Coaching
Reality checking real estate market conditions – feelings, perceptions and facts
My perception of reality isn’t always factually accurate.
Mostly I’m a positive guy. But every other day or so, I think and feel like opportunities are scarce and market conditions outside my control make success elusive. Do you ever have thoughts like that?
When I think thoughts like that, my perceptions limit me. When I feel like business is slow and scarce, my spirit saddens, I roll uptight tense and I struggle. As a result my attractiveness dims and my effectiveness dulls. People and opportunity don’t seek out and choose the dim, dull and struggling. Opportunity gravitates toward the positive, not the sad and negative.
To succeed, it’s important that I understand the difference between what I perceive and feel, and factual-reality. So, I have this daily Reality-Check thing that I do. It keeps my head on straight.
Here’s how I Reality-Check myself and my real estate market.
I consciously suspend my perceptions about my market. I don’t consider how I’m feeling or what others are saying. I flip my logical thinking switch to ON, suspend my beliefs and go directly to the MLS to see what’s really happening in my market.
Here’s what I do:
I search listing activity for the last 30 days. How many new listing came on the market per day?
I search pending/contracts written activity for the last 30 days. How many listings went under contract per day?
Running these simple searches give me the facts about actual activity in my market place. With the facts in hand I’m not poisoned or paralyzed by the negative opinions, speculation, conjecture or feelings of other people. What I discover is that no matter how well or poor I perceive my market to be, there are always available opportunities and possibilities. Always.
Whether I’m feeling flush or frustrated, every day sellers decide to sell and new listing come on the market. Every day buyers are buying. This daily Reality-Check sets me straight. People buy and sell everyday. The only question is, who will they choose?
Understanding the facts gives me hope and inspiration. Business is there, if I want it. It doesn’t matter what other’s report, believe or perceive. It only matters what’s really happening in my market, and what I’m willing to do to attract, discover and earn what I want.
I run my reports every morning. When my feet hit the street, I know what’s real and what is possible. I know the only thing holding me back is me. If I take action, I can sieze opportunity and change my future.
That’s how I Reality-Check. How do you Reality-Check yourself?
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Cheers and thanks for reading.
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!
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sfvrealestate
April 11, 2011 at 9:11 am
How do I reality check? Vodka.
Ken Brand
April 11, 2011 at 9:40 am
If you’re going down that road, Belvedere would be my recommendation, or Crown with ice-cubes and a splash of H2O. Cheers:-)
Mark Brian
April 11, 2011 at 9:40 am
For my dose of reality, I pretty much do the same things. I look at the MLS and even try to blog every week about what I see: what sold, what was the best deal, what the average DOM was for the homes that closed, new listings, expireds, etc etc.
Ken Brand
April 11, 2011 at 9:58 am
That’s the way to roll Mark. People like agents who know what’s really happening. Thanks for sharing. Cheers.
Jason Farris
April 11, 2011 at 7:21 pm
absolutely loved this and could not have come at a better time as I was emailing my clients about market conditions and reducing the price of their home.
BawldGuy
April 11, 2011 at 8:01 pm
As a RE investment broker/advisor I have competition from literally all over the world. It not only keeps me tied to daily reality, it’s a fine check. An example is the #2 source of buyers for investments in areas I really like. From another continent. It tells me they perceive the same thing I do, which is, weirdly sometimes, comforting.
Our perceptions can screw us up or positively ignite us. Matching our perception to the world’s reality sure makes our daily travels more palatable.
ken brand
April 11, 2011 at 8:14 pm
Thanks for sharing Jeff. That’s exactly right, when they use fear, counter with facts. And in all cases, proceed with extreme correct actions. Cheers man.
MH for Movoto
April 12, 2011 at 3:48 pm
Great advice for anyone, in any market. Simple and eternally true – opportunity gravitates toward those who are optimistic enough to give it the time of day. Right?
ken brand
April 12, 2011 at 3:59 pm
As right as rain.
Diane Tate
April 13, 2011 at 2:02 pm
I needed a reality check today for sure. It is always about me, my attitude and what I am willing to do–the willing to do is critical. Thanks. DI
Ruthmarie Hicks
May 14, 2011 at 3:32 pm
You also have to be realistic about your chances of gettng business in this environment and how much it will cost. I was getting business. The big problem was that it was costing me MORE to get the business than I was earning. That's a problem. The question was why? I found the answer eventually – and realized that I had to move my focus to another municipality. After some research – the agent that had closed the most transactions in our city for last year – had only closed 2 more sales than I had in the same city. He had closed 9 sales – I closed 7 sales. But I did more in gross sales volume. How? I happened to have a few buyers who went to neighboring towns. The desirability of areas can change quickly. If the highest number of transactions for an entire city for any one agent is 9 – you have a problem with sales volume or/and market saturation. Know what CAN be done realistically . Don't just rack up the numbers and say "I could have had all 30 of these sales!" Becuase that doesn't work either. Think about what you COULD or SHOULD have gotten and go from there.
ken brand
May 15, 2011 at 8:24 am
Good points Ruth, it's super important to know what you're putting in and what you're taking out as well is where the real opportunities are. Thanks for sharing and all the best of success in your redirected efforts. Cheers.