Some of the agents in our valley will remember the days of “short sales,” and when rampant foreclosures where common… do you remember the HUD keys?
Although we’re not back to those days, we are starting to see “short sales” and “pre-foreclosures” more common today than a year ago, and possibly this will continue to exist in our market for a while longer. But, we’re not going to discuss the why’s of the short sales. Our focus here will be more about the how’s… How to navigate the closing of a short sale successfully, ensuring both the buyer and the seller a quiet escrow!
So, if you’re new to the real estate profession, do you know what a “short-sale” is? Maybe you’ve been in your office, and you’ve been an agent for a few years, when you hear some other agents discussing short-sales… hmmmm…. We’ve all been in a place where we do not really want to let others know that we don’t know everything… or even some things! So, lets talk…
Most agents are familiar with a foreclosure and the timeline involved. There is a period of time prior to foreclosure that is referred to as a pre-foreclosure, when the homeowner is in default and due to circumstances determines to sell the home rather than hold on to it and risk foreclosure. In some instances, there may be equity at stake which will strongly motivate that seller to sell the home and maintain that equity and help them to recover financially. There are other times when the home owner is faced with what we commonly refer to as a “short-sale.” This situation is often less motivating for the seller, and carries some consequences for the seller, which requires or it is strongly recommended that they obtain advice from a qualified, experienced attorney… someone other than his realtor!
A bit of information that you might want to store away in your mind is: a short sale can further damage the home owner’s credit scores, often showing up as a “settlement” that indicates that they paid less than owed. They may also be faced with an IRS bill on the unpaid debt, which is generally considered income to the home owner. A skilled negotiator may be able to avoid these consequences or at least minimize them, so they may want to consider getting an experienced attorney’s help in this matter. No matter how skilled you may feel that you are at negotiating… do not advise your client or provide services that can be misconstrued as legal advice or services! In this situation, a negotiator is an attorney. You may and should strongly advise them to contact an attorney to help them limit any liability that they might encounter in this type of transaction! Being honest with them about the possible consequences will get you more kudos and referrals than withholding information and possibly facing a lawsuit of your own!
So… What is a short-sale? Well, by definition, the term “short-sale” is commonly associated with the stock market…
From Wikipedia, the free encyclopedia:
In finance, short selling or "shorting" is a way to profit from the decline in price of a security, such as stock or a bond.
And recently on a real estate board where the discussion of short sales was taking place a post was made wondering how a short sale applied to real estate… since their only understanding of a short sale was via the stock market… The response was this quick definition:
A Short Sale in the mortgage world amount to an accommodation on
the part of the lender in hopes of avoiding or mitigating an impending loss…
So… does that help? Maybe not, so possibly this definition will be more direct and clear the muddiness… in short a short-sale occurs when the seller of a property owes more than the property is able to be sold for. Usually, the price of the home appraises for less than the amount that is owed on the home. Often there is more than one lender involved, with the second, and sometimes a third position holder being short.
What motivates a lender to accept a short sale transaction? Well, typically, the lenders will only accept a short sale if
· you are at least one month behind on your mortgage payment
· have a ready and willing buyer
· are unable to debt service all of your existing liabilities
· your financial situation has changed and you are currently making less money than before.
· have depleted your savings.
When you become involved with a seller faced with a potential short sale… there are a few things that you must be aware of... the most important is that in order for a short sale to proceed, the lender will be involved and must approve the terms of the sale.
A few other things to consider, and recommended:
· Order a prelim report at the listing of the property
· Review tax liabilities – property taxes are often in default in a short sale situation.
· How many lien holders are on title?
· Is the sale complicated by a foreclosure or bankruptcy process?
· Direct the homeowner to discuss this transaction and possible negotiation of limiting their liability with a qualified attorney.
Often the lenders will require additional documentation from your seller to determine their qualification for a short sale. Some of the paper work that may be required is:
· Two years tax returns with w-2’s and any tax schedules
· Most recent two months of pay stubs
· Most recent two months of bank statements for all accounts, including retirement accounts, 401K
· Current mortgage payment coupons for existing mortgages
· Copy of original mortgage note and deed of trust.
