Dear REALTORS,
I wanted to thank those of you who came to my event last Thursday with David Bright. It was so nice to see you. We covered some very important topics in the short sale market. For those of you we had to turn away due to full capacity we apologize. Lotus Realty Group and David Bright will be having educational events every 3 months. We will be sure you are able to attend the next one.
One topic in particular I would like to go over in this news letter is all issues pertaining to a negotiator fee. I know that most of you do not want to pay a negotiator and parting with a 1% fee is painful for most of you. One of the questions for David Bright was; can the buyer pay the negotiator fee or is it the listing agent’s responsibility?
For those of you who have followed my events with my attorney David Bright understand that he feels very strongly on this matter. His reply was simply “The listing agent’s responsibility. Having a buyer pay a negotiator fee has a lot of dark ally’s in this industry today. As a business owner and having built my company to where it is today with a lot of sacrifices I cannot afford to go down any of those dark ally’s and one of my goals has always been to protect my clients as well. Homeowners and the REALTORS I negotiate for. I take pride in the fact that our company has a strong reputation of ethics and integrity along with our success rate in closing short sale transactions.
I was reflecting on the situation that drove us into this type of market in the first place. The lending industry liked to call it creative financing. Now, there are companies out there trying to do creative short sales and charge less money for their services to drive in the business. I am in my third year of business and I have seen these companies come and go.
I know how long short sales take to close. I also know how many you have to have in your pipeline to stay afloat. Not to mention the right team to handle the short sales from start to finish and how many deals that need to close on a monthly basis to make the numbers work to keep business doors open. But most importantly, from a legal stand Pointe, short sales have become a liability with all of the CREATIVE short sales taking place. Lenders and the DRE have extra eyes on short sale negotiators. Is it worth the headache and the risk to try to save some money or does it make more sense to hire a team of professionals who has your best interest in mind. A company who will protect you and your client.
I would like you to consider this; there are so many sides to a short sale transaction. As a negotiator I am negotiating the hardship, contributions and values. If a company is willing to give up their worth and accept less for their services, how hard do you think they will fight when negotiating your file? That saying, you get what you pay for is exactly right.
I wanted to share with you exactly what the 1% negotiator fee covers when you outsource your short sales to Lotus Realty Group.
Why use Lotus?
1. Qualified, experienced and professional staff. I was very mindful when hiring people for my company to assist me in executing my strategic, streamlined process to allow Lotus Realty Group to run like a well oiled machine and at the same time; people that would be a good reflection of who we really are and what we have to offer. Every person employed at Lotus Realty are licensed REALTORS.
Our staff:
Cari Drolet- Founder/CEO- 14 years in the industry from Lending to Real Estate. Licensed REALTOR, CDPE.
Stephen Bick- Broker of record/Business partner. Charter Financial Analyst. (CFA, CMA, CIRA.) Business Management and compliance.
Lana Boyle- Director of Operations- Bachelors Degree in business management. Licensed Broker, CDPE.
Jennifer Talasazan- Sales partner/Loan modification/Debt relief. Licensed REALTOR with back ground in the lending industry.
Donna Rommano- Transaction Coordinator- Licensed REALOR.
2. # 1 Real Estate Attorney, David Bright. David Bright is my attorney at Lotus Realty Group. My short sale package has all of the disclosures to protect all parties in the transaction. All disclosures were either co-created with David or approved by David. David is a huge asset to have on our team and he is always available for my clients.
3. Experienced negotiators with all of the large financial institutions and are able to handle all of the banks requests and requirements before the file hits their desk.
4. We have a stream lined process that allows our company to handle all files with ease. Our organizational skills are like no other. Nothing falls through the cracks.
5. In addition to negotiating your file Lotus Realty Group offers the following assistance to REALTORS:
A) Prospecting
B) Prequalifying
C) Full short sale package readily available to hand off to your clients to get started.
