Real estate has it’s own reality.
Today was a normal day. I woke up at 5:30AM, poured some coffee and fed my cats. That was the moment when my reality ended. Realty reality took over from there. It’s now 11:22PM and it still has hold over my daily life. I’m sitting at my dining room table trying to finish this post in order to have it posted by 11:59PM (I promised Lani I would get my post in today and from what I can tell, she’s into that Harry Potter black magic stuff, so I don’t want to mess with her). My eyes hurt, my feet ache, and I’m kind of tired. But the reality of realty still has its sway.
In the course of any agent’s life there are times where we have a bit of that “a-ha, could have had a V-8” style moment. Today was such a day for me. I did a lot today – multiple showings, photos for a listing, second showing for another client, finalized a contract negotiation, spoke with my client who just arrived into town, talked to multiple agents about multiple things, ate a brownie, spoke to my broker and my old broker, and somewhere in there I think I drank at least one other cup of coffee.
None of this may seem like a big deal to any of you – you do it all the time, but this entire week has been a revelation of how to cope with the reality of realty. I’ve planned, blocked time, rescheduled a few things, skipped lunch, worked late, went out of my way – all those things you’re taught to do so that you don’t wind up running around like a chicken with its head cut off. I love the ever changing nature of a day in the life of an agent, but this past week has been ridiculous (and I still love it). In it, I see patterns emerging that will allow me to better block time and prepare, but that’s not the point here (at least I see room for improvement!).
Cold harsh reality.
The facts are the facts. Plan all you want, but realty has its own reality. When you’re in your car on the way to your next appointment and a seller calls with a huge problem, what do you? You adapt your day to make it work. When a buyer needs to see the house one more time before they write the offer, but the schedule didn’t plan for it, what do you do? You adapt your day to make it work. When the agent sends you the finalized version of the offer during dinner, what do you do? You adapt your day to make it work. When you feel so tired you just want a nap, but you’re behind on paperwork, what do you do? You adapt your day to make it work.
Every day is a trial in real estate. Someone is testing you, pushing you, grading you, and analyzing your every move. Embrace it. Talk to the clients and customers on a one-to-one basis. Don’t beat around the bush. Tell them you need to fit in this or that emergency, but let them know you’d do the same for them. The gurus and experts will tell you you have to block your time and stick to the schedule. I agree to an extent. Don’t be afraid to reevaluate and readjust as the day goes on. Make realty’s reality work within your own reality, but don’t cram it into your mold. Let it breath, let it change, let it evolve. Just keep it in check so it doesn’t get out of control. Some days even reality needs a good smack on its nose to teach it to behave.
All in all, today was an excellent day.
Despite its hectic, frantic nature; today was awesome. I got when I needed to get done and then some. I had to change plans more than once. I had to readjust time schedules a few times. I had to drive one side of town to the other then back. And I got everything done…except one, and you’re reading it. You deal with it. You make the reality of realty fit in with the reality of you.
For a new agent, this might not come right away. For me, it took over a year to finally see what a good day should be like and to truly get a good lesson in multi-tasking real estate style. I’ve had good days, but not like this. I missed the real estate boom, but to me this is my own little boom and I’m learning from it every day. I’m about to learn how to squeeze in some sleep time as I speak. Right after I make room for a yawn…even they have to be scheduled some days.
photo courtesy of scoobymoo
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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