Having friends is good.
This topic is talked about all the time – the value of any relationship. Whether it’s our clients, our agent friends, our vendors, or the people we “meet” online, there is a value to having them. If there’s no value, then perhaps they shouldn’t be our friends – real or perceived. I got to thinking about how I value the different people in my life on two separate unrelated cases in the past few weeks. Who are my friends? Are my clients my friends? Are my online friends really my friends?
The true value in any relationship is care. Caring about the other person on some level that creates an interest, a desire to know more, and a connection between the two people that for one reason or another gives them both returns, whatever they might be. I might be friends with one person for different reasons than another, but having a relationship with that person provides me (and them) with something.
Many of you are my online friends. We talk, we joke, we ask questions of each other. I’ve known some of you for almost a year now (my first article on AgentGenius, “Will the real Matt Stigliano please stand up?” was written on September 22, 2008) and many of you have become great friends to me. Kim Wood is one such friend. I knew we were friends long ago, but recently I realized just how much our friendship meant. Kim was feeling a little sick and went to the hospital, when I heard the news, I was worried. How can I worry about someone I never met?
I think many of us can attest to the care we feel for our online friends. The relationship is real. It’s discussed constantly in real estate circles, but I know it for a fact. I worried about Kim until I received more news that she was doing better. I sent her a card, one which didn’t make it to her. I sent it again and it made it finally. She had sent me a note on Twitter that said “I’m sure it will show up just when I need it.” It did and I was thrilled.
Kim and I had a secret competition in writing here at AgentGenius. We both posted on the same day (Wednesdays – yes this is a day late!) and would try to beat each other to get our article in before the other. Although the competition was about who was first, it was really more than that. I love her writing, so knowing that I was in direct “competition” with her for eyeballs made me push myself to write better posts. I miss having Kim’s posts here every week to compare my own to. She’s getting better, but I still miss that friendly competition – even though there was no prize other than bragging rights. Get better Kim, I need you back!
I’ve had a busy week of closing and phone calls have been non-stop daily trying to wrap up the final details and get things done. Yesterday, I called my client – we’ll call her Sue (which is funny, because I don’t think she should be named Sue at all, just doesn’t fit her for some reason). I needed to get a few details from her to expedite the closing process and when I called, I was met with a newsflash. Seems my client was having some heart trouble. Feeling palpitations that scared her to death. I forgot why I even called her. Sue and I spoke for about 20 minutes and I didn’t even think to ask her the questions I had called her about. She’s been an awesome client since the day I met her and I was genuinely worried for her. I wanted her to be better. I didn’t care much about talking shop with her. I had a job to do, but it could wait while we discussed what was going on in her life.
Sue’s okay, I spoke with her last night. They’re doing the usual tests and such. She sounds great and she wanted to talk business. I was there at 9 PM (which isn’t all that late for an agent) going over facts and figures with her before the documents were sent out to her to sign (she’s now out of state). We talked for quite awhile about business and life. She gets excited when I have new clients or closings. She wants me to succeed and is always boosting my confidence.
By forming relationships with both of these people, I have benefited. I gained confidence, fun, knowledge, and plain ‘ol good feelings. When they are down (but not out!), I am there with them – rooting them on to a successful recovery. Hoping to speak to them soon when they’re 100%. Sending them my best thoughts and wishes, just because I took a few minutes to get to know them. When we open ourselves up to getting to know the people around us, good things come from it. Not every agent is a referral and not every client is a paycheck. They are our friends and we can receive value from those relationships that far exceeds and referral agreement or commission check we’ll ever receive.
photo courtesy of hojusaram
Disputing a property’s value in a short sale: turn a no into a go
During a short sale, there may be various obstacles, with misaligned property values ranking near the top, but it doesn’t have to be a dealbreaker!
It’s about getting your way
Were you on the debate team in high school? Were you really effective at convincing your parent or guardian to let you do things that you shouldn’t have been doing? How are your objection-handling skills? Can you flip a no into a go?
When working on short sales, there is one aspect of the process that may require those excellent negotiation or debate skills: disputing the property value. In a short sale, the short sale lender sends an appraiser or broker to the property and this individual conducts a Broker Price Opinion or an appraisal, using special forms provided by the short sale lender.
After this individual completes the Broker Price Opinion or the appraisal, he or she will return it to the short sale lender. Shortly thereafter, the short sale lender will be ready to talk about the purchase price. Will the lender accept the offer on the table or is the lender looking for more? If the lender is seeking an offer for a lot more than the one on the table, mentally prepare for the fact that you will need to conduct a value dispute.
Value Dispute Process
While each of the different short sale lenders (including Fannie Mae) has their own policies and procedures for value dispute, all these procedures have some things in common. Follow the steps below in order to conduct an effective value dispute.
- Inquire about forms. Ask your short sale lender if there are specific forms that you need to complete in order to conduct a value dispute. Obtain those forms if necessary.
- Gather information. Your goal is to convince the lender to accept the buyer’s offer, so you need to demonstrate that your offer is in line with the value of the property. Collect data that proves this point, such as reports from the MLS, Trulia, Zillow, or your local title company.
