Solution in a box.
If you’ve spent any amount of time here, you’ve probably seen the phrase “solution in a box” (probably more than once). I’ve read it a bunch of times, but it never quite sunk in 100%. Today, I had a phone conversation with Lani. We got to babbling as we do about what’s going on and she dropped the phrase in conversation. Later I couldn’t remember how it was phrased and had to send her a message on Twitter, because I knew that it had struck a chord that moment, but in my busy day, it slipped from my head (I know, I know…write things down).
Our conversation turned to what’s going on in my real estate life, as Lani and Benn have been looking after me since day one. I had some cool news for Lani and it all tied together for me once I had the help of the phrase in my head. So this is my story.
What’s a “solution in a box?”
Please pardon me Benn for paraphrasing, but basically a “solution in a box” is one of the millions of packages/CDs/seminars/workbooks/etc. available to the agent – all promising results and riches. For just $99.95 (few are that cheap), you too can have instant success and wealth, all you have to do is open the box and follow these steps. Within twelve days, expect to see the Brinks truck arriving with your piles of gold! In our desire to not do things the hard way, we line up and shell out our money in the hopes of success.
I’m not knocking these systems, they must work for some and I’m sure there’s a few out there that have taught you something you didn’t learn elsewhere. What I am knocking is our search for instant fame, fortune, and glory. It’s not just a real estate thing, but that’s a whole other topic.
My box, my wait, my change, my success.
I tried a “solution in a box.” Against many people’s private advice. The backers of the system won out and I gave it a shot. I gave it more than a shot. Up until recently, I was still working it. This system wasn’t as bad as some of the others I’ve read about and I never felt it was promising me instant success. It definitely seemed like it was about building for the long term. It taught a lot of common sense. Things you knew were right, but might not have put into practice. There was nothing truly genius about it and nothing I hadn’t read here before, but at the time I started it, I felt it was of value to me. It helped me get my feet wet.
As I worked the system and studied the manuals, CDs, and emails I received; I began to realize that I didn’t feel right with what I was learning. Although I still practice much of what I learned, I was learning that the system made me feel like a phony. Maybe people I met didn’t see that, but I felt it inside and that thought made me feel sort of sick. Months passed with little to no results. Of course, it made me wonder if I was just doing it wrong. Maybe I hadn’t studied it hard enough, so back to the manuals I went. If the system doesn’t work for you, you must not be dedicating yourself to it, right? (I’m amazed at how often I’ve heard phrases like this. Perhaps the system doesn’t work because it doesn’t work for me.)
Months gone, bank accounts smaller, no sales. I waited, I tried, I prayed a few times even. Anything to help me get on the right track. It wasn’t in the box. No matter how hard I tried, the box left me feeling empty. When the box was empty a new one arrived. I worked the system and emptied the box. I was still empty – in feeling and in cash.
Somewhere in that time I began to blog and use social media. I learned from so many different people everyday and I liked what I was learning. I enjoyed blogging. Not just a little, but a lot. I loved sitting in front of my MacBook Pro and thinking of my next post. Some posts were horrible, some were sheer genius. It was (and still is) an up and down ride. Some days the words flow, sometimes I have to force them a bit. I began to create relationships, not just databases. I got to know people. I didn’t just beg them for their number and address. Having grown up in the age of the personal computer, I understood what was happening around me, because I had experienced the same feelings of joy when I discovered my first modem (remember those?).
I’m not a social media/blogging guru, genius, maven, or god by any means. I have tons to learn and I’m still very much new to the “scene.” By studying some of the best and the ones that I found captivated me for one reason or another, I learned quickly though. But, like most new agents, I still wondered where the return was from time to time. I was still looking into the box (of blogging) and wondering why it was empty.
Recently, my blogs have started to get comments. Yesterday was a big moment for me. The phone rang. And my email dinged. The phone was a caller looking to list their property. I went on the appointment today and will find out tomorrow what their decision is (I feel pretty good about it). They found me on the internet. Read my blog, knew my history from my profiles, they saw me “everywhere” they said. The email was from someone requesting some information on some areas of town. They had been watching my market reports and wanted some more detailed info. People are finding me. Lani doesn’t even know this, but I got another call later today – someone who lives a bazillion miles from me owns a house here, they want to sell it. They found me…you guessed it, on the internet. My “solution in a box” provided me with little, but blogging and social media has given me work, hope, and a sense of belonging.
Blogging is not a “solution in a box.”
You don’t type a few words and sell a house. Its not like that. I’m glad it’s not. With a little hard work and dedication (probably the most important part of blogging), you just might find yourself getting business. Treat it like a “solution in a box” and you’ll be left empty. I saw a blogger on ActiveRain the other day who posted to the effect of “I’ve been here four weeks, where’s the money?” It doesn’t work like that and when/if it does, I may have to leave it behind. I don’t want to become an overnight sensation – I did that once before in my life. It was a blast, but it didn’t last all that long. I’m not here to make a buck and run. I’m here for the long haul.
photo courtesy of donger
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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