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Three steps real estate leaders can use to disarm tense situations



Portrait of the ultimate tense situation, photograph by Polina Sergeeva.

Disarming tense situations in business

Harvard Business School Professor Rosabeth Moss Kanter analyzes three steps leaders use to disarm tense situations, which is critical in the intense practice of real estate. Consumers are upset by difficulties in lending or how long their home is sitting on the market, while team leaders and brokers are shouldering the burden of hearing agents vent frustrations of market conditions limiting their income.

Any industry that is negotiation-centric is tense, but add in an economic collapse on top of that, and real estate professionals and their consumers are experiencing tense situations in nearly every transaction.

Kanter says empathy, support, and invoking higher principles is the answer to disarming tense situations. Leaders, be they brokers, CEOs, or a Realtor leading a transaction, succeed best when equipped to handle tense situations.


Kanter says the first step of disarming a tense situation is to empathize. “This step is a cliché because it’s true, and it works.”

A client calls their Realtor and is angry that they haven’t heard any news in three days and their listing has been on the market for three months. The Realtor has the choice of over-explaining immediately, or being defensive (the most common response) and blaming the market, but there is nothing empathetic about a defensive speech. The Realtor should let the client vent, hear them fully, recap what the client is saying, “I hear your frustration in not hearing from me for a few days and about your home sitting on the market. I assure you, I share in your frustration. Here is what I have been doing to insure a rapid sale to beat the six month average time on market in your subdivision.”

Offer support

Kanter notes that leaders “demonstrate commitment to lending a helping hand if the situation gets worse.”

A broker is on the phone when a new agent stands in the doorway tapping his foot impatiently. The new agent vents to the broker that they have spent four hours per day making cold calls, three hours social networking online and blogging, two hours trolling the mall and an hour on the [insert famous real estate coach here] system, but to no avail, he still has not had a transaction in his first two weeks.

The broker will know this pain and realize how hard this new agent is hustling and will first empathize (“I remember my first few weeks”) and second lend a helping hand (“my first few months produced nothing, I was misdirecting my energy. Why don’t we do lunch and we can see about refocusing your priorities and see if my experience can give you some shortcuts?”).


The third step toward defusing a tense situation is to invoke higher principles and uplift the other person. “To get perspective, zoom out to remind people of the vision, purpose, and principles that make the frustrations worth enduring. Lifting eyes to the prize can smooth tensions and inspire renewed effort.”

A Realtor has to call a young couple buying their first home and tell them that the house they put in an offer for has sold to a higher offer, and the couple is frustrated because they just got off the phone with the lender who has “misplaced” some of their paperwork and is asking for difficult to locate paperwork again and until they do, they don’t qualify. The couple is frustrated and wants to call the whole thing off. But they live in an apartment an hour away from their offices, they have twins on the way, and their current living situation is not feasible.

The Realtor will listen and empathize, offer help to do the homework for them and find three houses to see over the weekend, meanwhile calling the lender to sort things out, but ultimately, the Realtor will remind the couple of the big picture, and without being cheesy, will note that she knows the couple needs a new home and the drive is tough and the twins need space, so she is going to work overtime to make that happen.

Real estate leadership comes in many forms, and it is traditionally a tense career filled with late nights and compromises. Empathizing, offering help and uplifting are three simple steps to disarming tense situations and helping situations from spinning out of control.

The American Genius is news, insights, tools, and inspiration for business owners and professionals. AG condenses information on technology, business, social media, startups, economics and more, so you don’t have to.

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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!



magic eight ball

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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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:



short sales standoff

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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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 sales

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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