Residential
Zillow banks on new Special Offers feature to entice agents to pay up
Two new features on Zillow
Today, Zillow added two features, both aimed at real estate professionals rather than consumers. First, agents that pay to use the Premier Agent Program will be able to add a logo or their own picture to all of their listings, a branding move that is long overdue for the Zillow offering, and one that agents have likely requested for some time.
In addition to being able to better brand themselves, agents in the Premier Agent Program can use “Zillow Special Offers” which allows agents to add an offer for homebuyers who find a listing on Zillow. Zillow told AGBeat that the new program is “designed for sellers who are interested in providing an incentive at closing. It’s a marketing vehicle that helps to shine a strong spotlight on those properties that the agent, working with the seller, has decided to market in an additional way to the millions of shoppers looking for homes on Zillow,” adding that the program is a “way to merchandise, market and differentiate a listing through a seller-funded concession.”
Because Zillow users will be able to filter their search by only looking for “Zillow Special Offers,” and they will be featured at the top of the search results, the media company is likely banking on the fact that in a down market when everyone is deal hunting, consumers will search first for what they perceive to be the best deals (as “Special Offers” sounds like a coupon or a price reduction). The new feature could act like glue, attracting agents into the pay-to-play model which some may enter out of desperation to sell a listing, some may sign up out of hope for more exposure, others may sign up because they feel forced to, others will simply start using the service they already pay for, and others will do so because the seller is aware of the option to do so. Regardless, anything that resembles a coupon is hot right now and other real estate search giants may find their own way to compete with this feature.
Zillow says, “The seller may feel an added incentive will help their listing be more attractive to buyers – whether it is new on the market, in need of new appliances, or lacking blinds. These seller-funded incentives give buyers a little something extra after closing such as $3,000 credit off closing costs or a gift card to go buy those new appliances or blinds … extras that make the listing stand out.”
Residential
Short sales: the top 3 title insurance troubles
Short sales are not without challenges, but knowing the answers to the most common obstacles and questions can aide in a less stressful transaction.
The importance of title insurance
When my husband and I purchased our first home, I was very young and very green. At the closing, our agent passed us our title insurance policy and said, “Put this in a safe place, and do not EVER throw it away.” At the time, I had absolutely no clue about title insurance, why it was important, and how it could save you from a world of trouble.
Decades later, working short sales, it’s the title reports and those dreaded liens that seem to be what gets us into all sorts of trouble. In fact, most of the reader questions that I received this past week related to title woes.
Three common short sale questions
Question: When I run the Statement of Information for my seller, it comes up with a child support lien and a mechanic’s lien. My seller says that he is aware of those liens, but has no money to make good on those debts. What should I do?
Answer: In short sales, the first lien holder will authorize funds from the proceeds to pay off a variety of expenses associated with the sale. These include commission, settlement fees, title insurance fees, and other mortgage liens. However, it is extremely uncommon for the short sale lender to offer to pay off a seller’s personal debts. Before you spend months and months processing the short sale, I’d strategize to ascertain whether you will be able to help the seller make good on these debts prior to closing. Otherwise, you should probably run like the wind.
Question: I am dealing with the IRS on a tax lien that needs to be released prior to short sale closing, and the IRS won’t budge. What should I do?
Answer: First off, it’s always a good idea to get non-institutional liens released early. At the time that you take a short sale listing, work with the title company to run a Statement of Information on the property owners. That way, if something comes up (like an IRS lien), you have plenty of time to work it out.
Generally, the IRS and the state tax authorities have mechanisms in place to remove these liens from title at no charge, since there is no equity coming from the sale. A tax attorney can guide you through the process. However, ask your title officer or title representative if they can work with you on this problem. The good news is that some title companies can help agents and you can avoid working with the IRS.
Question: I have a second lien on title with Chase Bank. Yet, when I contact Chase Bank, they tell me that the loan has been charged off and I need to contact the company where they transferred the loan. However, they do not have a record of where it was transferred. I’m between a rock and a hard place. What do I do?
Answer: This kind of chaos happens all the time with short sales, and it is very frustrating. Generally, if you contact the executive offices at the bank where the loan was held originally (in this case, Chase Bank), they can have their research department obtain information about where to call.
Another option might be to ask the lender for a “zero demand”. If they charged off the loan and show a balance of zero, then maybe they will send a zero demand and not further short sale negotiation would be necessary for this lien. Hey… without a second lien on title, maybe this won’t even be a short sale any longer!
Coaching
How to avoid short sale buyer frustrations
Minimizing the frustrations that come with a short sale is often seen as a mythical possibility, but with these simple tips, any short sale transaction can go more smoothly.
Short sale frustration all around
Representing a buyer in a short sale can often be very frustrating. Primarily, that’s because of the unknowns associated with the short sale transaction. For one, nobody knows how long it’s going to take to obtain short sale approval. Actually, you don’t even know if you will get short sale approval. Not only that, but you also have to wait a fairly long time to learn the approved terms of the purchase. It’s frustrating to wait and wait, and then learn that the direction of the short sale is not the direction that the buyer is interested in taking.
Good communication is the key to short sale success. It’s vital for short sale listing agents to make communication with the buyer’s agent a regular and systematic part of the week. No matter how insignificant the short sale task, it is important to communicate with the buyer and the buyer’s agent and let them know that there are baby steps towards short sale approval.
