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What Kind of Stupid Question is That?

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I have a fantastic listing right now. The condition is pristine. It has been well maintained the entire time they have owned it. (They didn’t suddenly rush to complete a bunch of work just before it went on market!) It’s a dream listing. Staged, clean, beautiful. After carefully reviewing comparable solds we priced the home appropriately.

So, I hosted a broker/Realtor open the first Tuesday after we listed the house. I served lunch, and we had a nice turnout. All was going well, and an agent looks at me in front of a bunch of other people and says, “So, how do you think the house is priced?”
(Insert screeching brakes sound effect here…)

Wait, What Did You Just Ask Me?

I am representing the sellers here, they are my *clients*. Am I really going to say anything other than, “Just as it should be priced”? I’ve actually heard agents answer that question with, “well, I wish we’d priced lower.” (Yes, you just breached your duties to your client.) I looked at the agent, a colleague, and said, “Are you serious? What kind of question is that? You know that I’m representing the sellers and I helped them price the house.”

Now, if he was asking before he was writing an offer with clients, I could appreciate ‘fishing’ for a feel for pricing. (I’d answer the question the same way, but still.) But this agent was looking for ‘shop talk.’ I’ve sat in for sales meetings where agents have announced new listings, describing them with the square footage, bedrooms, bathrooms, community info, etc, and then a disclaimer of how it’s priced a little high, but ‘gosh you need to come see it.’ Gee, if your sellers were listening in on that, how do you think they’d respond to you instantly weakening their future negotiating position with a potential buyer’s agent in that room?

Bumped into an agent who asked about this same listing, wanting to know if it was still available. He’s seen the home, knows the market. I told him we had just reduced the price. “Well, that’s still out of my client’s price range. I’ll wait a couple weeks to show it to him until you reduce the price again.” I guess the idea of showing the client some homes that are actually in his price range would make entirely too much sense…

And the original agent, who questioned the pricing..when he heard that we’d lowered the price, insisted that you have to lower a price by at least 10 percent for it to matter. I guess the comparables and current market conditions aren’t important… Strangely enough, I’ve yet to have a listing that at least one other agent didn’t vocalize that they thought it was overpriced.

Don’t Even Go There With Me

Let me just say this…I’m here in this business to help my clients buy and sell houses. I’m not going to the office to drink coffee and complain about my clients. I’m NEVER going to complain about my clients, especially not in front of another agent who could potentially be on the other side of the negotiating table for a transaction that includes them. If I don’t agree with the way we have a listing priced, I’m sure as hell not going to tell you that. I’m not going to agree with you if you start to explain why you think it should be lower priced…why would I want to have that conversation?

Honestly, if I wouldn’t be comfortable with my sellers (or buyers) overhearing every conversation I have with another agent or potential buyer about that listing, then I’m saying something that I shouldn’t say and am not representing them to the best of my ability.

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13 Comments

13 Comments

  1. Dan Connolly

    November 4, 2008 at 6:39 pm

    I have taken this concept a little further and will no longer give feedback when I show a house. Why would I give the Seller honest feedback if I thought it was priced right? That would weaken my Buyer’s position if they wanted to offer less. If I told them that the decor was wrong they may get insulted and that may spoil some future negotiations…there are lots of examples where my chatting with the listing agent may hurt the chances of my client, the buyer.

  2. Jim Duncan

    November 4, 2008 at 6:46 pm

    Turning the question around – do you ask that question of sellers’ agents when you’re representing the buyer?

    I know I do – it’s amazing what one can find out 🙂

  3. Kevin LaRue

    November 4, 2008 at 7:15 pm

    I too have always wondered why agents ask me and my other colleagues that same question. What is the point of even listing a home if you are going to give away your negotiating skills by telling potential purchasers your thoughts on pricing? I am glad to see I am not the only one who feels this way. I have never responded to them the way you have, but I just might do so the next time it comes up! Thanks for the great article!

  4. monika

    November 4, 2008 at 7:20 pm

    If you wouldn’t say it with your clients standing there listening …then don’t say it all.
    Now when I’m a buyers rep I always ask and you’d be surprised at the answers I get for the sellers reps. Scary!

  5. Matthew Rathbun

    November 5, 2008 at 5:29 am

    They ask the question, because they are representing their Buyer’s interest.

    Kudos to you for not falling for it, but in ABR we TEACH Buyer Agents to ask all they questions they can. I know it doesn’t sound fair, but to the degree that you are protecting your clients, so should be the Buyer Agent.

    Agents ask, because most Listing Agents answer.

  6. Paula Henry

    November 5, 2008 at 7:09 am

    I hear this all the time and it works when you represent the buyer. We always have to remember who we work for.

    If we are overpriced, the market will soon tell us without any input from me, as the seller’s agent.

  7. Elaine Reese

    November 5, 2008 at 7:17 am

    Another question that is often asked, by agents as well as open house guests, is “why are they selling?” The true answer most likely will put the seller at a disadvantage.

    My standard answer to that question is “they’re moving”. It’s not sarcastic, yet let’s them know I’ll not be going further with the seller’s background.

  8. Ginger Wilcox

    November 5, 2008 at 7:29 am

    I think the buyer’s agent does have a duty to ask all the questions, and the seller’s agent has a duty to keep their mouth shut! While you may never complain about your clients, I am always surprised at the information many listing agents are willing to disclose!

  9. sabrina Huang

    November 5, 2008 at 7:41 am

    For the market we are in right now, things change monthly if not weekly. For some area, using sold listings for CMA to determent new listing’s price is no longer truthful (when the sold data was months old and few Pendings). If the seller want their house sold quickly, it’s very likely the home need to be priced lower than the current actives (because they are unsold) and pendings when the market is going downward.

    “I told him (an agent) we had just reduced the price. “Well, that’s still out of my client’s price range. I’ll wait a couple weeks to show it to him until you reduce the price again.” I guess the idea of showing the client some homes that are actually in his price range would make entirely too much sense.” Honestly, when there are bunch overpriced listings, buyers’ agent will show buyers listings that are a little bit over their price range, especially when those listings has been on market for a while. I done that and I watch all these overpriced listings reduce their price for a few times depends on how realistic the sellers are.

    Buyers’ agent and seller’s agent wants different things for their clients. THE question needs to be asked if I was buyer’s agent, but I don’t need to tell if I was seller’s agent.

  10. Heather Elias

    November 5, 2008 at 7:54 am

    Wow, look at all the responses! Yes, absolutely if I was representing a buyer, I’d ask that question too (and probably a few more.) My issue was that this was a fellow agent at a broker’s open, in front of about 10 other agents. He wasn’t representing a buyer in a negotiating position. So why ask that question in front of so many people?

    And Sabrina, of course I look at actives on the market when pricing. But I tell my sellers that the appraisers are going to look at sold listings, not actives….so that data is pretty important. (In my market, the steep price drops have leveled off.) Also, the agent that made the comment about the price range for his clients was talking *significantly* out of their price range, and would still be so with another reduction.

    This post isn’t so much about the communication that happens at the negotiation point, but the day to day conversations that happen between agents that can compromise their clients’ confidentiality..

  11. Lisa Sanderson

    November 5, 2008 at 7:02 pm

    There are no stupid questions, only stupid answers. We just need to *think* before we speak-glad to hear that you do that, Heather!

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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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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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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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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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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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