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The Seller HAS a Problem and Then BECOMES One

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Marketing

The seller has a problem.  They have a house they want to sell and need to sell it at a certain price.  They hire an agent who takes on the task of selling the home.

"Maybe if you had more open houses?"

"Have you thought about running an ad in the Wall Street Journal?"

"There are a lot of people from California with money because the prices are so high there.  Run an ad in the L.A. Times."

"If you go to (large local employer) you can put a notice on their bulletin board about the house."

This is just a partial list.  The limits of the list are only the limits of the seller’s imagination.  There are hundreds and hundreds of these great ideas for getting the house sold.  Sometimes agents try them all (one at a time, of course).    Usually, the agent notices that it didn’t work.  But for some strange reason this does not prevent the agent from attempting the very same science fair project again at a later time, and surprise: they get the exact same results they did the first time.

Walking through the office about 15 years ago a very nice agent asked me if I would go in with her on running an ad in one of the picture magazines.  She didn’t want to buy the whole page herself and was looking for a couple of other agents to put one of their houses in the ad, in order to defray the cost of the ad.  I asked her why she was running the ad and her answer was, "To make the seller happy".  I asked her if she believed that running an ad in the picture magazine was very likely to sell the house.  Her answer was no, she did not think it would even help sell the house.  I told her I did not ever run ads on homes because they did not make any difference in getting the home sold.  She agreed with me.  But she still ran the ad.

It was easier for her to run that ad than it was to tell her seller the truth.  My answer to sellers on that issue is, "If an ad in the paper or some magazine was going to sell their home they don’t need an agent.  They could just run the ad themselves and save the commission."  That’s the truth.

From Anne:

ok, so if I may start my question asking. My goal is to get seller’s to stop getting so addicted to my marketing efforts and more focused on price. I feel my current listing presentation does a pretty good job (although now after star power I’m going to make it even better) as some are well trained while others act like cocaine addicts and can’t get enough of my open houses and are always calling me with new ideas to get "exposure" to their potential buyer and crap like that. Some of them I flat out tell them no and others I feel so sorry for because they are seriously in trouble if they can’t sell financially. How do I handle this? any thoughts?

Yes.  Get a subjective reality on what does and does not cause houses to sell.  Get rid of all of the little points of "reasonableness" on this subject.  The "unsolvable problem" does not exist in the mind of the seller.  I do understand that it seems like it does.  It exists in your mind.  You do not have certainty that what you are doing is enough.  There is some nagging doubt that there is "something" you aren’t doing that you "ought to do".  This point alone opens the door to all sorts of nonsense (the not very fun kind of nonsense).

If you believed that running those ads or holding those open houses (or whatever "exposure" you or they could dream up) was going to cause the house to sell, you would be doing them.  You wouldn’t need any sales pitch or prodding.  You would just do them.  There are two factors here: what works for you and what you "like" to do.  Open houses can work.  I don’t like them.  Therefore I don’t do them.  This is not a statement that others should not do them or that someone who does not know how to correctly hold a house open should not learn how to do it. 

I believe that if you re-read the first paragraph after your question and wanted a simple answer to what caused a home to sell (assuming the usual is already being done) you will come to realize what you already know: price.

Russell has been an Associate Broker with John Hall & Associates since 1978 and ranks in the top 1% of all agents in the U.S. Most recently The Wall Street Journal recognized the Top 200 Agents in America, awarding Russell # 25 for number of units sold. Russell has been featured in many books such as, "The Billion Dollar Agent" by Steve Kantor and "The Millionaire Real Estate Agent" by Gary Keller and has often been a featured speaker for national conventions and routinely speaks at various state and local association conventions. Visit him also at nohasslelisting.com and number1homeagent.com.

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17 Comments

17 Comments

  1. Bob

    December 18, 2008 at 1:00 am

    Standing up and applauding.