One significant step towards short sale approval often comes after the bank’s valuation (BPO) when the bank makes a counter offer. Depending upon the short sale lender, this counter offer can come via email (in an email message), via telephone, or through an online platform such as Equator.
And then there are the counter offers…
Buyer’s agents and buyers often request to see the counter in writing. However, depending upon the short sale lender, this is often just not possible. Bank negotiators have contacted the short sale agent via phone, reviewed the settlement statement, and alerted the short sale agent as to what they will approve and what minimum net they might take accept in order to move forward with the short sale.
Since these counter offers usually do not come in writing, it’s important for the buyer’s agent to set the buyer expectations accordingly. Make buyers aware that there is lots of ‘verbal’ back and forth during the process. Many times it is only the short sale approval letter, the document that allows them to close, which comes in writing.
If buyers are willing to wait and keep the faith and understand that this process is a little more challenging and unique then most, they may find that they are getting a great deal on a wonderful property—often in better condition than the abandoned REO down the street.
Coaching
Short sale: are there situations when agents can’t earn a commission?
Short sale: are there actually situations where an agent would not get paid? There are some complicated situations when it comes to short sales, and we address one here today.
A short sale listing agent recently reached out to me to ask whether an agent principal can earn commission in a short sale transaction. This agent, Agent Alice*, was told that there are certain situations where licensees cannot earn a commission when buying a short sale.
The question:
Agent Alice received an offer on her listing from Agent Alex. Agent Alex is both the buyer and the principal. Agent Alice wanted to know whether the bank would pay a commission to Agent Alex at closing, since he is both the buyer and a principal.
The answer:
All of the major lenders including Fannie Mae and Freddie Mac employ some sort of arm’s length affidavit in which the buyers, the sellers, and the agents acknowledge (often in front of a Notary Public) that none has a business or familial relationship with another party outside of the transaction. Between this affidavit and investor guidelines for short sale commission, it is uncommon for the short sale lender to permit a commission to be earned by an agent principal.
Agent Alice then asked me whether Alex’s Broker, Broker Bob, could represent Agent Alex and earn a commission. While I do not work for the short sale lenders and cannot predict each short sale lender’s response, I’d say that it would be best to avoid this scenario, since the two have a business relationship outside of the transaction.
My two cents:
When I recently posed these scenarios to a group of agents, many shared creative ways to obtain a commission for Agent Alex. Remember that any creative solution whereby Agent Alex earns commission must also show his commission on the HUD-1 that is approved by the short sale lender prior to closing. As such, it is highly unlikely that there is a legitimate workaround for this problem.
The solution:
The easiest and safest way for Agent Alex to purchase Agent Alice’s listing is to seek representation outside of his brokerage. Not only will this assure that the buyer’s agent earns a commission, but it will also assure that all parties comply with the requirements of most lender short sale addenda.
*The names of the agents and the brokers in this post are pure fiction. Any relation to real listing or buyer’s agents is merely coincidental.
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Tina Merritt
October 7, 2011 at 6:40 am
I like the Zillow's site. Unlike many RE peeps, I don't view Zillow as the "enemy". I think Zillow has captured what the consumer wants as far as information goes. Too many brokerages fail to meet that need. That being said, I despise Zillow's telemarketing sales strategy aimed at the real estate industry. Zillow is an online business; and, as an agent-customer, I should be able to conduct business with them online, NOT via telephone. Zillow, your constant sales calls are annoying and soooo 1985. Fix it.
Steve Roesch
October 7, 2011 at 3:30 pm
I agree with Tina. I got a call from Zillow and because I wasn't interested in giving them a Pro Account, he said, "I'm sorry, I confused you for someone that wants to increase their business". Well excuse me, insulting the customer never works. Well Zillow, you are still pulling my 20 listings to your site via IDX. And guess what? I'm still getting calls from buyers surfing your site, without me giving you a DIME! I think I'll take the Non Premium Service please and you can keep insulting other agents.
Sara Bonert
October 7, 2011 at 5:28 pm
Sara from Zillow here. Steve- fortunately (or unfortunately for one sales person) we keep track of all outbound calls, so we will certainly follow up internally on your comment. I am sorry about that comment and certainly not the tone we endorse here at Zillow. I am glad the free exposure Zillow offers agents is working for you and hope you continue to take advantage of it. Tina- along the same lines, as I said, all calls are logged with one of the goals being that we don't bombard any one particular agent. We will look into the frequency of which you were called and see what happened. One of the beauties of this new product is that they can be fulfilled online, so hopefully that partially addresses your desire for more online interaction.
Collier Swecker
October 9, 2011 at 7:54 pm
In my opinion Zillow is out there not trying to be a partner with the agents but rather lure them in and then turn around raise their rates once an agent has been a paying member for some time. After 2 years my rates just jumped 800%, needless to say I told them not to bother calling back and to cancel my ads. Every single time they call you, magically a price increase was right around the corner. On a different note, I can't tell you how many Realtors and consumers are turned off by Zillow's inaccurate Zestimates which Zillow must know to not be accurate and I think are not transparent with that fact. I do want to say that there are some nice and smart folks working at Zillow.