Tools, tools everywhere.
It seems everyday, there is a new tool presented to me by agents, brokers, vendors, friends, or through my daily reading and research. We have so many different tools to use everyday to make our jobs easier, better, faster, more cost efficient, or cooler. I love to play with them and after awhile, I decide what’s good for me and what’s a waste of my time. You all know many of the tools – ActiveRain, Twitter, blogging, Flickr, BudURL, RealEstateShows, reading blogs…you get the picture (I could make a list longer than anything I’ve ever written if I really had the time). We’re inundated with them and we adopt and discard as we see fit. Its a great world of neat stuff out there, but I’ve learned there is a secret to maximizing the benefit of all of them.
You don’t hammer without a nail.
The hammer is great all by itself – you can use it smash things, open up walnuts, and break your thumb. Combine it with the nail and you suddenly have a genius device capable of fueling our very own industry. Without the concept, there might not be houses and we would all be selling lean-tos. By combining different tools, we create new possibilities.
Recently, I’ve been thinking a lot about the combination of the tools that I use. By thinking about it, I have learned that I am doing it and doing it more often. I recently spoke to a local follower on Twitter and asked him for some thoughts about the consumer applications of Dwellicious and used it as a jumping board for a project that will allow me to utilize the Dwellicious agent side and see what I think about it before actually jumping on board fully. It also doesn’t hurt that he is thinking of me more of an agent than ever before. Perhaps some business will come of it someday. By not keeping my Twitter life and my Dwellicious life separated, I am creating new opportunities (and paths to learning). A local follower posted a great article on San Antonio’s new “Mission Verde” and I enjoyed the article. I blogged about it, told Greg Harman (the writer) about it and now we’re talking about a meeting with some of San Antonio’s more green minding builders. By using several tools in concert, I may open a door for myself.
I am currently involved in a blog post that has required several different tools. It started off with a tweet. I read the tweet followed the link to a blog, googled the origin of the blog, found out it was written locally (Austin) by a writer for the Statesman, tweeted them and got contact info for the author, emailed the author back and forth, got contact info for one of the people involved in the article and now will blog about it after speaking to them on the phone, (hopefully) getting some photos, and creating an amazing RealEstateShows visual tour to compliment it all. That may all seem very obvious to you, but if you don’t open yourself up to the connections (between the tools – we all know the value of connecting to the people) then you might just limit yourself to tweeting about what you ate for dinner, and that’s not going to bring you business.
We all do it everyday, but by thinking about how we do it, we’re able to come up with new uses for the tools. Case in point? BudURL. I liked the idea of it, but didn’t know how to use it. I’ve been tracking a particular couple and working on turning them from an acquaintance to a client. I email them, call them, send them notes, etc., but for the longest time, I had no response from them. We had spoken in person and hit it off well I thought, but there was no connection afterward. I wanted to email them again, but was trying to come up with a way to see if they were reading my mail and truly looking at the content I was providing them. In stepped BudURL. By creating a custom BudURL for them and them only, I knew that if the clicks on that BudURL ever went from 0 to 1, they had read my email and looked at what I sent them. It worked. Interestingly enough, I’ve spoken to them several times since then.
Driving the nail home (with the hammer of course).
Like I said, I know some of this is obvious, but the point was to make you think of new ways you could combine your tools. How do you bring Twitter into your phone call to your favorite client? How do you connect your favorite bloggers to someone else and get both of them thinking of you as an agent and not just someone who reads their blog? How do you utilize the local news media to connect with your blog audience? How do you do all of this without being “pushy Realtor guy/gal?” I am just now discovering the art of connecting, something Lani taught me about early on, but was lost on a guy with a limited sphere of influence. Once you begin to build that art (which we all know Lani does so well), you begin to become the center of the circle. And you can do it all by combining the tools you use and the people you know.
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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