Archive for October, 2007
 By Marshall Redder
“A Short Sale Will Never Work Unless You Can Get an Offer”
When asked if I would write an article on short sales, I said to myself, where do I start? It’s almost like a science. However, there are certain guidelines that you must stick to in order to be successful in getting short sales approved by the seller’s lender.
First, let me go back to the headline…“A Short Sale Will Never Work Unless You Can Get an Offer.” Michigan is in a declining market, and everyday I go through my Expired listings and over 10% say, “Subject to seller’s lender approval of a short sale.” That means the listing REALTOR® of those properties spent the entire listing period wasting time and never getting an accepted offer. Why? One reason: price!
When you are looking at listing a short sale property, looking at what is owed on the property is not relative to what the property will sell for. You must research the area and see what homes are currently (the last 30 to 60 days) selling for. Homes in my market are currently selling for 80% of what they did three years ago.
So if a homeowner did a refinance on the property in 2005 and it appraised for $200,000, that property will now sell for $164,000. Anything higher and I am missing the market. Also, when I acquire the property, I have the seller sign five automatic price reductions for five percent of the asking price. These price reductions go into the MLS every 15 to 30 days until we receive an offer. This process will put the listing that started out at $164,000 down to $129,900 in 90 days. By following this system, we are bound to get an offer. If you are in a buyers’ market and prices are declining, this is what you have to do to get properties to sell. At what price they will sell at, it’s hard to say. And as your MLS listing inventory increases, you must be even more aggressive on price reductions.
Next, and probably most important, is your initial phone interview with the prospective seller. You need to find out if there is a first and second mortgage on the property and are the lenders the same or different, and are there any liens on the property. If the second mortgage lender is not the same as the first, you’re probably wasting your time. I avoid those listings and move on. You also need to know if the seller is behind on their payments, because it becomes difficult to do a short sale unless they are behind at least one month.
Your next step is to determine which lenders will do short sales. Keep a master list of all lenders, especially lender names and phone numbers. It is also wise—and a timesaver—to keep a list of the lenders who refuse to do short sales. So when a prospective client tells you who their lender is, you’ll know right away whether that lender has been cooperative with short sales in the past. If you’ve had poor luck, don’t try again. If you have had a successful short sale with a particular lender on a property, even though the next one that comes up at that lender may have a different contact person listed, call your old contact rather than staring in the loop again with a new person to ask for help on a short sale. On an FHA or VA loan, all lenders must cooperate if it’s prior to the auction date. It’s a federal law.
To give the seller motivation to list their property as a short sale you need to be aware of the following. First, by negotiating a successful short sale with their lender, the mortgage will show on their credit report as Paid in Full or Redeemed. This will be extremely helpful down the road for future financing for your seller when they want to buy again. Many lenders today refuse to give a mortgage to a borrower within 24 months of a prior foreclosure. However, if the loan shows “Paid in Full” or “Redeemed” with a successful title transfer, no foreclosures will remain open on their credit report. It will just show up as mortgage lattés, and they can typically get mortgage financing within 12 months.
Second, you need to stress to the seller that by allowing the property to revert back to the bank for less than what the borrowers owed, the bank will incur a loss. In order for the bank to write off this loss, they must give the borrowers a 1009 tax form. This loss is ordinary income to your seller to be taxed at both the state and federal tax levels. A $20,000 bank loss could cost your seller $5,000 to $8,000 in income taxes owed, based on their current income tax rate. The best way for this seller to salvage their credit and avoid a potential 1099 is to list the property and attempt a short sale.
When you list these short sale properties in the MLS, it is highly important, and in most cases mandatory, to put on your listing contract under financial comments, “Contingent on seller’s lender approval of a short sale” and “Limit points and repairs to zero.”
When an offer comes in, it is important to demand that the buyer apply for a loan within 10 days and immediately get appraisals and inspections on the property completed. This will ensure that when you get the final approval from the seller’s lender for the short sale that the buyer is ready to close and not just beginning the financing process. Don’t ever let the buyer wait for anything until your short sale is approved. You must be in control.
