(Once you’ve read, please comment with at least one thing you’d like your Broker to do or change in 2009)
Recently in our market we’ve seen great exoduses from certain brokerages and insertions into others. In a few cases it’s a mystery in others it makes absolute sense. In many situations, the brokers are archaic and apparently unaware of their need to adapt and overcome their office culture to the changes in the industry.
Failing to move forward with change isn’t an option. The rapid change in the industry resulting from the turbulent economical state and coupled with the generational specific demands of the consumer, will change your business model or leave you in the dust.
Consumers as well as more and more agents are continuing to challenge the fact that Brokers have stipulated how real estate is done. Brokers need to make some changes now more than ever. The following is a list of recommended changes for the 2009 fiscal year.
- Brokers need to get rid of your office computers. Require your agents to bring their own laptops into the office. This will cut down on your expenses and encourage your agents to befriend what should be an agent’s best tool. Lots of brokers spend countless dollars in maintaining office computer equipment, when only staff need to have PC’s supplied. Setup wireless Internet and printers and that’s it.
- Use sources like Airset or Ning to host company files, e-mail lists and documents. No need for local servers that agents have to be in the office to use, or VPN.
- Go as paperless as possible. Unnecessary paper usage is not only harmful for the environment, but expensive. Why store countless boxes of files when they can be reduced to PDFs and the paper recycled (consult state laws – as always)
- Create a written technology training program for yourself. Set aside your pride and realize that you need to know all that your agents do.
- Setup a RSS reader which has all your agent’s blog pages setup to ensure that your agents aren’t being knuckle-heads online. Add at least five Blogs that reveal current industry knowledge to that RSS feeder, outside of your staff’s.
- Resolve to put the consumer’s best interest first and eliminate single-agent dual agency in your offices. If you do allow it, require that agents meet certain qualifications, such as ABR, GRI, specific training or certain amount of experience. Otherwise they should have to come to you each time.
- Establish a specific policy for agents taking Short Sale listings. Establish parameters by which listings can be taken. DO NOT TAKE UNSALABLE LISTINGS!
- Eliminate “Administrative Fees” as they are in no one’s best interest and makes it harder for your agents to be competitive, unless they pay the fees.
- Enact a policy that requires agents to submit a list of marketing venues to you, so that you can be aware of what and where information is being submitted.
- Check all your agent’s marketing venues frequently. In most states Brokers are ultimately responsible for the agent’s marketing.
- First and foremost; do away with office meetings. If you’d like to retain good agents, respect their time. If you wish to have monthly business meetings to train and prepare your agents great. Stop asking agents to go around the room and talk about their loser listings! Don’t spend time harping on the need for timely EMD submission, etc… Do that by e-mail so that you can prove you did it AND not make meetings about anything other than how to do business better.
- Provide good tools and resources for your agents to utilize, but don’t demand they use them. If the agents aren’t using good tools on their own – they may not be appropriate for your office. Demanding agents use certain broker specific tools may just frustrate an agent with their own powerful systems.
- Learn to recruit quality agents and not just a quantity of agents. Production is important, but not if the prima donnas are retarding your other agents mental well being and productivity.
- Brokers should concentrate on their business and be agent-centric. Competition against your agents causes animosity and takes away from business development. If you’ve got a good team of agents they are producing, you shouldn’t have to!
- Provide easy access to trend reports and statistics about the market and consumer trends, to your agents.
- Have all policies written and reviewed with your agents, but do not create such restrictive policies that your agents can’t be creative in their business – the industry has enough legislation to go around!
- Most of all, be responsive to your agent’s needs and desire to seek counsel. Show that you are prepared and willing to answer questions.
What Say You?
This is far from an exhaustive list and I am well aware that many Brokers would simply laugh at this list – but changes are coming. Agents are looking for Brokers who can use their wisdom and knowledge to help lead a company – not maintain the status quo.
If you could recommend or change at least one thing about your company; what would it be?
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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