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The Vendor Client Relationship – Oh How Things Are Changing

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I don’t want to pay for your service

Over the past two years, many posts here on AG have been written about how the climate is changing between clients and vendors.  There seems to be a new reality that leaves many vendors (that’s you) scratching their head that for some reason every potential client they meet wants something for free.  In fact, they want to know what you know before they’ve even asked you the question.

I’ve eaten the food, but I don’t want to pay full price for it

We’ve had many argue with us that it was a blanketed statement that something was changing, and our response has always been to give it time, soon, this mentality will reach their office doors, telephones, or even face to face.  My feeling has always been that most just don’t want to change, most don’t want to adapt, most just wish to live in denial.

I can do this myself, I don’t need you

Interestingly this new phenomenon isn’t just happening within the real estate space, in fact it’s everywhere and in every space as demonstrated in this video.

Let’s barter

Take two minutes to watch this video:

Benn Rosales is the Founder and CEO of The American Genius (AG), national news network for tech and entrepreneurs, proudly celebrating 10 years in publishing, recently ranked as the #5 startup in Austin. Before founding AG, he founded one of the first digital media strategy firms in the nation and also acquired several other firms. His resume prior includes roles at Apple and Kroger Foods, specializing in marketing, communications, and technology integration. He is a recipient of the Statesman Texas Social Media Award and is an Inman Innovator Award winner. He has consulted for numerous startups (both early- and late-stage), has built partnerships and bridges between tech recruiters and the best tech talent in the industry, and is well known for organizing the digital community through popular monthly networking events. Benn does not venture into the spotlight often, rather believes his biggest accomplishments are the talent he recruits, develops, and gives all credit to those he's empowered.

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26 Comments

26 Comments

  1. Andrea Schulle

    June 29, 2009 at 12:33 pm

    Benn – you have hit the nail on the head with this one! Lani shared this video w/me a couple of weeks ago. I am dealing with this constantly now. Always something for free or at a reduced rate – nudge, nudge, wink, wink. Would you go to Macy’s or Nordstrom and ask them to give you an extra discount? See if your waiter at Truluck’s would throw in an extra crab claw just b/c you are you?

  2. Jeremy Blanton

    June 29, 2009 at 12:46 pm

    That video is one of my favorites!

  3. Ines Hegedus-Garcia

    June 29, 2009 at 12:54 pm

    CRACKING UP!! I recently had customer that contacted me to help them, then called me a couple of weeks later for me to congratulate them because he was under contract (using another agent) and to please give him names of my inspectors and other providers because they were so psyched about their new home. Then called me 2 weeks after that to ask for help because the deal was falling apart. So we give them the info, they don’t think they owe us loyalty, they want us to share our resources and we are supposed to be happy for them. (SIGH)
    Goes back to this: I also choose who I do business with – it’s not a one way street. Just because we are service providers doesn’t mean we will give it away (at least I won’t). I will provide value, I will show and reinforce the fact that I do provide value….not every client will need my services, but please don’t use my resources either – they are there for the exclusive use of our clients, the ones that appreciate us.

    (that sounds like a rant, no?)

  4. Anita

    June 29, 2009 at 1:09 pm

    rotf lmfao!!!!! Just love the look on the stylist’s face when he says “you want me to work for free?”.

    Thanks Benn, you’ve made my day.

  5. Joe Loomer

    June 29, 2009 at 1:26 pm

    Awesome Benn, just had a transaction where my client (seller) brought her sister in the mix – a mortgage lender in another state and location that has zero VA presence (it’s 23% of our market).

    The sister – herself on a commission-based income – starts asking me why I’m not making all these concessions to my comission I negotiated up front with the listing agreement and why I haven’t discounted my services to help my actual client out with the repair costs in the contract and subsequent inspection and appraisals. Once I told her I don’t work for her and would be happy to have that conversation with my actual client – her sister – she kinda backed off. Still – yeeesh – someone a branch of the same industry and word-one is “thanks for doing EXACTLY what you promised to do, but I want you to cut your pay.”

    Navy Chief, Navy Pride

  6. BawldGuy

    June 29, 2009 at 1:30 pm

    This video portrays exactly what I was talking about in my transparency post recently.

    Show us how to do it. Give us a discount. It never ends if you let it.

    At some point ‘service providers’ are gonna hafta grow a pair. You’ve outed so many real estate agents for what they’ve become: scared little girls whose guiding hope is not to be ripped off too badly.

    Thanks Benn.

