My office has seen a slew of new agents join in the last 6 months. I suspect it’s largely due to the heavy recruitment efforts of my fabulous branch manager – I just don’t believe that there are that many people out there just itching to become a Realtor right now.
This column was originally published on February 15, 2010.
Talking and working with these new agents got me thinking about my own experience in the principles of real estate course just 3 years ago. I remember being told that only 10% of the students are still in the business after 2 years. For my class, that average was spot on (3/32). The biggest failure I see in training agents is a complete lack of practical education. It’s great to spend 4 of your required 40 hours of training learning about metes and bounds (which, to this date, I have still never used), but so many basic skills are completely overlooked. I’m a big supporter of raising the bar (#RTB), so, in no particular order, I’ve put together a short (and, I’m certain, incomplete) list of items that should be required for new agents.
Wanna know why new agents fail? Because they don’t know how to generate new business. It’s all fine and well to make a new agent pay for the course, the test, their dues, their MLS fees, their sentri/supra/multac key charges, their office/desk fees, etc., but when it comes to actually generating business, fuhgeddaboutit! Why are we expecting people to shell out thousands of dollars to become agents, but god forbid we actually teach them how to find business! Teach a man to fish and you feed him for a lifetime, right? New agents NEED to know how to actually generate business! I understand some people take the test without any intent of becoming a Realtor, so for that minority I’d even be willing to see some kind of compromise:
How about creating an optional required add-on course taken after principles of real estate, within 3 months of getting your license? We could include this sort of core business training and call it Realtor 101 (RE101), charge a few hundred dollars additional and give people a better chance to succeed. If I became a barber, I’d need over 800 hours of training to get my license, just to have the right to charge for a haircut! Why do I only need 40 hours training to charge someone for selling their biggest asset?
Current Loan Programs
Teaching the difference between conventional/203k/FHA/VA seems pretty standard right now, but there are so many additional options out there. For instance, many local areas have seen huge support by way of foreclosure purchase assistance programs. While learning every lender’s unique program would be nearly impossible, I think it should be required for new agents to at least learn the federally sponsored programs that are being used locally.
It’s a dis-service to agent and buyer if the agent doesn’t know their clients options. When a buyer learns about a program they could have used after the fact, it makes the agent – and the industry in general – look bad. Regardless of whether or not it’s true, it damages the industry’s attempt at transparency.
Let’s be honest. I don’t think E-Pro is a terribly useful course. The designation is nice on a resume, but I know too many E-Pro certified agents who don’t know how to use their own email. If (some) E-Pro certified agents are not what you could consider “tech-savvy”, where does that leave the minimum standard of knowledge for a wet-behind-the-ears agent?
This business requires internet knowledge and training, period. I’m not suggesting that E-Pro become required, but I think it’s necessary to incorporate some of that designations training into a more modern principles of real estate course.
It never ceases to amaze me, but when I post up the latest market stats on my website, I ALWAYS get a new agent in my office wanting to know where I got my information. It’s not hard folks, the information is right there on the MLS, all you need to do is download it!
Beyond that, I know several agents who don’t know how to set up automatic drip feeds for listings, don’t know how to add/modify search fields (you can search by waterfront table depth?!?), and don’t even understand all of the abbreviations that are used. Knowing how to use the MLS is a must, so why isn’t training on it standard as well?
It’s difficult to comply with federal anti-spam laws if you don’t know what they are. Ignorance is not immunity and most agents don’t even realize they’re exposing themselves to tens of thousands of dollars in liability simply because they don’t have an unsubscribe link in their mass mailings. Teach it, learn it, move on.
Every agent should be set up as some sort of LLC or S-Corp. Most don’t, and yet creating your own business entity is cheap and easy. The peace of mind alone should be enough reason to do so, but if you don’t know any better, how can you hope to protect yourself from expensive litigation. I’ve seen agents lose their OWN HOME because they we’re sued by an angry client and they had no corporate entity set up to shield their family from that sort of risk.
Red Flag Awareness
Haven’t we all been on the other side of a deal with a new agent, frustrated because closing falls through when some preventable issue torpedo’s the deal? Everybody makes mistakes, but real estate is a complicated business with lots of things that can sink a contract. Here’s how we do it: Add it to RE101, teach people to do preliminary title searches, educate on things that can cause financing to fall through, explain how a short sale does (or doesn’t) work, and teach agents how to identify issues before they become deal-killers.
Another candidate for RE101. Too many agents don’t even know what a business plan looks like, much less how to create one. Give new agents business plan samples, explain what goes into creating one, and let them choose to take it or leave it at their discretion. A little planning goes a long way, and a better understanding of how to create a successful business would certainly help create better agents
I never understood why this wasn’t taught in the principles of real estate course itself. The most valuable paperwork I got as a new agent actually came from an appraiser. It was a valuation estimation sheet that they used for estimating how much improvements to a property were worth. Knowing what the average value increase for 2 vs. 2.5 bathrooms? Priceless. Providing a new agent with the same powerful tools is cheap and easy, so why not do it and train agents on the mechanics of doing a market analysis?
Wrapping it Up
Obviously, none of these suggestions can replace anything currently being taught. This is additional information, to supplement current minimum education. Will it increase the required hours to get your license? You Betcha! Will it increase the cost of the course? Yup! Raising the minimum standards of training is neither cheap nor easy, but it provides a better service to the agents in the class, their future clients, and the face of the real estate industry in general.
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!
Microsoft’s overseas email storage piqued the Supreme Court’s interest
Amazon is extending its takeover to sportswear
iPhone X is driving prices up and customers away
OnePlus swears to kinda stop collecting invasive data from users
Ending a dismal year, Samsung says goodbye to CEO
A few smarties are trying to create space cryptocurrency via Bitcoin
Microsoft’s Autism Hiring program really is driving innovation
LL Bean just stole the show with their invisible ink ad in the NYT
iPhone 8 Plus devices allegedly split open while charging #splitgate
Does creativity die as we age? Science says sorta
Amy’s Ice Cream founder on Austin’s business risks and rewards #WhyAustin
Turns out a lot of people are in between introverted and extroverted
P. Terry’s founder on the booming economy in Austin #WhyAustin
Ladies and gentlemen, the U.S. National Anthem
Indeed President, Chris Hyams tells us #WhyAustin [video]
News neatly in your inbox
Join thousands of AG fans and SUBSCRIBE to get business and tech news updates, breaking stories, and MORE!
Thank you for subscribing.
Oh boy... Something went wrong.
Business News7 days ago
Microsoft’s Autism Hiring program really is driving innovation
Business Entrepreneur4 days ago
The top 10 startup cities in America
Business News6 days ago
Ethereum’s trading on NASDAQ – huzzah!
Tech News5 days ago
Who’s kissing who? Self driving cars edition
Tech News7 days ago
How to find remote jobs if you’re on the go
Tech News7 days ago
Workey is your AI solution to job searching
Business News5 days ago
Zuckerberg used VR to highlight hurricane Maria destruction
Business News1 day ago
Ending a dismal year, Samsung says goodbye to CEO