Remember When………

Do you remember when you were a kid and your parents and teachers would tell you to never take candy from a stranger? I do! I was so afraid that if a stranger ever offered me candy I would be a goner. Rape, death, abduction….all of these things and more would happen if I ever took candy from a stranger. Parents and teachers are very effective at scaring kids.

The funny thing is that as we grow older we forget the rule, we get bold, grow our own opinions, secure our own thoughts and completely forget the rule that we should never take candy from a stranger. And I can prove it. Take a look at our current economic situation, our economy is dieing a slow and painful death and in my humble opinion it’s because we all forgot the rule: Never, I mean NEVER take candy from a stranger! We have all done it and now we’re going to pay the price.

I’m a Realtor. Currently I’m dealing with what I like to call “The Three D’s”: Divorce, Distress, and Death. These are my clients, and it’s very “D”epressing…..although I have this blog to help me cope.

Divorce and death are typically unavoidable but it’s the issue of distress that may help prove my earlier point. MANY of my clients are in financial distress and are defaulting on their home loans. In most circumstances it’s due to the fact that they never should have been allowed to purchase the home in the first place. In other words, purchasing a home just because they could do it didn’t mean that they should have done it and now they and the rest of the American people are paying for it. See, what happened was that a stranger came up and offered them candy and they forgot the rule and they took the candy and now they must suffer!

So then along comes the federal government, like a white knight on a steed and it “has a plan”, and it’s a good one. It’s been called “the Obama Plan”, “Help for Homeowners”, ” Hope for Homeowners”, you name it, it’s your government to the rescue. But like a Snickers bar being held out to an unsuspecting child, just as we begin to move forward the “help” (or candy) gets yanked back and we now find ourselves struggling to break free, or worse, fighting for our livelihood.

That’s what happened this week. It’s been only one month since this “plan” has been rolled out and within 2 days mortgage interest rates rose over an entire percentage point to over 6%, leaving thousands of homeowners that were hoping for assistance now unable to get it and worse yet, significantly reducing buying power for perspective borrowers of homes that so desperately need to be sold.

But back to the moral of the story. Although I digressed into something morbid and disturbing (the economics of our country) I would like to point out that there are many lessons that our children are being taught today that will hopefully stay with them (but I have serious doubts). The “Stranger Danger” issue has taken a back seat to the new danger of smoking, almost to the point of absurdity but I’m not complaining. My kids are so in fear of cigarettes that they won’t even go into a restaurant where it’s ok to smoke, seriously they would rather starve!

So in looking back over what I’ve just written and in taking into account that we as adults grew up and are doing the opposite of what we were taught as children I suppose that I shouldn’t be surprised if someday my daughter or my son becomes the CEO of Phillip Morris?

The Short Sale “Experts”

I know that I’m missing the boat, a golden opportunity to capitalize on the decline of our financial market and I’m not getting the most out of it. I do know that at the end of the day I can honestly say that I have done something to help distressed homeowners without making someone else “pay” for it…..and knowing that helps me sleep.

There are more than a few companies that have cropped up to take advantage of this market. They typically call themselves “Short Sale Negotiators“, “Loss Mitigation Experts”, or even “Third Party Negotiating Services” but what I’ve found is that although their practices aren’t illegal they are much less than “fair”. Here’s how it works:

Most of these companies will tell you that they “are not Real Estate companies” and that is true. However the typical business model is that of an LLC and at least one if not all members are licensed real estate professionals. If the listing agent on a property chooses to utilize the services of the LLC then the LLC is paid by the buyer for successfully negotiating the transaction with the bank. I have seen these fees vary from about $3K-$4K. If the listing agent so happens to be the owner of the LLC then they not only earn the fee paid by the buyer but they also earn the listing side commission. Obviously this can mean a substantial pay-off at the end of the day.

Here’s why I have a problem with this business model. First, when representing a buyer who chooses to purchase a home under these circumstances, the buyer must be able to either add the $4K as part of their closing costs to be paid to the LLC at closing and/or they have to come up with cash. If the buyer is obtaining an FHA or a VA loan this fee is disallowed, meaning that the buyer cannot pay the fee, even if they wanted to. Since a large number of buyers are obtaining these loans it leaves them out of the pool of potential buyers……and I assure you that the distressed sellers do not realize or understand this fact.

These companies justify their fees by making statements about how they are “dedicated” to negotiating and that they have a high percentage of closed short sales. I have personally seen a sale go to auction because one of these “short sale expert negotiators” was so backed up that they hadn’t had time to check with the bank and order a sale extension. That is not okay.

