GETTING BUYERS AND/OR SELLERS TO MOVE FORWARD
“Let’s make a list of all the things that you would like in a home. Your wish list. Now that we have the list down on paper, we have an important job to tackle. Knowing that unless you build a home from scratch to your specifications, you will have to make compromises when buying a resale. Let’s go through the list and zero in on only those items that are MUSTS. In other words, you would not even consider purchasing a home without them
CLOSING ON SIGNING AN EXCLUSIVE RIGHT TO REPRESENT AGREEMENT
“Here is the agreement that informed purchasers choose to sign. What it does is ensure that you will have as much assistance in making negotiating and purchasing decisions as will the sellers. You may choose not to sign this agreement, but understand that you are giving the sellers a negotiating advantage. Are you okay with that? May I explain further?”
HANDLING DIFFICULT NEWS/SITUATIONS
“My job is not only to tell you what you want to hear, although that would be great. My job is to tell you what you need to know in order to make a sound business decision.”
Leaders Elite, a North American online membership-based training and coaching program for real estate professionals, will present the following Webinars during September 16-30, 2009.
Developed and led by Mark Leader, Leaders Elite’s virtual-based program offers monthly Webinars, coaching and communication templates as well as an effective activity planner developed by Leader.
Non-members may sign-up for a free 30-day membership to Leaders Elite. For more information, visit www.leaderselite.com.
Mark Leader, North America’s No.1 real estate sales speaker/trainer and founder of Leaders Elite, is pleased to announce that Yolly Seedtibood with Crye-Leike REALTORS® in North Little Rock, Ark., has been named the Leaders Elite Wall of Fame’s Star of the Month for August 2009.
Developed and led by Mark Leader, Leaders Elite is a North American online membership-based training and coaching program for real estate professionals. The virtual-based program offers monthly Webinars, coaching and communication templates as well as an effective activity planner developed by Leader.
Seedtibood received this international recognition from Leader for her total points and dollar amounts accumulated in August. She also received recognition for being the top producer in August for appointments scheduled and as top lister for properties and overall listings.
“I am extremely proud of Yolly in all her efforts to be successful,” said Harold Crye, CEO of Crye-Leike REALTORS®. “By their nature, real estate people are entrepreneurs, and Yolly is certainly proving that she has the drive to pull ahead and accomplish her goals.”
Gary DeGrandchamp with Real Estate One in Livonia, Mich., was the top lister for buyers in August. Both individuals competed for the awards with other Leaders Elite real estate professionals throughout North America.
“Gary continues to excel in every aspect of the business,” said Dan Elsea, owner of Real Estate One. “He has done an outstanding job of becoming an expert in his market, at a time when buyers and sellers need professional expertise more than ever.”
“Yolly and Gary continue to succeed at the highest levels, and that is a great testament to all their hard work and dedication,” Leader said. “I am so proud of their many stellar accomplishments and honored to have them as part of the Leaders Elite community.”
Seedtibood is a member of the North Pulaski Arkansas Board of Realtors and has achieved the ABR (Accredited Buyer Representative) and MMDC (Crye-Leike Multi-Million Dollar Club). This is her fourth year with Crye-Leike REALTORS.
DeGrandchamp is a member of the Western Wayne Oakland County Association of Realtors (WWOCAR), Michigan Association of Realtors (MAR) and National Association of Realtors (NAR). He has received the Rising Star Award and a Gold Membership in the Multi-Million Dollar Round Table with Real Estate One. DeGrandchamp has been with Real Estate One for more than five years.
For more information, e-mail info@leaderselite.com or visit www.leaderselite.com.
Mark Leader, North America’s No.1 real estate sales speaker/trainer and founder of Mark Leader Courses, is pleased to announce that Marcie Roggow has joined Leader’s Choice as its National Training Director.
Developed and led by Mark Leader, Leader’s Choice is a 45-hour, nine-week classroom course that has been proven to quickly increase production, dramatically improve self-esteem and foster work/life balance for real estate agents across North America.
Roggow, ABR/M, CCIM, CRB, CRS, DREI, GRI, SRS, and licensed since 1971, has worked in all facets of the real estate profession — broker-owner, developer and educator. She concentrates her efforts on disclosure and legal topics, but her main body of work is in real estate professionalism.
