If We Stop Now…
For all we have accomplished, for all that blogging and new media have done to change the real estate industry, we have done nothing if we stop now. If we rest, satisfied with what has been achieved, if we think that everyone else isn’t going to catch up, then we are in big trouble.
If you want proof of this, look no further than the American Olympians. USA Basketball can tell you better than most what happens if you believe that what you are doing works, so just stick with it, no need to improve it. On the other hand. . .
Michael Phelps won 8 gold medals at the Olympics last week. He won more gold medals in a single Olympic games than any other athlete ever. He won more gold medals than some entire countries. He stands alone at the pinnacle of athletic achievement.
He didn’t get there because everyone told him how good he was. He didn’t get there by sitting at home and watching everyone else swim. He didn’t just rely on his physical talents.
He worked. Hard. Every day. For years.
It Wasn’t Easy
It wasn’t always comfortable for him, it wasn’t always easy, but he was willing to put in work when others weren’t. He was willing to commit himself to excellence.
Still, after all that training, after all that hard work, after everyone telling the world that he was the greatest physical specimen to ever enter a pool, he won the 100 Butterfly event (his strongest event) by .01 seconds. Basically by the length of a pencil eraser. A guy named Milorad Cavic, a guy who most folks had never even heard of (unless you are a close follower of swimming), took Michael Phelps all the way to the wall. Pushed him harder that anyone thought was possible in an event that most people thought Michael Phelps would dominate. No one saw it coming, but it did. Everyone thought the result was a foregone conclusion. But it wasn’t. Now, every swimmer who gets in the pool with Phelps knows he can be beaten.
So What Now?
So what does Michael Phelps do now? Does he go home, content to put his record number of medals in a trophy case somewhere? I mean, he is already almost indisputably the greatest Olympic athlete ever. That works, doesn’t it? Isn’t’ that what he was after? Can’t he just let it ride?
Micheal Phelps is going to take a few months off, and then he is going to begin training again, for the 2012 Olympics in London.
See, that’s what champions do. Even when they seem unbeatable, they compete against themselves. They continually strive for more. They make themselves uncomfortable because they know that it is through discomfort that new breakthroughs are made. They know they are never nearly as good as everyone thinks they are. They continue to push and raise the bar higher and higher, until they can reach no further.
USA Basketball had to learn this lesson the hard way. While the entire program was busy enjoying their international success, the rest of the world was busy working hard to defeat them. While USA Basketball was listening to how great they were, believing that their past results would ensure their future success, the rest of the world knew better, and was willing to work hard to prove it. USA Basketball had to have the glory stripped away, heads hung in shame, in order to understand that striving for excellence is an active, continual process. Now, they will have their shot at redemption. And this time, if they are able to stand atop the medal stand, they will, no doubt, appreciate it a little more; and they will work a little harder to maintain that level of excellence. I doubt they will ever take it for granted again.
And Now About You
And so it should be with you. Don’t be satisfied with what you have done, because you could do more. When you look around, and everyone is doing what you are doing, do more. When you look around and no one is doing what you are doing, do more.
Real estate has been an industry that has pulled, almost dragged its members forward. This should not be. It is time to start pushing, pushing hard, demanding more from ourselves than we have ever demanded before, more than we ever thought we could do.
But it starts with you.
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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