While speaking with Senior Escrow Officer, Jessie White, at A.C.T. Escrow of Lancaster, she was helpful and offered the following advice: “Check with the lender prior to receiving an offer on a property faced with a short sale and determine their willingness to accept a short-sale condition. This will make the escrow process less cumbersome and time consuming if the lender is already apprised of the condition and has expressed a willingness to work with the seller.” Additionally, Jessie reminds us that the contract must contain an amendment that apprises/discloses to the buyer that the close of escrow is contingent upon the approval of the short sale by the lender.
In short… a short-sale is not a recommended transaction to be tackled by someone new to the industry or unfamiliar with the short-sale, pre-foreclosure process without the supervision or guidance of a more experienced agent, and broker! Remember, the outcome of any transaction always has an affect on your future business. The positive closing of an escrow, despite the reasons for the sale, will result in referrals to you… if you are uncertain of the procedures, be open, and honest… and either seek help for both or refer them to an agent that specializes in short sales!
http://www.short-sale.com/blog/
http://www.californiarealestatecenter.com/realestateshortsale.htm
Friday, May 11, 2007
Sunday, March 25, 2007
Have You Reviewed Your Resume, Lately?
The other day I was working with a new client. We were reviewing her websites, evaluating her marketing strategies, and determining which options available to her through the different systems she has in place should be utilized, as we happened upon her resume posted on one of her web sites. She has been a realtor for almost 15 years and has been very successful top producer through all the various cycles real estate has taken us. She’s very savvy and understands the importance of marketing and even more the changing face of venues in real estate marketing. But, I was surprised by her next statement. “This needs to be changed! It’s not supposed to be about me!” Now, remember, we are reading ‘her resume’ and in the typical employment situation the resume is all about the employee. But she is 100% correct! Since I’d been working on the changing face of real estate marketing, it was exciting to talk to her about this!
As a real estate agent, you are “employed” by the customer, not the broker… but what is even more accurate about her statement, is that as a real estate professional, you are marketing yourself to your client, but, as I mentioned in the previous post, the face of marketing is changing. (“…Where is your marketing taking you?”) The real estate client of the 21st century is primarily an informed client; they’ve done their research… they desire to be involved in the complete process… so how do you market yourself to them?
Today’s marketing is more focused on the customer’s wants, needs, and desires. Our resources, relationships, and offerings should be focused here, and that includes the redefining of our value to them.
So, how do you rework a resume that touts you and your unique skills and yet at the same time values their participation in the process and makes the client the central figure and leaves them feeling validated and confidant that if they chose you as their agent, you would make this transaction about them? You’re skills are ever important in the transaction process, and maybe even more important in today’s market. Yet, the client doesn’t necessarily understand that, nor do they need to. When you watch a sports match, the referee is vital to the game, but the best games are those that the impact of the referees’ presence is not felt. So it is in today’s real estate transaction… you are integral to the success of the transaction!
So, I would challenge you, as we begin this journey of evaluating your place and the moves you should make in today’s market that you begin to look at your resume, your offerings and services to your clients, and see how it presents itself in today’s market. Is there any rewording that could be done to change the focus from you to them?
Is it possible? Certainly! What subtleties could be utilized to convey your skills to your client? How do you make them feel it’s all about them, without sacrificing the value you will bring to their process! Because, without those skills, the successful completion of the transaction will be lost! Success = Happy Clients!
Happy Clients = Referrals! Referrals = Successful Realtor!
As a real estate agent, you are “employed” by the customer, not the broker… but what is even more accurate about her statement, is that as a real estate professional, you are marketing yourself to your client, but, as I mentioned in the previous post, the face of marketing is changing. (“…Where is your marketing taking you?”) The real estate client of the 21st century is primarily an informed client; they’ve done their research… they desire to be involved in the complete process… so how do you market yourself to them?
Today’s marketing is more focused on the customer’s wants, needs, and desires. Our resources, relationships, and offerings should be focused here, and that includes the redefining of our value to them.
So, how do you rework a resume that touts you and your unique skills and yet at the same time values their participation in the process and makes the client the central figure and leaves them feeling validated and confidant that if they chose you as their agent, you would make this transaction about them? You’re skills are ever important in the transaction process, and maybe even more important in today’s market. Yet, the client doesn’t necessarily understand that, nor do they need to. When you watch a sports match, the referee is vital to the game, but the best games are those that the impact of the referees’ presence is not felt. So it is in today’s real estate transaction… you are integral to the success of the transaction!