As Leader’s Choice National Training Director, Roggow will be responsible for recruiting and managing a world-class team of real estate professional trainers. The most important motto Roggow instills is to get back to the basics, and Leader’s Choice trainers will be an essential part of that process. While the nine-week program is the core element of Leader’s Choice, Roggow is creating a full-service speakers bureau that will offer clients talented real estate trainers covering a myriad of topics in order to complete a company’s training needs.
“My affiliation with Mark Leader and Leader’s Choice is a natural progression for me,” Roggow said. “I have been a trainer and author of courses for more than 20 years. My relationship with nearly every component of the real estate industry has provided me with the opportunity to meet and work with the best trainers in the business. Forming this new cadre of trainers to improve the performance of real estate professionals and, therefore, the service to the consumers is truly a pleasure. Leader’s Choice will be a new comprehensive real estate training company.”
“Marcie is a highly-intelligent, hard-working and dedicated individual,” Leader said. “She has exceptional credentials and a resume full of experience in everything from broker-owner to educator and everything in between. I am delighted to have her join Leader’s Choice. She will be an asset in a myriad of ways and help bring even more success to the Leader’s Choice program.”
A Charter Certified Residential Specialist (CRS), Roggow has served as the Iowa and Dakotas state chapter president and received the CRS of the Year Award for both states. She was one of the originators of the Regional Vice Presidents for the Council, for which she is very proud to have served six years as one of the first regional representatives. She was also president of the Iowa City Board of REALTORS®, one of the first national trainers for the ABR designation and responsible for many of the rewrites of that coursework.
Roggow is a senior trainer for the Sellers Representative Specialist Designation, along with an author and trainer of two CRS elective programs and the CRB elective, “What’s in Your Policy Manual?” Roggow’s emphasis is on professionalism, law, risk management issues and brokerage management. Her recently published “Internet and Social Media Policy and Procedures Manual,” which was co-authored with Frances Flynn Thorsen, was penned as a road map for brokerage companies dealing with Web 2.0. To that end, Roggow has worked closely with REALTOR organizations and Real Estate Commissions alike to draft legislation that can be understood not only by the consumer, but also by the licensee.
For more information on the Leader’s Choice program, visit www.leaderschoice.com.
The following is an article about short sales from Marylyn Schwartz, a Master Trainer for Leader’s Choice and a nationally-renowned real estate speaker/trainer and expert in the field of sales and team/management development.
It is a veritable alphabet soup of language out there relative to distressed sellers’ properties. There are foreign-sounding terms, made-up jargon, rules, policies, procedures; blah, blah, blah. No matter who you might happen to speak with, they know someone who knows someone who is an “expert” at handling one or all parts of the distressed properties’ options.
Well, to paraphrase the Trojans, beware of Greeks bearing gifts-especially when the gift bearers are claiming to be experts within a market segment fraught with pitfalls and legalities at every turn. Many are dilatants, few are experts. Rick Cowle (rcowlelaw@comcast.net), a highly experienced attorney who has handled hundreds of bankruptcies, short sales, foreclosures and mortgage modifications, is an expert. When Cowle speaks, he has experience, credibility and expertise on his side. His advice and counsel are sought by other attorneys new to “distressed property” issues.
MBS: Rick, you and I have worked with REO (real estate owned) properties and with sellers in all phases of foreclosure in the past. We’ve seen markets deal with the onslaught of short sales and foreclosures 15 years ago, but nothing comes close to what we are seeing today. The volume and rapidity of the properties cropping up is unparalleled. What advice do you have for the agents out there struggling to assist people fraught with problems?
RC: While it may be easier said than done, it is important to consult an expert. There are resources out there available to the public such as the Housing and Urban Development website, free credit counseling services, attorneys with extensive experience with distressed seller issues, etc. It is even possible to use Google to find attorneys who advertise their credentials as distressed property experts. The thing never to do is to give advice or guidance when you are not qualified to do so. Taking a three-hour short-sale class does not make one an expert on giving advice on the short-sale process. However, there is much that an agent can do in concert with an attorney. I always advise agents to help the seller find an attorney before they do anything else.
MBS: Sellers who are in financial distress fear that they cannot afford an attorney to assist them. They often simply “ignore” bank delinquency notices because they believe they are powerless to help themselves. Presented with such a scenario, what do you recommend?
