Defining the Environment
So, you write a blog….do you consider yourself a leader when you do so? Maybe you should. I’ve been reading a great book, called Born Digital and a lot of it is resonating with me. For a long time (other than when I am beleaguering someone for being antiquated) I have been trying to dispel the notion that the industry changes we’re seeing are relative to “generational trend”. I fully believe that the changes in the industry are a result of industrial evolution.
An excerpt from Born Digital: “Rather than calling Digital Natives a generation – an overstatement, especially in light of the fact that only 1 billion of the 6 billion people in the world even have access to digital technologies – we prefer to think of them as a population.”
See, here’s my quandary. What came first the chicken or the virtual egg? I don’t think that there is some conspiracy of the Generation X and Y to blow traditional Real Estate practices from the face of the earth – frankly we’re collectively not that intelligent. To support my opinion, I offer American Idol. Any generation that makes American Idol the number one show for several years in a row, should be subject to punishment, not admiration!
Mr. Swanepoel offers this opinion: “Generation X and Y are growing up with a poor perception of the real estate industry.”“They believe they can and should fix it.” (Swanepoel Trends Report)
I have great respect for Mr. Swanepoel and his reports, but I respectfully disagree. I think that this move toward redefining the industry is not limited to one generation, but to a movement. The difference is that online media has developed and evolved to a juncture where we can be more collaborative in our thoughts and ideas. This release of platforms and formats, by which we can share has released the flood gates of ideas and innovations. We can easily share what we’ve found to be some truths and untrue ideology of the industry.
As exhibits to support further my statement: Teresa Boardman, Jay Thompson, Russell Shaw, Jonathan Dalton. There are many more, but these are leaders in our industry and not of a demographic that would include them into my “generation.” Even if they don’t consider themselves leaders, they are nonetheless. It’s not happening fast enough for most, but change is happening. The immovable dinosaurs in the industry that simply wish to fight the metamorphosis of the consumer is feeling the pressure for the first time in decades. But how do we move forward?
Rhetoric WAS the Groundwork
Now, let’s not take rhetoric as a negative insertion. I am talking about the idea phase of vision casting. Word pictures, oratory and development are necessary parts of any plan. Conveying our hearts and visions is fully necessary. However, I think we’re at the next step. We’ve got some great concepts that we’re all rewriting our personal spins on: Divorcing the Commission, Blending healthy Agent Skillsets with New Techniques, Giving Room for Various Commission and Business Plans, Using Blogging to Attract Clients, The End of Dual Agency, just to name a few. So, now what are we going to do? We know that change is needed, we know that the answer and the industrial culture is going to change – but how? There is evidence that the RE.net is influencing policy and consumers. We’ve found that we’re nibbling about the edge of real change.
Now it’s time to move forward. Those leaders that history reflects well on, started with a passion… a dream. I’ve been reading some old training material from the late 1980’s and early 1990’s. Over and over again I see where the material is calling “change”, “setting the bar higher” and “greater educational requirements.” Sound familiar? For the first time in history we’ve been empowered by the social media and technology medians to make real change possible and to enhance the culture in real estate.
What do we want change to look like?
I am not convinced that a complete dissolution of the current real estate practice is in order or even practical. Much of the way we do things is a result of looking at history and finding that it’s a necessary aspect. We have to provide exceptional customer care, we must have licensing laws and oversight, we must use the current market appliances that reach the consumer where they are. There are things we must maintain; agents need to get paid for their services, they have to watch costs, trained and competent Brokers (company owners) are necessary… But having said all of that – we know that the industry needs work.
It needs a fresh look and the institution who should be in the watch tower has become complacent. There is very little stopping us from becoming more unified and continuing to raise our “virtual voices” until we stop merely influencing the industry and start molding it. In my opinion, that means that we need to get our respective houses in order. It does no good for bloggers to all be writing and opining about what should be, only to start arguing about who is more right. I’ve seen a great and awesome series of examples of how we should be sorting our differences in the past few months. I’ve seen people who disagree; come to the plate and “talk” out their difference in a professional manner and enlighten everyone. We need more of that.
Lead or get out of the way
It’s time for us to stop just being soldiers with opinions, it’s becoming clear that the collaborative tools that we’ve all been talking about and learning about are effective. We should start encouraging those who are naturally leading and promote their ideas and thoughts (Russell Shaw, Benn Rosales, Jim Duncan, Mariana Wagner, Teresa Boardman, etc…). Egos aside, boys and girls! It’s time to help develop the ideas we have and start creating a “population” that can eventually organize and challenge legislators and industry leaders outside of the re.net to move forward!
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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