The short request with the lender can take up to two months and upon approval, you will receive a demand notice from the lender stating what dollar amount they will accept for payment in full. You mat have to renegotiate your contract with the buyer if the bank wants more than the buyer’s original offer. The bank will base their value on an appraisal and the REALTOR’s BPOs. Try to be present at all appraisals and BPOs to increase your chances of getting your offer accepted by the bank. Show them your listing with reductions and feedback from prior showings.
Most lenders are buried in their Loss Mitigation Departments and will tell you not to call until you get an offer. You will also find that their policy may change with economic conditions and how many properties they are sitting on in your area. Meaning in this market, they may be more receptive to lower offers. Unfortunately, there are no guarantees on what the lenders will do on short sales. It’s simply best to work with lenders where you’ve established relationships and have had good luck in the past.
Form a marketing perspective, spend minimal dollar promoting these properties. If your market is suffering from foreclosures and short sales are becoming popular, you’re obviously in a declining marketplace. Therefore, only one thing will make these properties sell…PRICE!
Remember first and foremost, if your seller is upside down, meaning they owe more than what their property is worth, if you can’t do a short sale the seller will lose their property and be evicted. Then the property will end up for sale by a REO REALTOR in your area.
Short sales are hard to do, however, with this system and knowledge, you can be successful.
Marshall Redder works in the Grand Rapids, Michigan, area and has successfully completed hundreds of short sales. At the time of this writing, he had 20 short sales pending to close and had over 100 properties for sale that are short sale listings. The STAR POWER Star of the Month in December, 1993, Marshall played in integral role in the creation of the brand new STAR POWER business solution, “Short Sale Seller Rescue Program” on sale now. Click here or call 1-800-635-6750 and mention Your Realty Insider to receive a special gift with each purchase.
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Selling Homes Faster in Today’s Tough Market
By Bob Crawford, Brook Furniture Rental, Inc
In this “buyers market,” home sellers need every edge they can to improve the marketability of their homes.
The easiest tactic to employ is the “price drop” tactic. However, for homeowners to capture the full value of the equity in their home, the “price drop” tactic is not always the best option. There are other proven alternatives!
For the last 4 years, across the country, Brook Furniture Rental has taken several steps to provide improved solutions to real estate agents, builders, and staging professionals, with the goal of helping them sell homes quicker and for higher prices.
Brook has significantly invested in improving the quality of its furniture inventory. If you haven’t had a chance to review Brook’s inventory recently, it’s worth a visit to a local showroom or a visit to the online catalog in the “home staging” section of www.bfr.com to browse the furniture. This higher quality furniture was brought into the Brook lineup specifically for staging purposes.
Brook has partnered with Barbara Schwartz, pioneer of the staging business, to drive joint efforts in the business. In her recent book Building a Successful Home Staging Business, Barb had many examples to share, and has this to say about Brook Furniture Rental: “Professional ASP Stagers were called in and with the help of furniture rentals from Brook, worked their wonders as you can quickly see from the stats.”
Here are nine hot home staging tips courtesy of Barb Schwarz - ASPMTM, CASPT, CSP,RLS, ABR, AB
INSIDE:
1. Clear all unnecessary objects from furniture throughout the house. Keep decorative objects on the furniture restricted to groups of 1, 3, or 5 items.
2. Clear all unnecessary objects from the kitchen countertops. If it hasn’t been used for three months… put it away! Clear refrigerator fronts of messages, pictures, etc. (A sparse kitchen helps the buyer mentally move their own things into your kitchen.)
3. In the bathroom, remove any unnecessary items from countertops, tubs, shower stalls and commode tops. Keep only your most needed cosmetics, brushes, perfumes etc., in one small group on the counter. Coordinate towels to one or two colors only.