RC: While I cannot speak for all attorneys, I know that many, myself included, have plans that take into consideration the sellers’ current financial realities and allow for ways to navigate the process with little or perhaps no attorney fees upfront. There are cases where attorney fees can be billed to and paid by the financial institution holding the lien. This is one part of the negotiable issues to be worked out. The ultimate cost to the seller can be far more damaging by non-action than by researching all options. If the agent plays a part in being a resource to the consumer, they indeed have value. Knowing what to do is less important than knowing what is available to help the consumer and guiding them to those resources. Just helping sellers to know what questions to ask or where to begin the process is invaluable.
MBS: It is no secret that even when sellers, or agents they have authorized to do so, try to contact the bank(s) in question, there is no guarantee that they will make any progress getting to the right people to help. It can feel like a black hole, and the level of frustration felt by everyone is enough to cause ulcers. What’s the right way to handle these roadblocks?
RC: There is no one answer that is right. Getting to the right people in the right departments is key in possibly preventing foreclosure. It is not going to be the mortgage department that will facilitate the process. The right department may be called asset recovery, loss mitigation, workout or something else. In addition, each lender will have its own paperwork requirements. Getting that package from the bank and completing the required documents is essential to even being heard. By hiring an experienced negotiator who works with most, if not all, major national banks, he/she will know what is required by that bank in advance and has forms on file for the sellers use. By knowing how to complete the necessary forms and doing so in a timely fashion, it could shorten the process for short sale approval by perhaps months.
MBS: What is a short sale for those readers who may be new to this?
RC: When the sellers owe more on their mortgage(s) than the value of their home, the sellers are in a shortage situation if they decide to sell. There will not be enough money to pay off the loan(s). The seller would need to come to the table with proceeds to satisfy the lien(s). That is not the same as being able to justify a short sale where the bank determines that the seller is worthy to be allowed to sell the home at less than the outstanding lien(s), and the bank will accept as their loss the shortage. In order to be considered for short-sale eligibility one would have to have a hardship such as divorce, medical expenses, job loss, death of family member or some similar life catastrophic situation. In addition, the sellers’ expenses must exceed his/her/their assets/income, they are behind on their payments and have no way to repay the bank. Simply owing more than the home is worth yet wanting to sell regardless of a lack of hardship is not a reason to apply for a short sale.
MBS: Let’s assume there is a hardship as stated above. What is the process for the agent/seller to follow?
RC: List the property at a price based on a detailed market analysis. The agent needs to be sure that they make other agents in the MLS aware that it is a possible short sale and that “all transactions including the amount of compensation, are subject to bank’s approval.” The fact is that even if a home is listed at market value and a buyer comes along and makes an offer commensurate with that value, the bank may not accept the sale. There are cases where the bank’s price opinion may be higher than the offer on the table, and the bank may counter or refuse the offer if it does not conform to what they believe is accurate. I often suggest that the agent take a video of the home to truly document condition as some appraisals are done without a full walk through. Without documentation it may be difficult to make the case to the bank about why the home is not worth what the bank’s appraiser determined. Agents should always meet the bank’s appraiser at the property and provide them with comps. They may not use the agent’s comps, but the documentation could come in very handy if a conflict ensues. This is not to be taken as gospel that any bank will debate with either an agent or an attorney. Some will, others will not.
MBS: What are the banks looking for relative to a buyer’s qualifications?
RC: In the vast majority of the time, the bank does not want to negotiate contingencies. Buyers who have another sale pending and need the proceeds from that sale in order to close on the next purchase are not likely to be considered. Banks take a dim view of buyers requesting concessions. Sales are always as is with no repair credits, except under very, very rare instances. While buyers can have inspections done, it is for their consideration only and not for negotiating any issues that may surface. I had an incident where during the processing of the short sale, the house suffered a freeze-up. I went back to the bank and renegotiated for the purchasers. We had to document the problems and estimate the cost of repair. That is the kind of rare occurrence I would consider presenting to the bank.
MBS: Are there some red flags that agents should be aware of before venturing into helping a distressed seller?