I won’t take the time to go into the difference that a short sale versus a foreclosure can make on someones credit history, trust me the difference is substantial. I would point out that when using a third party fee based negotiating company three things are absolutely a must: #1 COMMUNICATION, #2 COMMUNICATION, #3 COMMUNICATION. You get the picture. A listing agent utilizing one of these services gives up complete control of their transaction, something most sellers are not aware of. Reliance on a reputable third party negotiator is a huge leap of faith and a huge liability.

I recommend that rather than support these practices agents get educated! Learn by doing and learn by following. I have had agents in my office ask me to work with them so that they can understand the process and learn how to facilitate a short sale. Our market has shifted it’s time that the agents shift along with it.

There are golden opportunities for all Realtors to give credibility to our industry by walking the walk, not just talking the talk. Be the fiduciary that your clients expect you to be and get educated. For distressed sellers it is important that they have all of the facts and do the homework. Utilizing the services of a third party negotiator is not necessary and could hamper your sale. If you’re in distress, be certain that the agent that you’re working with is educated and has a knowledge of the short sale process.

Same Buyer, Different Day!

I must be missing something because I’m confused. Since when is it ok for people to just call a listing agent and expect that the agent will stop everything that they’re doing and show people (who may not even be qualified to buy) a home that is half way across town??

I have had that experience a lot lately! Just last week a lady called to ask me about a home that I have had listed for a while now. She said that she had been watching this home and had noticed that the price had dropped substantially and that she wanted to see it. The first question that I had for her was whether or not she was already working with an agent. She assured me that she wasn’t so then I asked her about her qualifications in purchasing a home at this price. Was she working with a lender, if so who? At that point she assured me that she was more than qualified and without telling me that she was working with a lender became somewhat indignant and went on a 5 minute long diatribe about how she was looking at homes far more expensive than this one and that I should just take her word on her qualifications. I did not.

It bothers me deeply to think that I should cause my sellers to clean and prepare their home to show it to someone who obviously was not qualified to purchase this home. I explained to the lady that if I were representing her in the sale of her home I would think that she would agree but this did nothing to quell her attitude. She continued to come up with 5-7 different reasons that I should show her the home whether she was qualified or not…..but of course she was more than qualified! Never the less, after the 10 minutes of my life that I will never get back and after having been subjected to what I would consider an incredibly rude and thoughtless person, I decided that it would be in my best interest to suggest that she find a Realtor that would show her the home, but that Realtor wouldn’t be me.

An odd thing has taken place over the last 5 years. Buyers used to say “jump!” and we would ask “how high?”; and we were once happy to work like that. In the last year or so buyers still believe that they can say “jump!” but I’m more inclined to say “only if you go first!”. In other words I think that there is still a belief out there that anyone breathing can get a loan and anyone working in this market knows that those days are over.

It’s frustrating on so many levels. Since I tend to work with more sellers than buyers I find myself thinking of my sellers first. When a potential buyer calls me regarding one of my listings I consider what the seller would want first, and I know that they would want a “qualified” buyer to view their home. So why are so many people looking to purchase without being qualified first? They have to see the news, read the paper, see the blogs??? They have to know that they must speak with their lender first right? And what makes them think that they’ll get some kind of deal by going directly with the listing agent? Everything out there is a fabulous deal already, they’re only going to miss out on personal representation by going through the listing agent, in fact I won’t provide “dual agency” because there is too much liability in it for me.

So there needs to be a new education for buyers. Many agents in my office prescribe to the CITO method of working with buyers. CITO mean “Come into the office”. Rather than meeting buyers at the home they are inquiring about these agents qualify the buyer first by setting up a meeting at their office. This allows the buyer’s agent to qualify the buyer, understand their needs and wants, and educate them on the process. I sincerely wish that more agents would do this. It would cut down on time wasted, it would weed out the real buyers from the “looki-loos”, it would bring more professionalism to our industry, and it would help educate buyers on the process…..thus changing the public perception of Realtors and our industry for the better.

Are you with me??

Strange Brew

Call me cynical (since I am) but I had some great news last week from Wachovia and I was so taken aback that I know I should proceed with caution and tell myself that I’ll believe it when I see it.

I’ve been working with short sales for two years now and I’m very well versed in the content of the packet that I need to send to the bank once an offer comes in. Typically this packet needs to include a hand-written hardship letter, two months of bank statements, last 2 years of tax returns, an income and expense report and a couple of recent pay stubs. These items come from the seller. Included in the packet is also the sales agreement, letter of authorization and the HUD statement from the title company showing the bank their shortfall. Most of the packets that I fax to the bank are anywhere from 50-75 pages in length and as you can imagine it’s quite a bit of work for my sellers.

Friday I called Wachovia to ask them to fax me a copy of their income & expense form for my clients to fill out so that I could submit the packet this week. As usual I was sent to the wrong department at first but I did speak with a very nice gentleman that informed me that he had just taken a class on what the bank was requiring for their short sale packets and he was sure that they didn’t need the income and expense report. That surprised me but what really took me back was his next statement. He said “actually ‘mam, all we require is the signed sales agreement, authorization form and the HUD.”