4. Rearrange or remove some of the furniture if necessary. As owners, many times we have too much furniture in a room. This is wonderful for our own personal enjoyment, but when it comes to selling we need to thin out as much as possible to make rooms appear larger.
5. Take down or rearrange certain pictures or objects on walls. Patch and paint if necessary.
6. Review the inside of the house room by room, and:
· Paint any room needing paint.
· Clean carpets or drapes that need it.
· Clean windows.
7. If you need room to store extra possessions use the garage or rent a storage unit.
8. Leave on certain lights during the day. During "showings" turn on all lights and lamps.
9. Have stereo FM on during the day for all viewings.
Brook Furniture Rental has also invested in enhancing the training it provides to its delivery teams, to make sure that these critical people are meeting customer needs at the point of customer interaction: inside the home.
Across the country, Brook has been having positive results. In Atlanta, where the staging industry is growing, Lynne Cherrington of Harry Norman Realtors states that “Brook Furniture Rental has helped me stage a home recently, which sold for 98% asking price in only 38 days- a far better performance than anticipated. Our sellers were thrilled how successful they were!”
Residential home builders are partnering with Brook as well. In the Chicago area, Mike Kelahan of Dubin Residential, states that “Brook’s design ideas, professionalism and follow–through have made it simple and easy to get our inventory staged and sold in a hurry. That kind of success is a bargain at twice the price in today’s market!”
For proven results to sell homes faster in today’s environment, it’s becoming increasingly important to partner with companies that know how to market homes effectively. Give your local Brook Furniture Rental representative a call, or visit www.bfr.com.
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Checking Your Clients DNA
by Dirk Zeller
Based on your qualifying efforts, determine the likelihood that your prospect will convert into a good client for your business by conducting a DNA analysis. This involves measuring the prospect’s level of desire, need to take action, and ability and authority to make a purchase or selling decision.
D for Desire
Desire or motivation is the strongest indicator of a successful business outcome. A prospect’s burning desire can overcome all other deficiencies, including a lack of financial capacity or purchase ability.
The summer before my junior year in college, I painted houses to earn money for my tuition, books, and room and board. When I started work on the last house of the summer, I learned that the owner was selling a 1976 BMW 2002. I wanted that car, even though buying it would take all my summer earnings and college savings. My parents tried to counsel me away from this foolish idea. My ability to buy was limited due to money, but my desire was greater than my lack of ability. I ended up borrowing the money for the car and still covered my college costs. This creative ingenuity didn’t please my parents at all. Looking back, it wasn’t one of the smarter decisions I have made in the last 25 years. But it did teach me a lesson about the power of desire or motivation to compensate for all other shortcomings.
Let me give you one caution: Desire is not the same as interest. Anyone can have interest. Interest doesn’t reflect intent, and it doesn’t indicate a high probability of action. If a prospect says, “I have an interest in selling,” probe deeper to see if there is real desire to sell, or just interest.
I have found that many “interested” shoppers are looking for something that doesn’t exist. Truly, I’ve heard interested prospects say, basically, “If you can get me $50,000 above market value for my house, and you can find one I can buy at $75,000 below market value, I’ll list my home with you.”
Get real! The truth is, if I could find a property for $75,000 below market I wouldn’t sell it to him; I’d buy it myself, and so should you!
N for Need
A need is a specific and identifiable problem that your service can help a prospect overcome.
Many prospects’ needs stem from lifestyle changes that prompt environment changes. A family expecting another child needs a larger home. Empty nesters tired of yard work and home upkeep want to move to a maintenance-free condo. A divorce requires one household to become two households, forcing a home sale and several purchases in the aftermath. The need to buy or sell based on environmental changes such as these prompt the majority of real estate transactions each year.
One of the reasons I worked expired listings was because the owners’ level of need was so apparent. After sitting with an unsold home for months or longer, the sellers’ need to find an agent who could solve the problem was pretty clear. My job was merely to convince them that, by working with me, their problem would be solved; that I would deliver a different and positive outcome.