RC: Sellers need to be very cooperative with the agent and whoever else enters the process. Couples involved in a divorce and at odds with each other can present insurmountable challenges when it comes to being responsive and getting all documentation in the hands of the right people. The sellers must also be willing to do the required paperwork. This is time consuming and detailed. Anyone who won’t ‘dig out’ what is needed as proof of the claims being made is wasting everyone’s time. There are also transfer documents that require signatures. Once again, if there is more than one seller, and the two or more are not likeminded, raise the red flag and be sure the problems are cured before approaching the bank with an offer. We hear about short sales taking upwards of a year plus. That is usually because of problems with issues such as referenced above. Well prepared and cooperative sellers make both the attorney’s and agent’s jobs much easier.
MBS: Often homes will have more than one lien holder. In such instances, what happens when trying to process a short sale?
RC: I have had about a 90% success rate working through this very issue. I know that the high rate of success is due to being very familiar with the lien release process and how to approach banks relative to why taking the sale is in their best interest. It is often a delicate balancing act fraught with lots of back and forth negotiating. I would say that it would be nearly impossible to accomplish without the skills of a very experienced negotiator working on the sellers’ behalf.
MBS: What upcoming trends do you see within this segment of the business?
RC: Lack of knowledge on the real estate practitioner’s part while the number of distressed sellers continues to grow will only exacerbate the challenges of getting these properties sold rather than in foreclosure. Banks are not yet geared up for the breadth and depth of the problems, and many sellers are falling between the cracks who could otherwise have been helped. The market will soon be flooded with REOs as these homes process through the banks’ systems after the foreclosure process. Agents want to work this segment of the market yet few understand the breadth and depth of what is required and the time commitment. Banks need educated agents for REO listings.
MBS: Having managed and processed hundreds of REO properties, I could not agree more. As matter of fact, errors and omissions companies are now concerned about indemnifying brokers who do not require their agents to clear all REO listings with the company prior to seeking them out. It is a very litigious, slippery slope. Banks require all kinds of guarantees and bonding for persons who work on their listings… not for the faint hearted for certain.
RC: I could not agree more. The more people understand the whole process from first delinquency on the mortgage through to the REO stage, the less likely they are to want to take it all on.
MBS: There are times when second lien holders, or even first, will ask the sellers to sign an unsecured promissory note for part of the shortage paid by the lender on the sellers’ part. When does that happen and how often?
RC: If the lien holder(s) feel that there are assets forthcoming, they may take this step. We see this often with loans that are secured by PMI (private mortgage insurance). PMI companies are getting hit pretty hard with the number of bad loans that were secured by PMI and subsequently failed. They may try to recoup part of the indemnifying monies they’ve lay out if they feel there is a good chance to recoup part down the road.
MBS: There are so many other topics that we could explore at great length. Volumes have been written on the whole area of distressed sellers and properties. What would you say is the single most important thing an agent could do to help them help their sellers?
RC: Education, education, education. Read, take classes, join networking groups of like-minded practitioners, etc. We simply cannot know enough to help people who need good advice, guidance and support now more than ever!
MBS: Amen to that!
by Marylyn Schwartz
The following is an article about short sales from Marylyn Schwartz, a Master Trainer for Leader’s Choice and a nationally-renowned real estate speaker/trainer and expert in the field of sales and team/management development.
Ever hear the expression, “There are no free lunches?” Well, there is little, if anything, free today, especially a fast way to make money in real estate. For the time being, the days of slapping a sign in the ground and voila you have three offers are a fond memory. In many markets, the sign in the ground has a better chance of sprouting roots and growing into a tree than it does generating a ready, willing and able buyer quickly.
So, what are the agents thinking relative to an effective way to level the playing field? Why don’t we go after short sales? Oh, how wrong that will be for most. If finding qualified buyers and motivated sellers is challenging, wait till you see what really challenging looks like … enter the pre-foreclosure market.
Short sales are sales in which the outstanding mortgage balance(s) is more than the market value able to be realized were the home to be sold. Owners find themselves in this predicament when they over leveraged the home relative to its value. Lots of folks took loans with interest rates that, when they recalculated, caused the owners to be unable to pay the higher monthly payment. In many cases, when the owners went to refinance the home, they found that the equity to do so was not in the home. Sellers could not make the margins work relative to loan amount to property value ratio. A great many homes declined in value for all the reasons we all know too well. We can play the blame game till the end of days. However, it is far more productive to devote energy to what we can do to move forward.
