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Pacific NW Housing Summit- 10 Things I Learned

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2010pnwhsI was lucky enough to attend the Pacific Northwest Housing Summit with 200 or so of my closest Seattle Real Estate friends last Thursday and learned a whole lot about the past, present and the future of the Seattle Real Estate Market. Each one of the panelist was an authority in their respective profession and all gave me some sobering as well as compelling sound bites that I’d like to share with you. There is no particular order to my top 10 list but each of these facts has there significance no matter where they landed:

  1. I learned that the hardest hit States in the housing down turn are referred to as “Sand States” (Florida, California, Nevada & Arizona…why didn’t I think of that?)
  2. The housing market recovery in the Pacific Northwest is lagging behind the Nation statistically and our areas down turn also started much later. (This much I did know)
  3. The job of an appraiser is not to determine the market but to reflect it. (Is that what they do? That’s news to me and probably every homeowner that is currently upside down)
  4. Lennox Scott (Head Cheese of John L. Scott) literally jumped up and down proclaiming to everyone in the audience the Tax Credit worked and that the market is on the mend. (Well, we all needed some good news even if a few of the Tweets I received from folks in the audience indicated otherwise!)
  5. The Unemployment rate in Washington is going down later this year! (I’ll take that kind of news any day!)
  6. Interest Rates will begin to go up later this spring…as much as half to ¾ of a percent according to some. And, adjustable Rate Mortgages ARM’s are set to adjust later this year as well. (That will make those hard to pay Mortgages a bit harder for some!)
  7. Banks that were holding off putting foreclosed homes on the market until the market got better will be forced to release their “Shadow” or “Phantom Inventory” now! In fact, I recently wrote a post about Bank of America releasing 500 foreclosed homes a month to the Nevada market. (That’s 6,000 homes in 2010 gang!)
  8. The Pacific Northwest Housing Market is at the bottom and is going to start going up later this year into 2011! (I completely concur with that)
  9. 25 of the 75 Banks in the State of Washington are current under a Cease and Desist Order. (All I can say is, “WOW”)
  10. Spencer Rascoff, COO of Zillow.com gave me several great insights about marketing and attracting today’s real estate consumer. Probably the best sound bites I heard all day were, “You have to FISH where the FISH are.” And my favorite, “Fishing is FREE, but bait cost money!”

This was a wonderful event and a tremendous opportunity to take a 10,000 foot view of the overall recovery and condition of the Pacific Northwest Housing Market and Seattle Real Estate.

Patrick Flynn is a 13 year Veteran of this Real Estate fray and a blogger on mySeattleblogs and is active in various social networks. Like many writers at Agent Genius, Patrick wears a few hats other than a Broker's lid- he is also a Certified Real Estate Instructor for the State of Washington and has enjoyed delivering 1,000+ hours of clock hour and non-clock hour approved courses in his career. Patrick has also been a Designated Broker since 2003 and revels in being able to coach and mentor fellow real estate professionals.

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14 Comments

14 Comments

  1. Justin Boland

    March 22, 2010 at 3:52 pm

    Awesome post, thank you for extending this to the rest of us. As for #9 — that definitely gets a resounding “WOW” from me, too.

  2. Rhonda Porter

    March 23, 2010 at 1:32 am

    Patrick, I’m glad you enjoyed the PNWHS last week. I was pretty pleased with the panelist and how the event came together–I was hoping that we would have a better turn-out. I’m wondering if we only had 200 because it’s a reflection of what our industry is going through–your thoughts?

  3. Patrick

    March 23, 2010 at 9:48 am

    Hey Rhonda @mortgageporter…You should be very proud of the #PNWHS and all the work you did to get this outstanding event put together. I’m more inclined to see the quality of the people that were there rather than the quantity! As one of the panelist remarked, “What makes a Diamond is heat and pressure.” We are all in this together and the ^Seattle Real Estate Market will recover very nicely thank you if those of us at the #PNWHS have anything to do with it!!! It’s a pleasure knowing you and you should be very proud of your commitment to our industry.

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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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magic eight ball

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

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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