Soul searching and plan building.
Two weeks ago, I wrote “Why? Finding real estate career motivation in down times,” as I was on a bit of a soul searching quest. The idea behind the post was not “poor me, I don’t know why I am a real estate agent,” rather it was an attempt for me to find that magic fire inside me that propelled me to improve, work harder, and succeed.
It wasn’t easy to answer the question, as I wanted to remove some of the superficial answers to the question and really get deep down into the core of what makes me tick. Reasons such as “it puts food on the table” (although very true) were not what I wanted. Instead, I was wanting to discover the things that make me wake up in the morning with that feeling of “bring it on world, I am here to win today.”
After some serious time digging deep and writing notes as I thought about things, I discovered much more than I expected. I’m not finished yet, but I am starting to assemble the pieces of “Why” and starting to build a plan based on those answers. Call it the “how” if you will, the next step would give me even more motivation than I thought it would.
How does production relate to motivation?
Let’s face it, in real estate, production is what we’re all seeking. If we don’t produce and generate commissions, we’re dead in the water. Selling and buying houses is our life blood. Without those two, what good would this career be? In order to understand our motivations, we need to look at each one with another question on our minds – “how does production help us achieve the goals laid out in our motivations?“
I won’t go into detail about my motivations, but I boiled them down to five basic needs for myself: education, challenge, control, recognition, and stability. Each one of these needs branches out into many different parts of my life (both personal and professional) and are interwoven amongst themselves (as well as through my history – probably the most revealing part of it all). Just spend a few moments dwelling on how much the first two (education and challenge) could be intertwined in your personal and professional lives.
For each of the five needs I then wrote answers to “how production makes each thing happen” (the actual wording of the note I scribbled to myself). Instead of just telling myself the obvious – that production pays the bills and puts food in my belly, I wanted to see exactly how my ability to earn commissions directly affected each of my needs and the goals that became a part of them.
It seems obvious, but money clouds the picture.
In simple terms, asking yourself how making more money could help you fill your needs and help you achieve your goals might seem obvious, but when I started jotting down notes, I found something different. Let’s pretend we don’t need money for a few seconds. Let’s pretend that money has no daily value in our lives. Remove all the “I want a new pair of shoes” and “I’d love to buy an iPad” thoughts from your head. Forget money as a necessity and focus only on its purpose in making more of your “why” happen on a daily basis.
What I found was that by removing the obvious, I found a lot more answers than I thought I would. Production allows us to build upon our needs. Your production can (and should) be a means to your needs. By focusing on what more production can do to feed those needs and goals, you can now begin to build the plan on how to grow your production to the necessary levels. We all want more production, but having root motivations as the core of why we want more production causes us to fight harder to gain more.
For some, production/money may be a root motivation, but for me the production is the source to feed my motivations (and the obvious source from which comes the ability to keep myself alive to enjoy those motivations). More production, more food to fuel my motivations with.
photo courtesy of Abulic Monkey
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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