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Buying a New Home 

Last month we sold our home; today, we move into a new home. The process has provided a lesson in what my clients go through and I believe we should all sell and buy our personal homes occasionally to step into our clients shoes. I have moved twice since I became a REALTOR®. Both times were to another state and this will be my last move. I think!

My Requirements 

We only have one child left at home, so we are downsizing. I knew exactly what I wanted in a home. It had to be ready to move in to. I don’t want to paint, change flooring, remodel the kitchen or the bathrooms. I don’t want to landscape, I want three bedrooms, an office, a large kitchen, a fireplace, three car garage and tree lined yard. I don’t want to look at my neighbor’s backyard.

Oh, and all on one level! Now, aren’t you glad you are NOT representing me?

What REALTORS® Thought

We did find the perfect home for us, with everything we want. Once I started talking to other REALTORS®, though, they all tried to sell me a home THEY have listed. Okay, I applaud them for doing their best for their seller, but they did not listen to me. No, I don’t want to make the living room an office. Yes, I need three bedrooms and an office. NO, I don’t want a two story. There may be a pond in the backyard, but there are no trees. A two car garage will not work. Are you sure you want to live in Indianapolis? YES!

A Lesson Learned

I wonder how often this happens? Do we try to make a home fit the needs of our client instead of finding a home which does fit the needs of our clients? Do we take time to really listen and hear what they are saying? Like my clients, I am buying a lifestyle. A lifestyle which works for me. I’m sure my associate’s and peers don’t actually recommend homes to their clients in the same manner; still, the lesson is one I will not forget.

Paula is team leader for The "Home to Indy" Team in Indianapolis . She is passionate about education and client care and believes an empowered client is better prepared to make good decisions for themselves. You'll find her online at Agent Genius,Twitter and sharing her insights about her local real estate market at Home To Indy.

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9 Comments

9 Comments

  1. Lisa Sanderson

    October 31, 2008 at 7:18 pm

    That is a great lesson that everyone needs to learn. The lesson I learned from buying & selling my own real estate was about the emotion involved in the process. I did not have a clue until I did it myself. I was a basket case at every step in the process and this experience made me a much better, more compassionate agent to others.

  2. Paula Henry

    October 31, 2008 at 7:22 pm

    Oh, Lisa – we won’t even get into the emotional part – it was plain crazy. There were a lot of lessons learned during the process, but having my agent friends and associates try to make their listing work for me was frustrating, comical and enlightening. I hope I never do that to a client or friend or another agent.

  3. Missy Caulk

    October 31, 2008 at 8:51 pm

    Glad you found what you were looking for. I have encountered the same thing, even setting up showings. You call to set up 123 Main and they want you to also show 234 NO.

    Our buyers pick out the homes they want to see not us. Unless we feel they really missed something great.

    Good lesson.

  4. Paula Henry

    November 1, 2008 at 5:54 am

    Missy – Like our clients, I looked at many online and rejected them. Sometimes, it was amenities; other times the neighborhood or distance from the freeway.

    Being the buyer was just as difficlt as selling.

  5. Bill Lublin

    November 1, 2008 at 6:54 am

    Paula: I related to your post because I have long said that REALTORS should be forced to move every couple of years just so we remember how stressful the process can be, no matter how experienced you are with it.

    I’m not sure that I find agents culpable for offering you things that are not hat you specified, since the home buying process for so many people as about learning what the existing housing stock is, and how it can meet the needs of the potential buyer. The person who told their agent that they wanted a 4 bedroom colonial and then ended up buying a 3 bedroom ranch home is almost apocryphal , so there should be some understanding for the submission of properties it features other than those requested by the potential buyer. I would find it unacceptable if the agent were to promote a property other than the one that the buyer indicated they had interest in, but I don’t think that was what you were talking about.

    @Missy, Though I hesitate to disagree with a lady I respect so much, I think a part of our job as agent is to submit to others all of the potential matches for their requests. If the co-op agent doesn’t want to show the property, they don’t have to, but we would be remiss if we didn’t suggest it.

  6. Paula Henry

    November 1, 2008 at 7:07 am

    Bill – I agree, I do applaud them for their efforts in represting their clients and listings, but you would not believe the ridculous homes offered to me.

    One agent from my office went through her complete inventory with me, trying to make one of the properties fit. Being a REALTOR, I had a better idea of what I wanted and would not be satisfied with anything less.

    I have seen buyers who have a list of “required” amenities, then go buy something we never thought they would.

    When I first meet a buyer, I have an information form for them to complete with a list of criteria they rate as either have to have, could live without or definitely do not want. I use the list to narrow down the available inventory and you’re right – sometimes they buy something which doesn’t resemble the list. It really depends on the experience of the buyer and whether this is home #1 or #4.

    This business is never the same day to day.

  7. Karen Rice

    November 2, 2008 at 5:41 pm

    Quote: I have seen buyers who have a list of “required” amenities, then go buy something we never thought they would.

    EXACTLY! I had lakefront buyers last summer who ran me ragged. They DEMANDED a certain sized cabin on a POWERBOAT LAKE THAT ALLOWED JET SKI’s. The jet ski and cabin size was for them a deal breaker/maker, or so I thought.

    I could have showed them other homes but they actually were annoyed with me when I sent them something “close” to what they wanted (either the cabin was too big, or something.) They made it clear what they wanted.

    Imagine my surprise when they called me one day with “terrific news.” They found a cabin at least an hour north of where they told me they wanted to be, but no, they don’t allow jet ski’s but oh well, can’t have everything right? Thanks for your help but we’re buying this FSBO.

    Seems like you’re gonna get shafted either way – by looking strictly for what they want, or trying to nudge them into something SIMILAR to what they want but NOT QUITE.

    Give these agents a break. They’ve probably gotten “scammed” by “lying buyers” who said one thing but bought another – from someone else who gave them something “similar” to what they wanted.

  8. Paula Henry

    November 2, 2008 at 7:14 pm

    Hi Karen – I think your scenario has happened to us all and the frustration is incredible. I have also had clients who have bought something which was nothing like what they started out searching for.

    The big difference and my take away in this instance, was, I am an experienced home buyer who is downsizing, in addition to being a REALTOR, so I knew what I wanted.

    I belive this holds true for the majority of people who are downsizing. Through the years, they (I) have learned what is most important to me; what we can and can’t live without and what we are willing to change should we not find the perfect home.

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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: 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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