of the negotiations, try following these four simple steps. You may find that the buyers will stick around, and people may call you the best short sale listing agent ever!
Real estate commissions are negotiable, no matter what any lawsuit says
(FINANCE) An anti-trust lawsuit against major players in the residential real estate industry sheds light on misinformation and misunderstandings about commissions – when you’re buying or selling a home, you’re in the driver’s seat. Negotiate!
Minnesota home seller, Christopher Moehrl, has filed an class action anti-trust lawsuit [in April], alleging a “conspiracy” to price fix broker compensation in the 2.5-3% range, naming the National Association of Realtors (NAR), Realogy, HomeServices of America, RE/MAX, and Keller Williams (with more to be named, inevitably).
The complaint intimates that by requiring brokers to offer buyer broker compensation when listing a property on the MLS, fees are “fixed” and inflated, violating anti-trust laws. In short, they believe buyer’s agents shouldn’t be paid because buyers can find their home online now.
The class action suit claims that because the seller has to pay the buyer’s agent, commissions are inflated. The truth is that although it is NAR’s rule to require compensation, it could be as little as one cent, and Associations support all compensation models (flat-fee, discount, rebates, traditional 3% per side, and even higher on luxury listings).
Let’s take a look at some of the court documents directly:
“8. Defendants’ conspiracy has kept buyer broker commissions in the 2.5 to 3.0 percent range for many years despite the diminishing role of buyer brokers.”
This point continues to outline how buyers agents are essentially useless in an era where homebuyers have direct access to listings and can find their own home online. That claim is similar to claims made by anti-Realtor bloggers in the early 2000s, and is wildly uninformed. All agents, no matter which side they represent have a fiduciary duty to their client, negotiate on their behalf, and walk them through (and oversee) a complex financial process.
Beyond that, buyer’s agents are often the person that has to inform a buyer that their dream home they found on Zillow (or other sites that use non-MLS data) actually sold several days ago, or was not real to begin with.
They’re the individuals that have to not only be educated on real estate law and contracts, lending options and processes, but be experts in a certain geographical area and be informed of architectural styles, smart home features, green home features, and so on.
The indication that a buyers agent’s sole value is to pair a homebuyer with a home is ludicrous and objectively false.
“17. In that sales transaction, Mr. Moehrl was represented by a RE/MAX franchisee, and the buyer was represented by a Keller Williams franchisee. As part of the sales transaction, Mr. Moehrl paid a total broker commission of six percent, and 2.7 percentage points of the six percentage points were paid to the buyer broker.”
It is important to note that it is not illegal to buy or sell a home without representation. It happens every day across this nation. If there was a legal requirement to hire a real estate professional, this lawsuit might have merit. But there is not.
Further, the fact that the buyer broker was only given 2.7 percent indicates that Moehrl negotiated against the supposed 3.0 percent standard the lawsuit is so aggressively fighting against.
Obviously this home seller knew he could negotiate commissions.
Not only did the Plaintiff not have to hire a Realtor, he didn’t have to allow any negotiation of the compensation, given that the buyer side earned 2.7 percent, and his own Realtor earned 3.3 percent.
“38. As required by the Buyer Broker Commission Rule, the seller broker makes a blanket, non-negotiable offer of a three percent commission to the buyer’s broker when it lists the home on the local MLS.”
The Plaintiff’s attorneys have clearly not done any homework. Compensation is required, that is factual, but there are no bylaws that dictate the amount. It can be as little as one cent. Or as high as 100%, it is all negotiable. All of it.
63. For years, buyer broker commissions have remained steady at two-and-a-half to three percent in the areas in which the Covered MLSs operate despite both an increase in home prices (increasing the dollar amount of the commission) and the diminishing role of buyer brokers described above.
NAR does not track or store broker commission data, and while brokerages individually do, they don’t uniformly or openly share that information with any competing brokers. There is no conspiracy regarding commissions.
The responsibilities of a buyer broker have actually increased over time, not diminished. Ask a broker in 1980 if they had to be well versed in modern marketing, social media strategies, analytics, paperless contract technologies, know the privacy laws regarding the collection and dissemination of information online, and so forth.
To repeatedly argue that anything other than market conditions have determined commission levels is dead wrong. In fact, some would argue that commissions on both sides of the transaction should be higher (and therefore, some brokerages offer services at higher commission levels than 3%).
The takeaway is that all commissions in real estate are negotiable, it’s not a legal requirement to hire a real estate professional when buying or selling a home, and that buyer agent responsibilities and values have actually increased over time.
Anyone in America who doesn’t like a Realtor’s services offered at a specific commission level can negotiate or hire a different Realtor – there is no conspiracy here. This lawsuit has a variety of factually inaccurate statements regarding commissions, and is laughable.
This story was first published in April of 2019.
Which generation is the most unhappy at work?
(BUSINESS) Employee engagement leads to employee productivity, and one generation appears to be more unhappy than any other…
New research shows that technology drives how and where people work. Technology has redefined work over the past two decades.
Employers have focused on retiring Baby Boomers, while creating a workplace that attracts Millennials. The study found that Generation X employees, who account for about one-third of the workforce, have been neglected.
