Do you have a Plan?
It’s December and we’re looking directly at 2009, have you written your 2009 business plan? How about your goals? How about a budget? As I travel around lecturing on various topics, I routinely ask agents to refer back to their business plan….than I wait for the blank stares. Even the agents that appear the most “together” have no idea of what they are doing or will be doing. The reality is that these agents are just living one transaction to another and you simply can’t run a business that way.
There are three main areas that I think agents should focus on while devising their master plan of market domination and stellar client-centric service.
Element 1 – Nostradamus
Nostradamus was a seer or prophet who lived in the 1500’s and arguably has been one of the few from that era to this that could speak of the future. Whereas I don’t believe that anyone can tell us the future of Real Estate in the modern era, we can look at trends to predict the possible forthcoming issues. Its a pretty sure bet, that we’ll still have economically tough times ahead. Interestingly enough not all agents are being significantly phased by the housing market.
I highly recommend Swanepoel’s Trends Report (2009’s edition should be out in January) as a great resource for the prediction of future market trends. Knowledge is the best investment that one can make in their real estate career. Finding sources that help you define how your business will develop is critically important. Using information such as these reports and, that which is gained from reading industry news like Inman or informative blogs will create a good sense of where we are headed.
Business and strategic plans should look at next year, five years, 10 years and 20 years. Typically each year you’ll only adjust the 1 and 5 year plans. Without these plans and adjustments how will you ever know where you stand in your life / business plans?
Element 2 – Don Quixote
Don Quixote was a character in satirical novel about a misguided “knight” that spent time fighting windmills, as if they were dragons. Of course, I am not recommending that anyone go and fight imaginary dragons; but do you know when there is a real dragon to slay and when it is simply a windmill? I am still sorting though the ability to distinguish between these two things in Real Estate. You need to understand that to the average practitioner, remodeling the industry is not an issue at all. Most agents feel that status quo is just fine and why try to fight issues like higher education and dual agency? To those agents, anyone who is blogging, has association involvement and strives for knowledge, are all fighting enemies that are really just windmills. Of course I disagree.
What does your business plan establish as a windmill and a fight-worth-fighting? Does your business plan allocate time to work on industry improvement as well? I am not saying that it has to – far from it. I personally don’t think everyone is a visionary or leader and more so than any other group, those are the folks who I want working on the big picture. But if you are a person who wishes to do more than just list and sell, have you planned for the time, money and effort needed? Does it fit your personal strategic and business plan?
Aside from activities, what goals you have set that may be a dragon to you and a windmill to others? Have you taken a look at your goals or plans (assuming you’ve expressed them in a measurable form at some point) to see if it’s really that important? What about that new car you wanted in 2008? Was it necessary? Was it more important than a solid savings account, seeing as there are no guarantees for the same level of real estate production as the past few years… What defines a real tangible need for your business plan?
Element 3 – The Here and Now
A lot of times, we get so very focused on tomorrow, that we forget that we still have to care for “today.” A lot of agents preparing for 2009 have failed to see the things that really need to be adjusted in their current way of doing things. The agents I am referring to, typically get everything done at the eleventh hour, have no focus and short tempers. Why? Well some just suck, but others really are great people who have no system in place. The end result of a systemless agent can be devastating and result in frustration and maybe guilt.
I love written objectives as a way to measure my “success”, after all – how do I know I am successful, if I haven’t created a tangible way to measure?
“Mark McCormack reported in his Success Secrets newsletter that 83% of Harvard School graduates had no goals 10 years after graduation; 14% had goals, but not in writing. The remaining three percent had written goals — and were earning 10 times as much as the group with no goals. Even the 14% whose goals were not in writing were earning three times as much as those graduates who had no goals at all.”
To write the goals of tomorrow, I need to know where I am today. I need to define my current industry’s position, so that I know if I’m happy with my plan and where to tweak it. Again – living paycheck to paycheck in this industry can be devastating. The agents I see making the most mistakes and treating their clients poorly are the folks who “MUST” get to closing with this deal; it “MUST” close or they won’t make their mortgage. I’ve heard that a lot, over the past few years, but strangely enough I heard it when you had to be a knuckle-head not to have a closing. Yes, even five years ago, when you could trip and fall into a closing, there were those agents without plans or backups that freaked out if a closing was delayed, because they had already spent the money.
You need a plan. You need a self assessment. You need a future initiative and you need accountability.
Here are a few other resources that you should have to help your planning (I do not benefit at all from giving these resource recommendations):
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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