A for Ability and Authority
Clients need both ability and authority to conduct a real estate transaction.
Ability relates to the financial capacity of your prospects. Do they have the financial wherewithal to sell their current home and buy the one of their dreams? Do they have enough equity in their current home? If not, can they borrow a larger sum to buy the one they want, or do they have access to additional funds to achieve their goal?
Authority means the prospect has the power to make the decision; to say yes or no to the deal. Find out: Are you working with the ultimate decision-maker or decision-makers, or is someone else also involved? Will the prospects decide autonomously, or will they seek the guidance or advice of others as they make their decision?
I think agents make a huge mistake when they make listing presentations without both spouses or significant others in attendance. Whether or not both names are on the title matters little. In our family, we own properties that show only my wife’s name on the title, and others that show only mine. This is purely an estate-planning move on our part. If we decided to sell, I guarantee that our input would be equal in decisions about pricing and who should represent our interest in the sale.
By using this DNA analysis of measuring one’s level of desire, needs, and ability and authority you will have an accurate basis for determining the probability of your prospect converting to a good client for your business.
Dirk Zeller is an Agent, an Investor, and the President & CEO of Real Estate Champions. His company trains more than 250,000 Agents worldwide each year through live events, online training, self-study programs, and newsletters. He’s the widely published author of Your First Year in Real Estate, Success as a Real Estate Agent for Dummies®, The Champion Real Estate Agent, and over 300 articles in print.
You can get more information by visiting Click Here For More Training!
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How to Stay Motivated
It is hardly a secret that the key to successfully accomplishing one goal after another is staying motivated. There are, of course, tasks that you may not like at all, yet you find motivation to complete even them because you recognize how each particular task serves a greater goal.
How exactly do some of us manage to stay motivated most of the time? Here are just a few ideas you can try:
1) Find the Good Reasons
Anything you do, no matter how simple, has a number of good reasons behind it. Not all the tasks have the good reasons to do them seen at first sight, but if you take just a few moments to analyze them, you will easily spot something good. We also have many tasks which don’t need any reasoning at all - we’ve been doing them for so long that they feel natural.
But if you’re ever stuck with some task you hate and there seems to be no motivation to complete it whatsoever, here’s what you need to do: find your good reasons. They may not be obvious, but stay at it until you see some, as this will bring your motivation back and will help you finish the task.
Some ideas for what a good reason can be:
- a material reward - quite often, you will get paid for doing something you normally don’t like doing at all
- personal gain - you will learn something new or will perhaps improve yourself in a certain way
- a feeling of accomplishment - at least you’ll be able to walk away feeling great about finding the motivation and courage to complete such a tedious task
- a step closer to your bigger goal - even the biggest accomplishments in history have started small and relied on simple and far less pleasant tasks than you might be working on. Every task you complete brings you closer to the ultimate goal, and acknowledging this always feels good.
2) Make it fun
When it comes to motivation, attitude is everything. Different people may have completely opposite feelings towards the same task: some will hate it, others will love it. Why do you think this happens? It’s simple: some of us find ways to make any task interesting and fun to do!
Take sports for example. Visiting your local gym daily for a half-an-hour workout sounds rather boring to many of us. Yet many others love the idea! They like exercising not only because they recognize the good reasons behind it, but simply because it’s fun!
At certain time of their daily schedule, they find going to gym to be the best thing to do, simply because nothing else will fit their time and lifestyle so perfectly.
Depending on how you look at it, you can have fun doing just about anything! Just look for ways of having fun, and you’ll find them!
A simple approach is to start working on any task from asking yourself a few questions:
- How can I enjoy this task?
- What can I do to make this task fun for myself and possibly for others?
- How can I make this work the best part of my day?
The answers will pop up momentarily, as long as you learn to have the definite expectation of any task being potentially enjoyable.
Some of you will probably think of a thing or two which are valid exceptions from this statement, like something you always hate doing, no matter how hard you try making it fun. I don’t want to argue - you’re probably right, and that’s why I don’t claim everything to be fun. However, most tasks have a great potential of being enjoyable, and so looking for ways to have fun while working is definitely a good habit to acquire.
