How to
“Green” isn’t just for new construction
Green Crusade
As I’ve written before, I have spent the past year and a half learning the Green Building scene and I’m sadden to say that I still feel as if I’ve only scratched the surface. There is simply a ton of information out there and frankly not all of it agrees, and some of it is just a bit too political or cult-like for me. Having said that, I do think that social responsibility and healthier living is always a positive thing. Currently there are at least three programs that real estate professionals can take; Earthcraft, NAR’s GREEN designation and Eco-Broker. I’ve subscribed to several Green blogs, SmartGrowth.org is my favorite site thus far. It’s a very practical site and has tons of resources.
Isn’t building “Green” more expensive?
One of the largest barriers to building “green” seems to be the cost. The training programs I’ve attended have estimated that increased costs are maybe 3%-5% over traditional construction. Our local Green builders say that they can build the home for the same price, and with the savings in utilities, it could actually be less. I’m not necessarily convinced, but I suppose it depends on what the consumer really wants and how these things are defined.
The real issue that I have, is that it’s hard to find an appraiser who can or will give additioanl value to a green system home. Therefore, the ROI of these improvements are questionable. It seems that Real Estate Agents and Interior Decorators are taking steps to become better educated, but those who actually determine value are not quite as progressive.
“I don’t buy into that Green Stuff”
So you don’t agree with the politics of the Green movement and you’ve not decided if “Climate Change” or “Global Warning” are just semantics…. That’s ok. The reality is, that thanks to the media and HGTV, your clients are making that distinction for you. Not all, but a growing number of consumers are looking for these healthy and utility reducing options. It’s important for the practitioner to understand what the consumer’s needs are and how to best serve them. You can think of them as Eco-Chic or Eco-Conscious, but either extreme can still benefit from your knowledge. Energy efficiency is good on many levels. Therefore I challenge everyone to put aside politics and take the time to educate yourself on what your client’s needs are.
ASID and USGBC REGreen Handbook
The American Society of Interior Designers’ Foundation and the U.S. Green Building Council have hooked up and created an outstanding free resource. This is a good tool to have linked to your web page and have provide to your clients when they are thinking of remodeling or making upgrades in preparation to reselling.
REGREEN Guidelines – Free Legal Forms
Leed For Existing Bulidings
LEED is a certification program for GREEN Buildings. In September of 2008, LEED released a manual for certifying existing Buildings as LEED.
Leed for Existing – Free Legal Forms
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!
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.
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:
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.
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.
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!
-
Opinion Editorials1 week agoAmerica has an addiction to being busy, here’s what we need to do about it
-
Business News1 week agoEmail remains the top communication tool for businesses – here’s why
-
Business Marketing2 weeks agoNews flash: Your coworkers are not your family
-
Business News3 days ago10 ways retailers track repeat customers that you can implement now
-
Business Marketing3 days agoUse nostalgia as a marketing niche for your business today
-
Business News5 days ago5 reasons why you need a mentor, stat!
-
Opinion Editorials1 week agoThe one easy job interview question that often trips up applicants
-
Business Entrepreneur1 week ago4 tips for success for acquiring a business, and how and why to do it
Erion Shehaj
January 30, 2009 at 10:02 am
Matthew
You should also check out Stephanie Edwards-Musa’s https://turninghoustongreen.com . In my opinion, it is one of the thoroughest blogs out there on green building.
Matthew Rathbun
January 30, 2009 at 5:15 pm
Erion,
Steph’s page is amazing and I’ve passed it along to lots of folks. It is certainly one of the most thorough Green sites out there and a great example of agent-consumer education.
It’s also one of the most aesthetically appealing sites out there.
Stephanie Edwards-Musa
January 30, 2009 at 5:30 pm
*blush* Thanks Guys. 🙂
Matt, there is a course out there now for appraisers but not many have taken it. Also, I contacted to Appraisal Institute to find one in Houston that had taken it and they said “We are not allowed to disclose that”
What? That was crazy.
Anyhow, the cost to build is directly related to the design and products used. It can be done for less for sure. I’m going to write a post soon about a LEED Gold property here selling for $15 sq/ft less than comparables. Crazy!
Glad to see your interest in Green Building. More professionals in all corners of the industry need to learn more about it. It will soon be a normal way of building..no green in front of the word. 🙂
Judy Peterson
January 31, 2009 at 6:27 am
Matthew-this is an excellent article with good resources and comments for me to followup on. Thanks!
Esko
February 8, 2009 at 1:42 pm
Matthew,
Green housing is still trying to make its way into the mainstream thinking and acceptance. Its progress in recent years has been pretty good and there is plenty of info available on the Internet. The current economic stagnation is temporarily, it seems and I hope so, slowing the pace, but long-term it is the only choice we have. We need strong public and private direction to educate the consumer of its merits.