Google AdWords Strategy
I promised to talk about my AdWords strategy, which is Google’s pay-per-click system. But first – we need to be speaking the same language and have a basic understanding of the system. Let’s get some vocab and the preliminaries out of the way.
I’m going to assume we’ve all been to Google to search for something. You head over to google.com, and type in some combination of words – these are keywords. "Tucson homes for sale," "Orlando hotels," "jury duty excuses." All keywords. Yes, they’re phrases. Most people use 2-3 word phrases when they search, so just keep in mind when we talk about keywords, we’re talking about both single words and phrases.
So you type in your keywords and Google gives you results. There are two kinds of results: paid and natural. The paid stuff is what appears at the very top in the highlight, and along the right hand side. When you click on one of these paid ads, you just cost the advertiser some money – hence the name pay-per-click. Google calls it cost per click (CPC), just to be difficult. No one clicks, no one pays.
Google’s system for managing these paid ads is called AdWords.
Text Ads look like this:
You get a headline title, a short description, and a display URL – we’ll come back to the display URL in a different post. There are rules to the punctuation and capitalization, the sort of claims you can make, which site URL you can display. There’s a really good learning center for AdWords, a bunch of tutorials where you can learn their editorial guidelines if you’re planning on using their system. Time spent in the learning center is well worth it.
So. People with stuff to advertise sign up for AdWords, create ads, and select a bunch of keywords that they want their ad to appear for – when someone types in any of these specified set of words, show my ad. And then you bid for placement, you set a maximum that you’re willing to pay for your ad to appear. Bear in mind that the higher you bid, the higher on the page Google will place your ad, and that generally, the higher you are on the page, the more clicks you’ll get.
But there’s another piece to this system.
Google wants to reward people who make good ads, use relevant keywords to their ads and their site, because that makes Google’s users have a better search experience. So they invented something called a quality score. Which of course, they don’t tell you too much about. You’ll have a relative idea of your quality score, but you aren’t going to get too many specifics. We do know that quality score has several factors, including the relevance of your keywords and your ad to your site and your click thru rate – click thru rate is the ratio of how many times people clicked on your ad and how many times the ad was shown.
The higher your quality score, the less you actually pay per click. Google wants to reward its good AdWord citizens.
The calculations are a little confusing, and really, you’ll never run these numbers because Google is going to calculate everything for you – they’re really good at knowing exactly how much to charge you, rest assured. However, I think it’s important to understand what happens in the background so you can see the impact of the quality score – and why you don’t actually pay the amount that you bid.
What About Competition??
So. Let’s say there are 3 of us, all bidding on the same phrase. For the sake of argument, let’s say we’re all selling wiffle bats, and are bidding on "wiffle bat."
Google’s going to figure all that out for you. The point is, what you pay is determined not only by what you bid and your quality score, but also on what every one else bids, and their quality score. The people with ads around you may be paying more or less than you, you don’t really know.
Pay Less For the Same Clicks
The other point is this: better quality scores mean you pay less for the same clicks. To get a better quality score, you need to have keywords that relate highly to the ad, and the ad and keywords relate highly to the site. They all agree and make sense together. One of the easiest ways to make everything agree is to be highly targeted. Go after smaller groups of niche people, show them a niche site, instead of trying to do the general words and a general site.
You set a daily budget, and that will limit your spending, and Google displays your ads evenly, more or less, throughout the day.
So we have ads, triggered by keywords, for which we’ve bid a maximum cost per click. Our maximum cost per click and our quality score determine our rank on the page, and that plus what the other guy is bidding and his quality score actually determines how much we pay, our actual cost per click.
You with me?
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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