How to
Choose Your Path
A Normal Days Drive
Last October I went to Columbus to visit my daughter. Actually, I was going to watch my grandson, so my daughter and son-in-law could go to NYC to visit a friend. I took my then 3 year old grandaughter with me, since I thought she would have a great time with her cousin and it gave me a chance to spend time with her.
It was an uneventful three hour trip to Columbus. We had dinner and my daughter gave me the last minute instructions for her son, emergency numbers and such. They were leaving at 4:00 in the morning, then it would be just me and my two grandchildren. Off to bed with my grandaughter.
The Unexpected
Within an hour, I was shaking and shivering uncontrollably. I tried to get warm and get myself under control, to no avail. I had to wake my daughter. I knew something was terribly wrong, but couldn’t imagine what. It seemed like hours before we reached the hospital. It was three days before I would leave. I ended up in Intensive Care for those three days, still wondering what happened.
Although doctors have diagnosis, none of it made sense. Supposedly pneumonia and an infection without any prior symptoms. What landed me in Intensive Care was a rapid decrease in blood pressure and a change in heart rhythm. Unexplainable, but scary, nonetheless. Actually, I was unaware of what was happening, but know it scared my daughter.
Live It or Conquer It
I don’t know how to explain the fear which ascended on me every-time my heart raced, or I felt weak. Each time I feel a bit anxious, almost panic stricken by my remembrance of that evening I went from perfectly fine to lying in a hospital. For a whole year, I avoided anything which would make me feel weak, make my heart race or cause me to feel anxious. Needless to say, in that year, I probably gained 20 pounds. I still don’t have the answers as to what caused this sudden ailment. I have lived in fear of something unknown, something unexplainable, something I had no control over.
I can only say, it is not the best place to be. Fear of the unknown is a horrible place to live.
NO MORE! I chose to conquer this unknown.
It’s Up To Me
I took the same approach to my business plan for 2009. I don’t know what next year will bring. Will interest rates go up or down. Will there be more foreclosures? Will the government bail out everyone? I have no clue, but I do know, my attitude will not be affected by what the news says. I won’t be swayed from my goals by a bad economy.
I continue to educate myself about real estate, changing laws, new loan programs, foreclosures, short sales and I plan to be a conquerer in 2009. I will not live in the past – those years are gone. We have a new real estate market and I believe my attitude will determine my success. How about you?
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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Steve Mattison
December 18, 2008 at 3:34 pm
I like it, you attitude will get you through life no matter what happens! Great post and great encouragement to us all:)
Chris Shouse
December 18, 2008 at 3:37 pm
Paula this is a great post to have when everyone is thinking about goals and business plans for next year. Fear will have no part of my plans!
Bob Schenkenberger
December 18, 2008 at 8:14 pm
Paula, I am a big fan of business planning and am shocked at how many agents don’t do it.
One thing in my 2008 plan, that will also be in the 2009 version, is that I am choosing not to participate in any real estate slump!
Paula Henry
December 19, 2008 at 7:59 am
Steve – Thanks! As I wrote this I thought about all the agents who are living in Fear of the changes in the industry and how many more are getting out.
They don’t know what to do!
Paula Henry
December 19, 2008 at 7:59 am
Chris – My attitude exactly. We can not live in fear.
Paula Henry
December 19, 2008 at 8:01 am
Go Bob! I know many who do not have a business plan – and more who don’t know where to start with the changes in our business. I believe they have set themselves up to fail without one.
Missy Caulk
December 19, 2008 at 10:26 am
Paula, how scary…seriously.
But, you moved on and we will move on and not live in fear of the unknown by putting one foot in front of the other.
Business plans allow us to know what worked and what we fell short of.
Paula Henry
December 19, 2008 at 10:33 am
Missy – It was scary – even scarier is how it affected me. I see how our market is affecting other agents and they are limited by their fear.
You’re right – one foot in front of the other = taking action.
Nickie Rothwell
December 19, 2008 at 10:58 pm
When you suddenly find your health in jeopardy, you gain a whole new perspective on life, don’t you?
Thank you for sharing how your illness helped you to grow and has made you stronger.
As my 3 year old grandson loves to say, “Never give up!” They sure do get smart young… No fear at that age 🙂
Paula Henry
December 20, 2008 at 6:05 am
Nickie – It certainly does!
How positive a message from a three year old!
Speaking of granchildren, it took my grandaughter awhile to forget that she went to bed with me and I was gone when she woke up. Thankfully, she did and doesn’t think her Mimi will disappear on her again.
Vance Shutes
December 20, 2008 at 4:34 pm
Paula,
I always knew from reading your work that you are special, and this article helps me to understand why. It may take a scare like the one you experienced to really appreciate having good health, and then the enthusiasm for life becomes contagious. Thank you for sharing this, and congratulations on your resolve for 2009!
Paula Henry
January 8, 2009 at 9:37 pm
Vance – Somehow I missed this and all I can say – is WOW, thank you so much for your kind words. Very best to you in the new year!