Coaching

Bark and scream have no place in short sale negotiations

Published

8 years ago

June 14, 2011

How to Avoid Short Sale Trouble

Have you ever seen The Music Man? If so, than you may remember the lyrics “Ya got trouble, my friend, right here, I say, trouble right here in River City.” Now, if I remember correctly, the trouble in River City referred to the fact that folks were actually playing pool, this behavior (so the story goes) leads you down a slippery slope.

Well, there are some people out there who always make trouble, whether it is in River City or elsewhere. There are some individuals who are combative and want to get their way. They argue until they are blue in the face. You know who they are; perhaps you are even one of them.

Since I started doing my short sale thing, I’ve spoken to more folks than ever before. I have spoken to thousands of real estate agents across the nation. I have also spoken with hundreds (maybe thousands) of bank short sale processors and customer service representatives, managers, and presidents. Each and every individual has a unique personality. When involved in these conversations with mortgage lenders and even with real estate agents, I am always working to achieve a goal. Usually I want to get my way in short sale negotiation, but sometimes I just want to convey a point.

Are you a verb?

I realized the other day that in order to be successful in dealings with others, you need to be a prepositional phrase and not a verb. (Caveat: Remember that I am a former English teacher. Please do not start snoozing; keep reading and hear me out!)

If you vaguely remember high school, you may remember that teachers taught us that a prepositional phrase is “Anything a rabbit can do to a hill” or “Anything an airplane can do to a cloud.” So, words such as above, around, below, over, under, and through are prepositional phrases. Thus, in my dealings with the lien holders on these short sales, sometimes I need to figure out how to be like a prepositional phrase: how to strategize to make it over that hill or around that cloud.

Now, if you vaguely remember elementary school, you probably know that a verb is an action word: bark, yell, scream, rant, annoy. When working on short sales and negotiating with lien holders, you can also behave like a verb. You can bark, yell, scream, rant and annoy. But, I can tell you right now that if you behave in this manner you will be significantly less successful in your negotiations, and you may burn a few bridges along the way.

So, when negotiating short sales, try not to make trouble in River City. Instead, work to meet your goals more like a prepositional phrase than like a verb.

Lastly, do not ever take anything personally. Be objective and professional. This is a business transaction for you, for your sellers, for your buyers, and for the bank. The bank does not care about everyone’s drama. So, leave that with your verbs at the door!

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Melissa Zavala

Melissa Zavala is the Broker/Owner of Broadpoint Properties and Head Honcho of Short Sale Expeditor®, and Chief Executive Officer of Transaction 911. Before landing in real estate, she had careers in education and publishing. Most recently, she has been able to use her teaching and organizational skills while traveling the world over—dispelling myths about the distressed property market, engaging and motivating real estate agents, and sharing her passion for real estate. When she isn’t speaking or writing, Melissa enjoys practicing yoga, walking the dog, and vacationing at beach resorts.

22 Comments

Manny

June 26, 2011 at 6:44 pm

I strongly agree! Everyone: agents, negotiators, sellers and buyers appreciate being treated with respect and professionalism. I have been very successful in dealing with lenders for short sales and loan mods.
The best approach is always treat people as you would want to be treated!

Reply

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!

Published

6 years ago

November 5, 2013

Melissa Zavala

magic eight ball

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?

Read also: Is cash still king in short sales?

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:

Published

7 years ago

January 29, 2013

Melissa Zavala

short sales standoff

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.

Published

7 years ago

January 22, 2013

Melissa Zavala

short sale approval

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!