Stop and go. Stop and go.
As I traveled down the 410 on my way home tonight, I got to thinking about the traffic. I make this ride every night with my wife after picking her up from work. Some days the traffic is good, some days its a nightmare. Its like any highway; construction, rush hour traffic, accidents, idiots, and smooth sailing. Yesterday we made it home in record time and the road was virtually empty. Today, the traffic backed up well beyond its usual slow spots and slowed us down considerably. Its never the same ride twice. Depending on how the traffic is performing, I occasional take slight variations of the route home. I adapt to the patterns around me and make decisions that affect our commute.
Before the drive, my day today was very busy. More so than normal. Calls, emails, a class in the morning, lots of searches for clients and potential clients, some statistical work for a client, stopping by the title company, thinking about what I would write in my post tonight, and just generally feeling good and busy. I like the idea of being busy. When I started in real estate, we were in that slow period everyone’s talking about. Combine that with a new agent with not much of a sphere of influence and you’ve got one broke agent. A frustrated agent at times. A questioning-his-place-in-the-real-estate-universe agent. I’ll be the first to admit I’ve had doubts more than once. But when I do have them, I remember how I wanted this, how I thought about it for a year before diving in, and how I am determined to succeed. I’ve had some help along the way, but overall, I’m in the driver’s seat.
The real estate highway.
Real estate has been a lot like my commute home every night. Each day I start off on my way home, only to encounter obstacles, smooth sailing, or a bit of both. I never can predict which is coming at me. One minute I’m cruising along with out a single person to interrupt that smooth stretch of road, when suddenly, around the bend, there is mass of traffic waiting to impede my progress. The traffic comes in all different forms. An agent popping into my office, a frantic call from a seller, an email from a lender, calls for all types of information of various properties, and sometimes the jerk that cuts me off before I can get to where I need to be. Some of the traffic has positive affects – the guy who cuts in front of me, gives me an opportunity to switch to his lane (the lane I need to be in), the slower speeds allow me to focus on the road ahead and not just go with the flow, the construction that forces me onto a new road and tests my ability to think on my feet. By watching carefully, you can plan on how to deal with what’s up ahead and focus on the task at hand – all at the same time.
I had just read Bill Lublin’s most recent post when I started to come up with the idea for this post and his ties into it all as well. I’m seeing more happening than I did my first months as an agent. Business is picking up. I have new clients and new issues to deal with. I am learning more as I come across new aspects of the business I hadn’t seen before. As these changes occur, I am dealing with new aspects of driving down the real estate highway. A couch in the middle of the road, a man crossing 4 lanes of traffic on foot, a closed exit that I have had to adapt to. These are all new to me, but the goal for the day is still the same. Drive straight, stay within the boundaries of the law, don’t crash, and don’t let the little things distract me from the ultimate goal…selling houses and getting home safe.
When you’re first learning how to drive, little things can distract you from the mission at hand. The first time you pull to a corner and a pedestrian wants to cross the street, the guy behind you is honking at you, you want to make a right turn on red, and the oncoming traffic is taking wide left turns into the lane you want to be in – this is a tough time. When business is good, you have many times more than that going on at once. Learning to process all the data and make the right decisions on how to proceed through that light is what counts. You have learn to take a deep breath, evaluate, and make your next move. Its a learning process I’m still going through. I think I’ll just wait at the light for a moment and ignore the beeping and the oncoming traffic. I’ll know when its time to take the turn.
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!
Business Marketing2 weeks ago
Free shipping is everywhere… how can small businesses keep up?
Business Marketing2 weeks ago
How many hours of the work week are actually efficient?
Opinion Editorials2 weeks ago
The truth about unemployment from someone who’s been through it
Business Entrepreneur2 days ago
How can a small business beat a large competitor moving in next door?
Opinion Editorials6 days ago
Ways to socialize safely during quarantine
Business Finance1 week ago
Is the convenience of payment apps worth the risk of fraud?
Tech News1 week ago
The inventor of the internet wants to give back control of your data
Business Marketing1 week ago
Ghost Reply has us asking: Should you shame a recruiter who ghosted you?