Since I was speaking with someone in the wrong department I was pretty sure that he was incorrect about this. I have never had to send in only those three items! Due to my lack of belief in his knowledge, the nice gentleman was polite enough to direct me to the short sale department and from there I spoke with a nice lady who told me the very same thing that the nice gentleman had shared. I was noticeably shocked and she said that she gets that a lot!

She then went on to share her time-line expectations with me and I was even more blown away. In a nutshell she assured me that the bank would have a response from their negotiator within a maximum of 20 days……which is pretty much unheard of. Like I said earlier, I’ll believe it when I see it.

So what’s going on out there? I know that Wachovia is in trouble but are they really going to be that easy to work with? My theory is that they have so much REO that can’t be backed up with the paper they have to hold in deposits so they’re allowing short sales to run through at a faster pace in an effort to stave off foreclosure. I’ve also been informed that Wachovia has placed a moratorium on foreclosures so this previous theory does make sense.

Whatever the case may be, I’m happy to report that this bank appears to be easier to work with than most. With that said here comes my cynical side………I’ll let you know how it goes!

Banks, Bankers & Bankees (A post I stole from my other blog)

I’m going bald. I’m 38 and I’m going bald. At first I thought I had a vitamin deficiency but after the conversation that I had with a bank employee today I realized that it’s not a vitamin deficiency at all. Turns out that I spend about 2 hours every day literally ripping my hair out from the roots due to the incredible and often subhuman conversations that I have with bank employees! It’s maddening and has now left me hairless.

WHY, you ask, am I even talking to these people? Well, because the real estate market has shifted and I have had to shift my business right along with it. As awful as it sounds (and it is truly awful) I have so many clients that are in either a state of financial crisis, divorce, death or all of the above! I kid you not, I’ve seen it all. And most of these people have contracted with me to facilitate a short sale, which in layman’s terms means that I attempt to negotiate with the banks on my clients behalf to sell the home for less than what is owed on the property…..and sometimes it’s a lot less.

This morning I spent 15 minutes on hold with a bank prior to even getting a human voice. This is not altogether unheard of. When I finally spoke to someone, this is how the conversation went: (the names and information have been changed to protect the innocent)

Bank: Can I have your loan number please?

Me: 2849573894

Bank: Can you verify the address?

Me: 17846 SW Whogivesadamn Street, Nowhere

Bank: Can you give me the name of the borrower and their social security number?

Me: I gave it

Bank: What can I do for you today Mr. Brown?

Me: Well, first off, I’m not Mr. Brown.

Bank: oh I’m so sorry (and they always have a southern drawl). To whom am I speaking?

Me: This is Mr. Brown’s Realtor, well actually not Mr. Brown’s because see, he’s deceased so I’m the Realtor for the personal representative for the estate.

Bank: (obviously thrown way off by my last statement) Well ma’am (southern drawl again), would you like to speak with our loan modification department…..blah, blah, blah.

Me: WWWWooooooohhhw, stop talking. Did you not just hear what I said? The borrower is deceased and you want to send me to the loan modification department? HE’S DEAD! Can you modify a loan for a dead person? Shit, you can’t give a loan to a live person but you’ll modify the loan of a dead person??

That’s right, I lost it. It wasn’t long after that that I requested a transfer to the loss mitigation department and was placed on perma-hold again, only to have the line answered by another “customer no service” rep who was kind enough to place me on hold again in an effort to get the department that I needed and she stayed with me until they answered. She was the only normal person that I spoke to, and I miss her.

After I had been funneled through the phone system for the zillionth time I finally connected with Gayle in Loss Mitigation. While there I was able to explain the borrowers dilemma (remember, he’s dead) and then I requested her requirements for a short sale package given these circumstances, citing that I actually had offers to present to them. Amazingly enough Gayle, a woman who undoubtedly takes these calls all day long attempted to read the requirements from a script. I know this because if she had heard me tell her that the borrower was deceased, she never would have asked me to have my client present a “hand written hardship letter”.

I laughed so hard I peed my pants. What was I going to do, have his body exhumed and take his lifeless skeletal hand and hold a pen in it, ever so delicately, and beg it to come back to life in an effort to write a letter to the bank to explain why he couldn’t make his payments?????????? Seriously people, get a clue!

Obviously fed up with me and my attitude and not knowing what to do next, Gayle suggested that I simply send a copy of the death certificate. I obliged.

So do you see where I’m at? It’s not a good place, and that was only the first half hour of a very long day. I’m riding full steam ahead on the crazy train and I was just promoted to engineer. There is only one positive that will come out of all of this madness: since I’ll have no hair left I should be able to save about $100 on my cut, color, and style every month! Can anyone recommend a good wig shop?