- Take photos. If there are parts of the property that are substandard and possibly were not revealed to the lender by the individual conducting the BPO, take photos of those items. Perhaps the kitchen has no flooring, or there is a 40-year old roof. Take photos to demonstrate these defects.
- Obtain bids. For any defects on the property, obtain a minimum of two bids from licensed contractors. For example, obtain two bids from roofers or structural engineers if necessary
- Write a report. Think back to high school English class if necessary. Write a short essay that references your information, photos, and bids, and explains how these items support your buyer’s value. This is not something that you whip up in five minutes. Spend time preparing a compelling appeal.
It is entirely possible that some lenders will not be particularly open-minded when it comes to valuation dispute. However, more times than not, an effective value dispute leads to short sale approval.
Short sale standoffs: how to avoid getting hit
The short sale process can feel a lot like a wild west standoff, but there are ways to come out victorious, so let’s talk about those methods:
What is a short sale standoff?
If you are a short sale listing agent, a short sale processor, or a short sale negotiator then you probably already know about the short sale standoff. That’s when you are processing a short sale with more than one lien holder and neither will agree to the terms offered by the other. Or… better yet, each one will not move any further in the short sale process until they see the short sale approval letter from the other lien holder.
Scenario #1 – You are processing a short sale with two different mortgage-servicing companies. Bank 1 employees tell you that they will proceed with the short sale, and they will offer Bank 2 a certain amount to release their lien. You call Bank 2 and tell them the good news. Unfortunately, the folks at Bank 2 want more money. If Bank 1 and Bank 2 do not agree, then you are in a standoff.
Scenario #2 – You are processing a short sale with two different mortgage-servicing companies. Bank 1 employees tell you that they cannot generate your approval letter until you present them with the approval letter from Bank 2. Bank 2 employees tell you the exact same thing. Clearly, in this situation, you are in a standoff.
How to Avoid the Standoff
If you are in the middle of a standoff, then you are likely very frustrated. You’ve gotten pretty far in the short sale process and you are likely receiving lots of pressure from all of the parties to the transaction. And, the lenders are not helping much by creating the standoff.
Here are some ideas for how to get out of the situation:
- Go back to the first lien holder and ask them if they are willing to give the second lien holder more money.
- Go to the second lien holder and tell them that the first lien holder has insisted on a maximum amount and see if they will budge.
- If no one will budge, find out why. Is this a Fannie Mae or Freddie Mac loan? If so, they have a maximum that they allow the second. And, if you alert the second of that information, they may become more compliant.
- Worst case: someone will have to pay the difference. Depending on the laws in your state, it could be the buyer, the seller, or the agents (yuck). No matter what, make sure that this contribution is disclosed to all parties and appears on the short sale settlement statement at closing.
- In Scenario #2, someone’s got to give in. Try explaining to both sides where you are and see if one will agree to generate their approval letter. If not, follow the tips provided in this Agent Genius article and take your complaint to the streets.
One thing about short sales is that the problems that arise can be difficult to resolve merely because of the number of parties involved—and all from remote locations. Imagine how much easier this would be if all parties sat at the same table and broke bread? If we all sat at the same table, then we wouldn’t need armor in order to avoid the flying bullets from the short sale standoff.
Short sale approval letters don’t arrive in the blink of an eye
Short sale approval letters may look like they’ve been obtained simply by experts, but it takes time and doesn’t just happen with luck.
Short sale approval: getting prepared, making it happen
People always ask me how it is that I obtain short sale approval letters with such ease. The truth is, that while I have more short sale processing and negotiating experience than most agents and brokers, I don’t just blink my eyes like Jeannie and make those short sale approval letters appear. I often sweat it, just like everyone else.
Despite the fact that I do not have magical powers, I do have something else on my side—education. One of the most important things than can lead to short sale success for any and all agents is education.
Experience dictates that agents that learn about the short sale process
have increased short sale closings.
Short sale education opportunities abound
There are many ways to become educated about the short sale process and make getting short sale approval letters look easy to obtain. These include:
- Classes at your local board of Realtors®
- Free short sale webinars and workshops
- The short sale or foreclosure specialist designations
As the distressed property arena grows and changes, it is important to always stay abreast of policy changes that may impact how you do your job and how you process any short sale that lands on your plate.
The most important thing to do is to read, read, read. Follow short sale specialists and those who blog about short sales on AGBeat, Google+, facebook, and twitter. Set up a Google Alert for the term ‘short sale’ and you will receive Google’s top short sale picks daily in your email inbox. Visit mortgagor websites to read up on their specific policies and procedures.
Don’t take on too much
And, when you get a call from a prospective short sale seller, make sure that you don’t bit off more than you can chew. Agents in most of America right now are clamoring for listings since we are in the midst of a listing shortage. But, if you are going to take on a short sale, be sure that it is a deal that you can close. And, if you have your doubts, why not partner up with a local agent that can mentor your and assist you in getting the job done? After all, half a commission check is better than none!
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