Key study findings:
- Employees name personal finances as the main source of stress across all demographics. But Millennials and Baby Boomers are more confident in their finances than Gen X.
- Nearly half of Gen X workers report living paycheck to paycheck.
- 68 percent of Gen X workers are happy at work, compared to 75 percent of Millennials and 74 percent of Baby Boomers.
- Only 54 percent of Gen X workers feel empowered at work.
- Less than two-thirds of Gen X workers feel respected in the workplace.
- Gen X workers are the most likely generation not to retire. More Gen X workers (18 percent) say that they won’t retire, versus 12 percent of Boomers and 14 percent of Millennials.
- Only 18 percent of employers believe that creating an inclusive environment for all employees is one of their challenges.
Why should employers care that Gen X feels unappreciated?
Gen Xers are going to be in the workplace for the next 20 to 30 years. As Boomers retire, it’s up to Gen X to fill the leadership roles because of experience, education, and longevity in the workplace.
According to the Global Leadership Forecast 2018, Gen X already has over half of leadership roles, making their salaries some of the highest in the nation.
Employee satisfaction is key to employee retention and productivity.
Gen Xers have leadership skills, but there’s a disconnect between what employees want and the priorities of employers.
Employees who don’t feel valued and appreciated will not be as engaged with work as those who do. Turnover costs for upper management are much greater than entry-level employees. For those reasons, it pays to foster engagement with all generations of workers.
How companies are embracing the gig economy to fight employee burnout
(BUSINESS NEWS) The gig economy has had plenty of ups and downs, but employers are using it to advantage their teams and the gig workers. It’s a pretty interesting model we’re watching evolve…
If you’re an employer of a lot of people, it’s no secret that there are a lot of moving parts involved in the day-to-day processes of keeping the business going. You’ve got full-time employees, people earning both salary and hourly wages, part-time workers, and more than likely have used a staffing agency over the years to fill in the blanks.
Depending on your experience, some managers love working with temp agencies, while others aren’t the biggest fans. Like toppings on a hot dog, it all comes down to personal preference.
But, there’s one segment of the market that’s roaring – the gig economy.
While on the surface, it might seem simple (someone comes in and does a job and leaves), it’s a little deeper than that. Depending on the industry, there needs to be a more nuanced approach to solving how staffing issues are handled.
When you think of the gig economy, you’re probably thinking of Uber or GrubHub, but a whole world has opened up – you can get your car fixed in your driveway or hire movers to come and take boxes away. There are a lot of apps out there putting money in people’s pockets thanks to taking on tasks like food delivery but also working on a crew for a day or being hospitality staff for a corporate gig.
Many people love the gig economy because honestly, the Internet has democratized our lives so much that millions of workers would rather be their own bosses, which honestly works to the advantage of businesses as well.
First, there’s less demand for the business because if they need a specific job taken care of, they can bring in some ringers to bang out the job, collect their pay, and move on. For companies, this helps because they’re only paying a one-time fee versus keeping someone on staff and paying them annually.
The boom right now is applications connecting workers with businesses who need help.
Instead of the consumer being the end-user, the applications connect a worker with a temporary or sometimes long-term employer with a click.
And the process is simple – workers are in just as much control as the companies. The price point is established by the company and the hours and people they need, but the worker can set their skill level and availability. So, when there’s a match, everyone wins.
While some of the companies offering access into the space, provide workers with gigs for whatever length of time, some of them are even doubling down on retention, offering W-2s and full insurance for staying in the worker community so employers have a larger pool to choose from.
This model works because it incentives both parties: the worker gets to work on their terms and still receive benefits, and the company gets the staff they need for project work without the HR/taxes/risk.
Listen: That W-2 aspect is enormous. The reason being is if you’ve ever had to deal with a 1099, they’re the worst. Taking away the burden of taxes is a significant win for the worker, especially those of us who still have trouble figuring out, “should I claim one or zero?”
Because this model addresses a major staffing problem, concerning short-term help, it’s still very focused on the worker.
The aspect of flexibility is built into the fabric of the concept, considering the labor pool is what matters – you can have a bunch of open jobs, but you need qualified and motivated people to fill those roles. While this is a gig-working scenario, it’s also unique in that there’s less focus on the person performing an idealized task like delivering food, but rather jumping on a team to solve a problem or finish a job.
Basically, they’ve digitized the temporary staffing model but cut all of the ugly overhead and worker quality issues out.
They’re taking a labor market and connecting it with a consumer via an app on the iPhone. But, the consumer isn’t someone who needs a ride to the airport, it’s a company who needs help staffing a Pearl Jam concert in a stadium.
With the market evolving pretty much on the hour these days, there’s a clear through line at play – we’re seeing more and more businesses adopt gig workers, if even for the day.
It’s easier to bring someone in as a temp to help clear projects or just get things finished the regular staff is too busy to handle. One of the biggest pluses of the model is that it helps avoid employee burnout.
For a place like a hotel, if there are a bunch of small jobs that keep piling up, it’s easier to spend the cash for a day or two worth of work rather than add to an already overworked staff’s load.
It’s a new world that’s evolving every day, but with every swipe, tab, and click, we see the workforce develop in ways we could have never imagined just a few short years ago. If the future of work is now, imagining five years from now is mind-blowing.
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