The Tissue Talk

There’s an awesome agent in my office that has recently included a new addition to his listing presentations: a box of tissues. It’s completely appropriate and highly necessary from where I stand and there are several reasons for it, none of them good.

Sellers in my market still believe that if they have purchased their home within the last five years that there is equity and I’m sorry to say that just isn’t the case in most situations. Never mind the fact that they’ve refinanced and taken out equity, never mind the fact that they watch the same dismal news on TV that everyone else does and never mind the fact that we as agents can show them every stat known to mankind that will shatter their little reality! NO, that’s not good enough. Somewhere, somehow in their very small minds they still believe that their house is so far superior to every other home on the market that it must be worth more.

Well, I am no longer a Realtor, I’m a dream shatterer and a reality buster. It’s my job to somehow help them understand that listing their home for well above the current market value will cripple their odds of selling and will more than likely put them into a short sale situation because they will be merely “chasing the market”……downward! We’re not going up yet people and this time of the year we’re suppose to be experiencing a bump up. Although I’m seeing more activity I don’t know about you but I’m seeing more shitty offers, no offers, and/or crappy offers that fall apart and I’ve about had it.

Just as I say that another person in need calls and then I’m back on the spinning wheel. I’ve never experienced a market like this and frankly I know agents that were around in the 80’s that say that it wasn’t this bad. The fear is that we may experience a “zero market” where all we have is sellers and no buyers, mainly due to the fact that buyer’s cannot get financing. The banks are so far in the hole that I’m concerned about a moratorium on lending. And why not, many banks have begun a moratorium on foreclosing in an effort to drive short sale purchases which ultimately cost the banks less.

Either way, I’m constantly being asked where I believe that this market is headed and I can tell you that I think that toilet tissue may me a more immediate need than Kleenex. Cynicism aside there are many agents that choose to look at this market in a positive light and they make me barf. There is nothing positive about talking to people who are out of work and cannot pay their mortgage, there is nothing positive about having to tell someone that the home that they bought 2 years ago for $775K is now worth $550K, and there is nothing positive about submitting offers to sellers that are so low that they’re insulting.

This has been my daily rant. Thank you for reading!

Good New, Bad News

Wow, time to revive this blog! I’m going to take a different approach this time though. Although I will add content that could prove helpful for many consumers I am also going to provide content for the agents out there that are struggling with this market.

Here’s my thought process. I have seen way too much negative information through the media and so many of the agents that you talk to would like to bullshit you into believing that the market isn’t as bad as it’s being projected. They’re both wrong. It’s good and it’s bad, it just depends on how you’re working your business and whether or not you have chosen to shift with the times. This is a concept very easily explained in Gary Keller’s book SHIFT, and I would encourage you to get a copy of it, FAST!

Every day that goes by we as agents are bombarded with information either through the media, via our “trusted” mortgage advisers, and just through the constant sharing of information that goes on in our offices. We then are entrusted by our clients to be the “expert” on the market but what information we chose to use can either harm or hurt or even help our clients. We’re damned if we do and really damned if we don’t.

Yet everyday my clients look to me to be the expert that will get their home sold and/or find them the perfect home (for a steal of a deal). And everyday I trust in myself that I’ll get the job done. And I believe that that mindset is what separates the thriving agents from the ones that are “going back to work”. (By the way, nothing irritates me more than when I hear that someone who was a Realtor has “gone back to work” in the “real” workforce. What the hell were they doing when they were a real estate professional??? This has always been work for me, and hard work at that!)

With all of that said I will try to make this blog a useful tool for both consumers and agents with the hope that if you happen upon this blog and would like to share your situations and real estate concerns that you know that someone is listening, can possibly help, and might actually know what you’re going through! In the meantime, I’ll be adding additional insurance my current E&O policy!

Stacy’s Website

Why Hasn’t My Home Sold?

This is a crazy time in the real estate market. This shouldn’t be news to you unless you don’t read the paper or follow the local news! It’s a difficult time to be a seller. If you are selling your home and it has been on the market for several months, you might start to wonder why it just isn’t moving. How can you introduce some extra energy into the sale?

The first thing you should do is have a frank talk with your real estate agent in order to get feedback from prospective buyers who have seen your home, and other agents who have shown it. Does your home look its best? Is it accessible for agents to show on short notice? Is the price in line with the rest of the market? Do you need to consider neutralizing any strong decorating features that may not have wide appeal?

Getting your home sold is a collaborative effort between you and your real estate agent. It is important for your agent to market your property aggressively, but you must do your part to ensure that buyers see a home that is as appealing as it can be. In addition, pricing strategies that price your home competitively, against the competition is critical in this market. Ask your agent for any new ideas that will create results.