To say that banks are being cautious when making loans is an understatement. For a bank to accept a short sale from a mortgagee, they are going to do diligent research to ensure that the seller cannot pay the loan and has not a “farthing’s” worth of resources that they can offer to the bank to lessen the short sale. If that seller has a savings account, 401K, stocks, bonds, a co-signer, etc. the bank will vigorously pursue the asset(s) to bridge the amount owed with the amount realized by the short sale.
The paperwork required to justify the bank’s willingness to negotiate a short sale will take the better part of a 16-hour day to complete. Frankly, many sellers needed weeks to complete the bank’s process. In today’s environment where many properties are going into foreclosure, banks would rather find a real buyer and sell the home rather than taking it into inventory. An REO (real estate owned) property costs a bank between 30-60 percent of the outstanding mortgage balance to take that property through the foreclosure process and then to sell it as a bank asset.
The agent who decides to assist sellers with this process had better know all the ins and outs before embarking on the journey. You’ll need to be familiar with the typical bank paperwork, who to contact within the bank to bring a short sale to the forefront (hint: the person calling the seller about their late payments could care less about negotiating a short sale … neither does the mortgage side of the bank.) Finding out who handles asset recovery properties, or as they are often called REOs, are the people who, in most instances, do not want to “buy” the home back through a foreclosure.
Advising a seller as to the best process for handling a short sale is rife with responsibility, not to mention liability. There are many attorneys who specialize in the process and may be the best choice for an uneducated seller and/or agent. The sellers may wonder how they would pay the attorney. However, the attorney will attempt to negotiate his/her fee with the bank as part of the short sale amount. Likewise, the agent’s marketing service fee can be rolled into that short sale amount.
Once the sellers are able to demonstrate to the bank that they are unable to pay the loan, the bank will most likely consider a short sale. If the agent finds a buyer to present to the bank, that buyer had better be golden in every way. They will need to:
It is incumbent upon the agent to provide the bank with compelling proof of the value of the home. Offers that do not match up with the real value of the property are a waste of time for all concerned and will do nothing to endear the agent with the bank. The bank is not interested in dealing with an agent that they perceive to be marginal, possessing limited skills/understanding of market values.
It might be worth noting that the larger bank’s asset recovery personnel may want a resume from any agent with whom they do business. They’ll want to know if the agent has a working understanding of the ins and outs of pre and foreclosure processes. With the amount of work at the doorsteps of the larger banks relative to mortgage holders in trouble, the banks have neither the personnel nor the inclination to “educate” agents on how to work with them to close a sale, or for that matter, handle a property in the bank’s inventory. They look for people who understand the bank’s requirements (most are quite similar) and get the job done.
With all the additional education needed to get up to speed on how to handle short sales and other pre-foreclosures through to foreclosure properties, it makes no sense that an agent who is not profitable should take his/her eyes off generating business through readily available channels: FSBOs, expireds, target marketing, SOI, door knocking, etc. Trying to get ready to get ready to feed, clothe and house one’s family through some kind of nirvana shortcut is back to believing there are free lunches, the Easter Bunny brings the colored eggs and the guy with the white beard is coming with that Lexus … .
If an agent is thriving and wants to broaden his/her knowledge of the industry by learning another segment or specialty, then that’s a good thing. However, diverting from what needs to be done today, i.e. generating revenue quickly, to learn a complicated, risk-filled new business, will ensure failure. The lifeblood of a successful real estate agent is referrals, prospecting and salable listings. Everything else is gravy. You’re not ready for the gravy if there is nothing to ladle it on!
Leaders Elite, a North American online membership-based training and coaching program for real estate professionals, will present the following Webinars during September 1-15, 2009.
Developed and led by Mark Leader, Leaders Elite’s virtual-based program offers monthly Webinars, coaching and communication templates as well as an effective activity planner developed by Leader.
Non-members may sign-up for a free 30-day membership to Leaders Elite. For more information, visit www.leaderselite.com.
This e-mail came from Mary Rose Olejniczak, a member of the Leaders Elite community, in response to a request for some “Good News.”
Good news to me!
With having a VERY dry six months and not knowing if I am going to get to closing with some of my deals, I have had six closings in the last three weeks and more to come!
Since I have made the commitment to step up to the plate and get rid of the clients that are dragging me around or the ones that do not return calls, I have let them go, and I will not take them on tour without a commitment with them.
Thanks to Mark and Leaders Elite, and be strong!