3) Take a different approach
When something doesn’t feel right, it’s always a good time to take a moment and look at the whole task looking for a different approach.
You may be doing everything correctly and most efficiently, but such an approach isn’t necessarily the most motivating one. Quite often you can find a number of obvious tweaks to your current approach that will both change your experience and open up new possibilities.
That’s why saying “one way or another” is so common: if you really want to accomplish your goal, there is always a away. And most likely, there’s more than one way. If a certain approach doesn’t work for you, find another one, and keep trying until you find the one which will both keep you motivated and get you the desired results.
Some people think that trying a different approach means giving up. They take pride in being really stubborn and refusing to try any other options on their way towards the goal. My opinion on this is that the power of focus is great, but you should be focusing on your goal, and not limiting your options by focusing on just one way to accomplish it it.
4) Recognize your progress
Everything you may be working on can be easily split into smaller parts and stages. For most goals, it is quite natural to split the process of accomplishing them into smaller tasks and milestones. There are a few reasons behind doing this, and one of them is tracking your progress.
We track our progress automatically with most activities. But to stay motivated, you need to recognize your progress, not merely track it.
Here’s how tracking and recognizing your progress is different: tracking is merely taking a note of having reached a certain stage in your process.
Recognizing is taking time to look at a bigger picture and realize where exactly you are, and how much more you have left to do.
For example, if you’re going to read a book, always start by going through the contents table. Getting familiar with chapter titles and memorizing their total number will make it easier for you to recognize your progress as you read. Confirming how many pages your book has before starting it is also a good idea.
You see, reading any book you will be automatically looking at page numbers and chapter titles, but without knowing the total number of pages this information will have little meaning.
Somehow, it is in a human nature to always want things to happen at once. Even though we split complex tasks into simpler actions, we don’t quite feel the satisfaction until all is done and the task is fully complete. For many scenarios though, the task is so vast that such an approach will drain all the motivation out of you long before you have a chance to reach your goal. That’s why it is important to always take small steps and recognize the positive different and progress made.
5) Reward Yourself
This is a trick everyone likes: rewarding yourself is always pleasant. I’m happy to confirm that this is also one of the easiest and at the same time most powerful ways to stay motivated!
Feeling down about doing something? Dread the idea of working on some task? Hate the whole idea of working? You’re not alone in that, I’m telling you!
Right from the beginning, agree on some deliverables which will justify yourself getting rewarded. As soon as you get one of the agreed results, take time to reward yourself in some way.
For some tasks, just taking a break and relaxing for a few minutes will do. For others, you may want to get a fresh cup of coffee and even treat yourself to a dessert. For even bigger and more demanding tasks, you may want to reward yourself by doing something even more enjoyable, like going to a cinema or taking a trip to some place nice, or even buying yourself something.
Your progress may not seem to others like anything worth celebrating - but take time and do it anyway! It is your task and your reward, so any ways to stay motivated are good. The more you reward yourself for the honestly made progress, the more motivated you will feel about reaching new milestones, thus finally accomplishing your goal.
Mix and match
Now that you have these five ways of staying motivated, it is a good moment to give you the key to them all: mix and match! Pick one of the advices and apply it to your situation. If it doesn’t work, or if you simply want to get even more motivation, try another advice right way. Mix different approaches and match them to your task for best results.
Just think about it: finding good reasons to work on your task is bound to help you feel a bit better. Identifying ways to make it fun will help you enjoy the task even more. Finally, if you then plan a few points for easier tracking of your progress and on top of that agree on rewarding yourself as you go - this will make you feel most motivated about anything you have to work through.
Gleb Reys is a creator and maintainer of the Personal Development portal, where he regularly writes about successfully setting and reaching your goals through becoming more organized, productive and motivated person. Subscribe to his Personal Development blog feed.
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