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This Too Shall Pass…

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One of the realities of life is impermanence. And yet, people act as if their current state of circumstances will never change, when of course, they inevitably do.

Sadly, you can find stories of suicide in any local paper – people overwhelmed by their current set of financial circumstances…or bullying at school….or their loss of love.  But as we all know, financial fortunes can change seemingly overnight, high school bullies fade into a memory, and you meet your love in a coffee shop on a normal random morning.

The Economic Change

As our economy changed over the last couple of years, many of us have struggled with this reality of impermanence.  Our burgeoning home equity, our expanding 401k’s, our profitable and growing business felt so  good.  And while we know intellectually that all economies have a curve, and that we were likely at the top of that curve, many of us believed that it would be the ‘soft landing’ that was mentioned by economists at CAR, the financial world, and even leading government.

I’m not speaking for everyone.  Some moved their investments to commodities or cash.  Some sold their real estate investments and rented.  Some planned for the downturn in their real estate practices.  But from what I’m seeing locally – that’s unfortunately a significant minority of the population.

Lessons From My Youth

One of the early lessons of impermanence came from my father via his after dinner lectures.  He used to say to me that nothing was guaranteed in a marriage.  One might divorce, one might be an early widow and it was my responsibility to own some ability to care for myself.  Hence, my real estate career.

Fortunately, I married a man I adore.  And yet, my father was right in some ways; you never know when circumstances may change.  I did anticipate a downturn in my residential real estate business.  What I didn’t plan for was the news we got last January – my husband, in commercial development and construction, was laid off.  The check that simply appeared in our bank account every two weeks over the past 6 years felt…well….permanent.  My real estate business immediately took on an entirely new level of importance in our home.

Let’s Look at Your Business

My reason for bringing this to your attention is that while circumstances do change, we often do not change our desire for a sense of permanence.  Many of us simply go into another set of circumstances believing THIS is the new forever.  So let’s examine how this in your business.

Your Business Before The Changing Market

  1. Did you find that you were too heavily focused on one sector of the market – FSBO’s, first time buyers, or ‘B’ paper loans – that diminished or simply went away?
  2. Did you find that you have been too reliant on one form of marketing – newspaper ads, real estate magazines, expensive farming methods – that were no longer as effective?
  3. Did you create enough of a safety net for a shift in economic conditions?

What Have You Learned

The bigger questions are really about what you have learned.  Are you allowing yourself to believe that THIS set of circumstances is permanent OR are you making the long term plan for the next change?

  1. Do you have systems that are diverse?  If you are having success as an REO agent, an ‘expired listing specialist’, or a ‘short sale specialist’, are you still working your other systems?
  2. Have you thought about the areas of expansion that you can capitalize on when the market begins to recover, such as FSBO’s or farming?
  3. Most importantly, if one of your most profitable systems went away tomorrow – could you still sustain your business and your life?

The Sphere of Influence Caution

If you are thinking, ‘Most of my business is from my sphere of influence; I don’t have to worry,’ – be careful.  I’ve seen it with colleagues – the dissolution of a marriage, a disagreement with a friend that is a ‘connector’, can change a social situation overnight.  Again, even a business heavy with sphere of influence revenue, should not be considered ‘permanent’.

The Moral

I wonder if we fool ourselves into believing our current state is permanent – if only to believe that WE are permanent.  At it’s core, it’s a denial of our mortality….but I realize I’m getting a bit too deep here.

The Moral – just check your damn systems people!  Be  diverse.  Be flexible.  Live in the now – just don’t be married to it.

Linsey Planeta is the Broker Owner of Belterra Fine Homes in Orange County, California. Linsey rants regularly on her blog, OC Real Estate Voice. She also provides sellers with tips on how to get their home sold on Why Didn't My Home Sell? She has been an active Real Estate Coach and Instructor and loves working with agents so that they may look at their business with fresh eyes, renewed purpose, and defined systems. Linsey can be found in her office or you can also find her on Twitter@Linsey.

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25 Comments

25 Comments

  1. LesleyLambert

    June 9, 2009 at 11:52 am

    I learned these lessons from my mother who was my first broker. If you are going to stay in this business more than “one season” you need to learn how to diversify and roll with the changing tides!

  2. Matt Stigliano

    June 9, 2009 at 11:59 am

    Linsey – This is a great reminder for anyone – real estate or otherwise. I too thought magical things happened when my bank account always expanded every few months thanks to ever increasing record sales. I was making a bigger fortune each and every year. In that time, we began thinking about a new record. Then the lawsuits started to pile up. They were all frivolous, but they were all serious. We had to fight them. We won some, we lost some. Insurance carrier dropped us. We couldn’t find new insurance. When we finally did it came at a price and with so many restrictions that we had to change our entire stage show – what made us famous in the first place. All that took its toll as we got around to recording.

    The process began to drag on and we wound up taking nearly five years to finish the record and get it released. Not all of those five years were spent recording and mixing though, most of it was spent fighting for copyrights, lawsuits, mistakes made by record companies (forgetting to get clearance for two samples on the record forced the destruction of over 100,000 records and a redesign of all the artwork). It was a lot of coincidences piled up on top of each other.

    Five years passed and the paychecks got smaller and smaller. When we finally got back out on the road, we were starting from scratch. We had played arenas, but now were playing skate parks. We had to build a new.