    Last 5 weeks, 3 of my listings closed above the FMV determined by the short sale lender – these were at or above market, not a Barry Cunningham deal. No advertising – not even a yard sign. Price it right, know how to negotiate, and support your position, and you’ll get the right price.

  2. Paula Henry

    December 18, 2008 at 5:41 am

    Russell – Sellers need a professional to tell them what does work in their market. When the Realtor has any doubt, they are subject to the whims and fantasies of what the seller thinks will sell the house.

  3. Jim Gatos

    December 18, 2008 at 6:35 am

    So, if I advertise “THAT” house on Jay Leno’s Tonight Show, that won’t work, no?

    Just kidding… but I think BEFORE everything else, the price has to be right..

    Everything else won’t work.. if it’s not priced right…

  4. Lisa Sanderson

    December 18, 2008 at 7:15 am

    Having confidence in your own knowledge and expertise is critical. If you sound wishy-washy, they are going to feel like you *need* their advice and will give you boatloads.

  5. Susan Milner

    December 18, 2008 at 1:20 pm

    Great reminder. I don’t do print marketing. Pretty much a blanket comment. That is because it does not work. At least not in MY experience. Price fixes everything too – at least if people can find it.

  6. Laura Cannon

    December 18, 2008 at 1:33 pm

    Great post! I have to admit I have fallen victim to running ads in print just to satisfy a seller. And, of course, it doesn’t work. All the serious buyers are on the internet and in Realtors’ cars looking at houses.

    Thank you for reminding me to stand my ground. After 15 showings and no bites, it’s the price. And an ad is not going to fix a pricing problem. It is so obvious, yet I listen to sellers complain and give in to their demands. It’s time for tough love! Thanks again for the post! 🙂

  7. fred

    December 18, 2008 at 3:26 pm

    Great post and this is exactly why sellers are listing with me. Savvy home owners know that internet exposure is the key. Paying a flat fee to list on the mls, pricing it right (and lower because of saving the commission), then selling quicker.

    If you ask most agents about print advertising, they say it doesn’t work. But if you ask agents how they stand up against flat fee agents, it’s the opposite! Some agents will “say anything” to get a listing. I have stories from clients to prove this. Go figure.

    Fred Romano

  8. cindy knight

    December 18, 2008 at 7:23 pm

    We only do things if the ROI makes sense – advertising and open houses are not good. We do not like or do open houses either and stopped advertising many many years ago. We tell sellers “what they need to hear not what they want to hear” and we are doing well. Good post

  9. Brian Brady

    December 19, 2008 at 2:36 am

    I think I’ve heard you say this 40 times and you’ll still haven’t said it enough.

    Nice work

  10. Mariana Wagner

    December 19, 2008 at 8:06 am

    Absolutely.

    We often tell our sellers, “Yes. Our marketing sells homes… but it only sells homes that are priced competitively. No amount of marketing in the world would make a buyer spend MORE for your house than for your competition.”

  11. David Sherfey

    December 19, 2008 at 10:05 am

    We hit the seller with the truth: “those print ads, wherever they are, are selling the agent – not the house.” There isn’t enough information in a print ad to actually sell a house.

    Price IS the most important part of a marketing strategy to sell a house. The best staged home and finest internet marketing presentation will not sell an overpriced house. Price is the gate on the picket fence in front of the house, and buyers won’t even walk through when the one down the street is asking for less.

    Once the price is right, then the other Ps of marketing can kick in and get the job done.

  12. Missy Caulk

    December 19, 2008 at 10:08 am

    …any house will sell in any market if it is priced right. The problem is the Realtor they hired not standing up and telling the sellers that. Ridiculous.

  13. Debra Sinick

    December 19, 2008 at 8:31 pm

    Price and condition, price and condition, that’s it. No amount of ads or opens will make a difference if a home does not stand up to the competition. Real estate 101

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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!

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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?

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.

  1. 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.
  2. 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.
  3. 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.
  4. 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
  5. 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.

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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:

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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.

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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.

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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!

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