So, I would challenge you, as we begin this journey of evaluating your place and the moves you should make in today’s market that you begin to look at your resume, your offerings and services to your clients, and see how it presents itself in today’s market. Is there any rewording that could be done to change the focus from you to them?
Is it possible? Certainly! What subtleties could be utilized to convey your skills to your client? How do you make them feel it’s all about them, without sacrificing the value you will bring to their process! Because, without those skills, the successful completion of the transaction will be lost! Success = Happy Clients!
Happy Clients = Referrals! Referrals = Successful Realtor!
Sunday, March 18, 2007
So, You’re a Real Estate Professional in Today’s Market…
The face of marketing is changing. In the past, the marketing mix was all about the 4 Ps: product, pricing, promotion and placement, but, we are moving beyond the 4 Ps and are venturing into a new arena of marketing. Today, marketing designs are becoming much more strategic; development of a game plan that lays out a step by step analysis and a plan to create an environment that will ultimately bring success and fulfill goals. Business models have become the new marketing bible, and innovations in this area have allowed entrepreneurs of all levels the opportunity to play on the big field. Resources, Relationships, and Offerings focused on the customer’s wants, needs, and desires are gaining more momentum rather than the traditional company revenue model.
So, how does this affect you… the Real Estate Professional?
Have you ever stopped to consider what your business model is? Have you developed a value statement? We’re all aware in Real Estate that the relationship an agent develops with the client generates the success of the sale, and so having a customer focus isn’t a new to the real estate professional. But, there is more to a unified marketing plan than focusing on the relationship aspect alone.
Today’s Real Estate Professional is faced with a client base that has access to information. Information on any level provides the searcher with a certain amount of knowledge, good, bad or indifferent, which places that client on a different level than the client of the past, who was dependent upon the information that you provided to him. Today’s buyers and sellers have vast amounts of resources available to them, providing them with tools to prepare them before they ever even talk to you. They’ve researched the area, community and neighborhoods from the comfort and safety of their own homes. They’ve investigated the processes and are often aware of the ins and outs of a typical transaction, they’ve read the hype, they’ve browsed the tours, and they’re armed and sometimes, dangerous!
So, as they are prepared, the question begs itself, “How are you preparing yourself to provide them with the best possible service, and in turn generate business that will produce results and increase your revenues, realizing your goals?”
Where do you begin? What is your product? Pricing? How do you promote yourself? And where is the best place for that promotion? Are those valid, or should your focus be strictly on the relationship, your available resources and your offerings? Can you focus on one rather than the other? How do you center your marketing plan to provide you with a strategy that will carry you into success as an agent in today’s quickly changing and highly competitive market?
So, how does this affect you… the Real Estate Professional?
Have you ever stopped to consider what your business model is? Have you developed a value statement? We’re all aware in Real Estate that the relationship an agent develops with the client generates the success of the sale, and so having a customer focus isn’t a new to the real estate professional. But, there is more to a unified marketing plan than focusing on the relationship aspect alone.
Today’s Real Estate Professional is faced with a client base that has access to information. Information on any level provides the searcher with a certain amount of knowledge, good, bad or indifferent, which places that client on a different level than the client of the past, who was dependent upon the information that you provided to him. Today’s buyers and sellers have vast amounts of resources available to them, providing them with tools to prepare them before they ever even talk to you. They’ve researched the area, community and neighborhoods from the comfort and safety of their own homes. They’ve investigated the processes and are often aware of the ins and outs of a typical transaction, they’ve read the hype, they’ve browsed the tours, and they’re armed and sometimes, dangerous!
So, as they are prepared, the question begs itself, “How are you preparing yourself to provide them with the best possible service, and in turn generate business that will produce results and increase your revenues, realizing your goals?”
Where do you begin? What is your product? Pricing? How do you promote yourself? And where is the best place for that promotion? Are those valid, or should your focus be strictly on the relationship, your available resources and your offerings? Can you focus on one rather than the other? How do you center your marketing plan to provide you with a strategy that will carry you into success as an agent in today’s quickly changing and highly competitive market?
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