    Those paychecks getting smaller changed everything. I had to sell my home in California and adapt my habits to match my new income. I didn’t pay enough attention fast enough and watched as my reserves kept dwindling. By the time I moved back to PA with my wife, we had little to show for the good times.

    I had mentioned to Lani the topic of my next article and after writing this comment, you’ll soon see why I’m excited to write it.

    Thanks for the reminder Linsey – it can happen to anyone in any situation, but you can prevent a lot of the fallout with consistent planning.

  3. Eric Stegemann

    June 9, 2009 at 12:04 pm

    What a great post. Being on the younger side, I too often speak to brokers and agents that feel like they can just do what they’ve been doing for the past 15 years and it will keep working. They’ll still get calls off their newspaper ads, they still think they can put an open house in there alone and people will show up. They feel that all they need to do is cold call, or knock on doors, or do whatever they did when they started.

    Let’s face it:
    * MLS Books are gone
    * Having to go to the listing brokers office to get a key is gone
    * Showing potential clients just your listings is gone

    Would you have it any other way?

    Why have agents embraced these changes (for the most part, Commercial Realtors I’m shaking my finger at you!)? But why can’t Realtors face the new realities of marketing and technology. It’s clear that an effective blogging strategy can work. It’s clear that online advertising can work. It’s clear that using Twitter, Facebook, etc can work. The problem that so many agents have with them is that they don’t dive into it the same way they used to with their SOIs and their door knocking and whatever other strategies they had. Why? Fear. It’s new, it’s different, it’s a big shift.

    Why fear it? Embrace it! Jump into it with open arms. The buyers that demand it will love you for it, and the others will appreciate your desire to keep them in front of new and better ways to buy and sell.

    Life and Business need change – without it consider how boring things would be….

  4. Matthew Rathbun

    June 9, 2009 at 12:04 pm

    Linsey,

    This is very insightful. The altering marketing and culture has really sent many agents into a tailspin. I’ve had times in my life where I was sure the “bad times” would never end and yet eventually (as you pointed out) you surround yourself with enough good people, that the few bad ones are just a memory.

    Time heals a great deal.

    However, as much change as we’re seeing; I’ve still noted that experienced and well grounded agents who have great people skills are doing well in this market – better than some of my tech-savvy friends. Some folks do have a gift for consistency in their lives. I often envy those who have steadiness in their lives…

  5. Linsey Planeta

    June 9, 2009 at 12:44 pm

    Matthew – I think you’re right. There are agents that seem to ride through these things with consistency and grace. They seem to be those that are diverse and willing to analyze ROI and make the changes. Unfortunately, too many do not.

    Eric – I agree that too many agents have their head in the sand about technology and major industry changes. Techies have to be careful too so that they don’t become married to a technology. No question – we all know how that can change.

    Matt – I’ll be watching for your next piece!! 🙂

    Lesley – Amen.

  6. Benn Rosales

    June 9, 2009 at 1:11 pm

    Linsey, I’m glad you’re seeing the brighter side and helping others who are in the same mess we’re all in, the economy has rocked many businesses around the world.

    It’s tough- I love your forward thinking!

  7. Ken Brand

    June 9, 2009 at 1:34 pm

    The only certain thing is change. As you shared, sometime good, sometime not so much. I’ve been in the biz for 30 years, some of the ups and downs have been violent, we always see how we could have seen it coming…when we look in the rear view. You’re right, it’s a wise idea to sit and think; what to change, what to be grateful for and what next.

    Thanks.

  8. Joe Loomer

    June 9, 2009 at 6:10 pm

    Your Sphere comment hit home for me – I’m retired Navy and relied heavily on my past shipmates and their referrals for business.

    Problem now is, even my past clients who purchased since 2004 bought VA – guess what – NO EQUITY.

    Good thing I know what an “Absentee Owner” is or we’d be in the tank.

    Gary Keller/Jay Papasan/Dave Jenks book – SHIFT – read it.

    Navy Chief, Navy Pride

  9. Paula Henry

    June 9, 2009 at 8:05 pm

    Linsey – This is a great reminder to not rest on our laurels and seek to find business in all areas we are qualified to work. Time changes all things and what we have been through the last few years will prepare us more adequately for the good times.

    Looking forward while also looking backward will show us the lessons we need to learn today!

  10. Bill Lublin

    June 10, 2009 at 1:46 pm

    Linsey – wonderful post – and I was oging to make a really simple yet deep comment – only to find that Ken Brand had already done it – The only constant is life is change – and if we embrace change without discarding things that work, we benefit from those changes.
    Great post – when are we doing breakfast again?

  11. Linsey Planeta

    June 10, 2009 at 1:51 pm

    Bill – thank you my friend. I do believe I saw your name on the list for REBarCampOC which is my neck of the woods. Definitely in for breakfast again if you’ve got the time while you are here. 🙂

  12. Missy Caulk

    June 11, 2009 at 9:18 pm

    Lindsey, nothing like experience speaking in a post. My husband was pinked slipped this year too. He was hired back for next year. He teaches high school.

    Change does force us to look at ourselves, our business and re-evaluate.

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Coaching

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!

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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.

  1. 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.
  2. 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.
  3. 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.
  4. 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
  5. 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.

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Coaching

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:

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short sales standoff

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.

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Coaching

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.

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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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