How to
Being known as the expert.
As an agent, we’re expected to be the experts.
Trust in an agent requires a certain belief that no matter what the situation, you, the agent, will have the expertise to guide the client through whatever comes along. We need to know our local markets, the national markets, home prices, contracts, title issues, mortgages – you can add whatever you want to the list, we’re supposed to know it. People rely on us to have the answers.
When you’re new, you’re not an expert. You don’t have the experiences that lead up to expertise. You’ve passed your test and you feel ready to take on the world, but I know from experience, on your first transaction something will come up that makes you say “what in the world is that and how do I deal with it?” If not the first, then the second; if not the second, then the nine hundred and thirty-first. It will happen.
Practice makes perfect experts.
Much like the skier in the photo above, you don’t just magically start at the top. You’ve got to earn it. You need to practice your craft and learn everyday to be an expert. Truly, I don’t think you ever reach the “expert” level. The minute you’re the expert, the mountain just gets taller. If you stop pushing towards the summit, you’re only going to slide down the mountain. Classes, reading, interacting with other agents, and reading blogs will help expand your knowledge, but actual use of that knowledge will make you the expert that consumers will trust.
Being the expert means knowing when to say “help!”
I’ve learned a lot, but I still think I have only a fraction of the knowledge I need and want. I’m not a mortgage expert. I’m not as knowledgeable about home inspection as I’d like. I cringe when I hear an acronym I don’t understand (we have so many). There are times that despite my own confidence in knowing what I need to do for my clients, I feel like I don’t know the answer. And when I don’t? I ask for help. Whether its another agent, my broker, a lender, a title company, or one of you; we all need help from time to time – new or not. Having expertise in every area of every field involved in a real estate transaction is simply impossible. That’s why a true expert knows the other experts so they can find the answers to their clients questions.
I’ve been asking a lot of questions lately. Perhaps I’ve obtained the “expert” designation.
photo courtesy of Joe Shlabotnik
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!
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.
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:
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.
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.
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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KimWood
March 11, 2009 at 9:00 pm
Matt –
I want on those slopes!!! It’s been too long… ok… I guess you didn’t really want to talk about the Diamond Runs……
I learned early it was ok for me to say, “I’m not certain about that, but I’ll find out” or “That is the perfect question to ask Mr. Mortgage”. You are right – redirecting those question does make the expert. It also makes a true ‘team’ when you have field experts to assist when needed.
Lisa Sanderson
March 12, 2009 at 5:35 am
The first buyer I ever closed (1992) wrote a rave review on the post-closing questionnaire that my broker sent out. In it, one of the things he cited as good was that even though I didn’t know everything, I knew where to get the info he needed. That was probably the best thing that first broker taught me ‘you don’t have to know everything but know where to find out’. That, and the power of ‘thank you.’
Missy Caulk
March 12, 2009 at 7:10 am
Ever learning…
It will never stop….
Don’t be afraid to say, “I don’t know” on the journey.
Matt Stigliano
March 14, 2009 at 12:23 pm
Kim – I was never much of a skier or snowboarder. In fact, I once had the opportunity to learn from the Nitro Snowboarding team – pros from all around the world. After about 100 times falling down the French Alps, I continued to the bottom. There I discovered the bar and enjoyed the fact that I was in the same mountains that Evian comes from.
I learned that lesson early in life, because I hated to be wrong and misguide anyone. So I’ve never been afraid to admit what I don’t know. Since I like to learn new stuff, I don’t mind admitting it either, since I’ll be able to learn the answer as well as provide it.
Lisa – I remember a teacher in high school telling me that school wasn’t to teach me things, it was to teach me how to learn things. I think that teacher gave me some great advice with that and it applies today.
Missy – The only thing that frustrates me is when I can’t find the answer. I’m still looking for a tax accountant who can answer a question I have, but so far no one knows the answer.