  7. Paula Henry

    June 29, 2009 at 2:09 pm

    Ah – the never ending “just a little off” saga, because you are my friend, or brother’s – sister in law’s – nephew. It is sometimes difficult to judge who the person is who will throw you aside for a few hundred dollars.

    The perceived savings is rarely worth it and the same is true in every industry – you get what you pay for.

  8. Cheryl Allin

    June 29, 2009 at 2:10 pm

    I love this video, it so speaks to what us website and graphic designers have to deal with on nearly a daily basis. We get the, “You can do it for us for free and add it to your portfolio…” or the “I want you to completely redo this and change everything but I don’t feel we should pay any revision fees.” I’m sure it exists in nearly every service industry. It might not always be easy to recognize if you’re doing this to any of your vendors, but it’s a nice reminder.

  9. Matthew Hardy

    June 29, 2009 at 3:11 pm

    The message of this video is as old as sales itself. The *really* important message of the video is not in the requests of the buyers, but in the lame responses from the sellers. If a seller/vendor doesn’t understand and appreciate the value they bring to the marketplace they’ll get taken advantage of by buyers like those in the video all day.

    I used to write custom software for hospitals, universities, corporations and governments. I *always* required a large retainer before starting *any* work and that all invoices were due and payable upon receipt. One time, when presenting to the City of Baltimore, the big-shots on the other side of the conference table explained that they didn’t pay retainers and that all work must show itself stable and to their liking for a period of six months before any of my invoices would be paid.

    I did not move from my position even a centimeter.

    I got the contract (the one I wrote), the exact amount of my retainer and my invoices were paid immediately. Moral: if you’re unsure of the value you bring, consider yourself ripe for the pickin’.

    On a side note, author Tom Foremski wrote a very interesting article I recommend to you entitled “The Internet devalues everything it touches”available here: https://tr.im/qcCd

  10. Benn Rosales

    June 29, 2009 at 3:47 pm

    Matthew, you’re right, the paradigm isn’t the question, the new paradigm is the rapid fire nature of the question in volume.

    I remember my grandfather when I was little telling a client (non-real estate) that he’d be happy to provide a discount if his clients would be kind enough to deliver the pink slip to the folks that would be losing their jobs.

    I didn’t understand what he meant until 2005 when I stood face to face with a client asking me to rebate 99% of my commission for my hard work- you can guess how that conversation ended.

  11. Matthew Hardy

    June 29, 2009 at 4:00 pm

    Rock on Benn. Do a good job and get well paid.

    PS: This is for Lani… https://www.youtube.com/watch?v=tVlbvxd0Q10

    High-quality real estate agents (and cars) cost money. 😉

  12. Matthew Hardy

    June 29, 2009 at 4:38 pm

    Also, just came across this excellent article in The New Yorker entitled “Priced To Sell, Is free the Future?” by Malcolm Gladwell. Available here: https://tr.im/qddt

    My favorite quote: “Free means never having to make a judgment”; something we see the back-end of every single day: agents who wasted their time on tech that did not afford them any leverage over their work but simply became another thing to move *from*.

    Especially interesting to read along with the above mentioned “The Internet devalues everything it touches” (https://blogs.zdnet.com/Foremski/?p=556)

  13. Ilene Haddad

    June 29, 2009 at 8:42 pm

    Welcome to my world.

  14. Lori Luza

    July 1, 2009 at 6:15 pm

    Nail. Head. Driven.

    We see this a lot in photography, too. After all, everyone owns a digital camera and uploads images. What they don’t have is perspective on retouching 1200-1500 images after a wedding shoot with multiple photographers and uploading them for all the guests to see. They just fail to consider the scope (as well as the costs of having redundant equipment should something fail as the bride is walking down the aisle.)

    It’s been a difficult challenge to educate our potential clients while keeping the kind of decorum necessary for a wedding consultation with a bride and her mother and future mother in law. Slowly, I think our industry is getting there….but it’s teensy tiny baby steps.

  15. Debbie Holloway

    July 6, 2009 at 2:17 pm

    This is the sales society we are in today. The question is, how do we as a whole change the current attitude of getting it for free? Those of you following me on twitter, check this out!

  16. Tom Ferry

    July 20, 2009 at 12:22 am

    Your post and the video, in my opinion, speak to the value shift that’s only amplified by the current economy. We still want it all, though too many over life styled badly and are in trouble… so now I want it all… for free.

    thanks for the post!

    TF

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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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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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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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