Broker and Technology
Last week I had the opportunity to teach a risk management class for Brokers, in regards to technologies used by agents. I would guess that the percentage of Brokers who have bought fully into technology were about 50%. Not surprisingly, most the Brokers who seem to actually get it, were also those with large companies and higher production levels per agents.
After the class several of these brokers stopped me to thank me for helping them find more policies and ideas to help their agents become more productive, as well as safer in their marketing. However, a few came up to say that they still think that consumers usage of the internet was over-rated and devised by younger agents who enjoyed the technology. Although the evaluations turned in by the Brokers were very positive, one helpful Broker commented that they would have found it easier to follow, had I not referenced resources that they were not aware of. My presentation only referenced, FaceBook, Blogs, ActiveRain and YouTube. How sad that there are office leaders who are still so disconnected….
Why Are We Still Trying to Convince Them
One of my friends, who is a new managing broker and was in the class, observed at the end: “It amazes me that we still have to go over this with Brokers.” I agree with her, but every time we review it, I get a room full of starry eyed office leaders who just haven’t caught up yet.
Swanepoel made this observation from a 2007 survey: 87% of Brokers [surveyed] feel that servicing smarter and more informed consumers as their largest concern”
I find it somewhat disconcerting that the largest majority of Brokers feel that a smart consumer is an obstacle. The Real Estate industry needs to really refocus on the consumer and how they need the practioner to serve them. No longer can the MLS book be kept under the desk. Listing information is ubiquitous and all the consumer is left with is raw data. Danilo Bogdanovic wrote a great post on this a few days ago.
Marc Davidson of 1000 Walt Consulting is quoted in Swanepoel’s Trend Report: ” How Long can a trillion dollar industry sustain disregard for the iPOD, MySpace, Facebook, YouTube, Starbucks, text messaging and brand consious consumers?”
I completely agree.
I think most of us in RE.net get the concept of technology’s role in working with obtaining and working with clients. It’s a tool to do a better job and not, at all, a tool for eliminating the agent’s need for good client centric service and face to face interactions. Let’s look at what client telling us by their behaviors and preferences:
How fast does a on-line consumer expect to hear back from their agent?
I heard a vendor, during an interview last year, state that on the national average it takes agents 52 hours to respond to a potential consumer’s e-mail inquiry. (disclosure: I can’t recall who said it and I can’t verify the information, but it’s close to my personal experience)
When the consumer was considering what they wanted from an agent during initial contact, this is what they were looking for:
I find it very interesting that a large determining factor in who the client hired was based on who quickly the agent got back in touch with them. The second (but very close) factor was the most qualified. Most interesting was the fact that only 10% of consumers confessed that lowest commission was a factor in hiring an agent.
What did the Consumer utilize:
84% of Consumer used information from a Realtor® to research their home purchase
84% of Consumers used the Internet to research their home (yes the consumers used the internet just as much as they used the Realtor®
Frequently Used Resources for the Consumer
Consumer found the following useful during a transaction
First step in the Real Estate Transaction
55% Researched On-line
20% Contacted a Real Estate Agent initially
When looking on-line, the consumer was looking for:
95% Properties for Sale
21% Information about the Area
4% the REALTOR®
4% Firm / Company
(So why are so many agents still using their webpages as a resume or ‘all-about-me’ webpage as if they were part of an on-line dating service?)
Demographics of an on-line consumer:
64% are Married
18% are Single Females
Median age is 37
Median Income is $76,900 a year
I think these numbers, extracted from the NAR Profile of Buyers and Sellers are pretty self explanatory. For Brokers, who should be looking at new trends and reading the pulse of the consumer, it’s a fairly simple decision to pursue investments in technology. I am frequently disheartened when I hear Brokers disparaging their agents from spending time with social media and personal education in technology. Just because a Broker may not use or needed these tools, doesn’t mean a competitor in today’s market doesn’t need to master them. Previous education, age, experience and investment costs can no longer be an excuse.
Here is a great video that I use when teaching about exponential times:
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.
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.
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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