D) Pricing and listing
E) Marketing
6. Lotus Realty Group will only take qualified short sale transactions. We will only take deals we know we can close and not waste time on deals that do not make sense. This allows us to maintain our excellent track record of closing short sales.
7. Weekly updates
The goal is to build your pipeline with the right deals. If you have thirty in your pipeline on a regular basis you will be closing 2-3 monthly.
The questions to ask your self are:
A) Can you do the negotiating yourself and build your pipeline to where it needs to be?
B) Does it make more sense to hire a company for less than the 1% fee for negotiating your file where there is a lack of service and legal protection to save a little money and in return lose sleep at night?
Here a couple suggestions to help you with the 1% negotiator fee:
1. Ask the buyer’s agent to split the fee with you. If the buyer’s agent understands what it is he or she is paying for to ensure the deal closes it has been my experience that they are willing to contribute.
2. Offer 2.5 % to the cooperating broker in the MLS and 3.5% to the listing agent if you have to carry the full 1%.
REALTORS, we have truly created a system that works. Where do you see your business headed? What number do you need to make this year and next year? Have you thought about it? Have you written it down? What do you need to do to execute your business plan? Where is your time best spent?
I would like to end with a short story. When I first started my business I had my hands in several cookie jars. I was door knocking and taking listings, working with buyers, looking into a property management service as an addition to my business, and becoming my own broker to build a brokerage. It was EXHAUSTING!
When I changed my business model and decided to focus ONLY on negotiating for other REALTORS and perfecting that system all of the sudden I looked up and everything had come full circle. I get 3-5 of my own listings monthly by referral only. 6-10 new transactions from other REALTORS monthly. I have created this on a $500.00 monthly marketing budget. Sign calls come in and I hand it over to one of the agents on my team and just recently our company became our own broker of record. We are still in the process with the paperwork at the DRE but it happened. And it happened by laser focus on one particular part of the business.
I would like to encourage you to evaluate your current status and consider allowing Lotus Realty Group to help you achieve your goals.
(Quote) "Persistence is the ability to maintain actions regardless of your feelings. You press on even when you feel like quitting. When you work on any big goal your motivation will wax and wane like the waves hitting the shore. Sometimes you’ll feel motivated, sometimes you won’t. But it’s not your motivation that creates results - it’s your action.
Persistence allows you to keep taking action even when you don’t feel motivated to do so, and therefore you keep accumulating results. Persistence will ultimately provide its own motivation. If you simply keep taking action, you’ll eventually get results, and results can be very motivating." – Zig Ziglar
Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.
LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS
At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...
Call today to find out how Lotus Realty Group can assist you in closing your short sale transactions or go to WWW.LotusRealtyGroup.com
Wednesday, August 3, 2011
Monday, July 25, 2011
: Law against short sale deficiencies expanded to Junior Liens
I know most of you are aware of the great news in regards to the expansion of the deficiency law to junior lien holders. There is no doubt this is a huge improvement that will make negotiating with seconds much easier and much more successful. However, there have been some misunderstandings on these new rules and I wanted to clarify a few things so that moving forward you are able to set proper expectations with your clients.
SB-458
1. As of 7/15/2011 Senate Bill 458, prohibiting a deficiency after a short sale for one-to-four residential units, regardless of whether the lender is a senior or JUNIOR LIEN holder.
2. Effectively immediately on all transactions closing escrow.
3. A lender cannot require a borrower to pay any additional compensation in exchange for a short sale approval.
4. The law does state that this does not prohibit a borrower from voluntarily offering a monetary contribution to a lender in hopes of obtaining a short sale.
5. A lender is permitted under the new law to negotiate for a contribution from someone OTHER than the borrower, such as other lenders, agents, relatives, and the like.
When we receive great news like this it is easy to overlook some key points or not read between the lines and think it through. I have had several calls on items 2-5 so here are the Q&A in order:
Q. If my client completed a previous short sale or the home was foreclosed on does this law apply?
A. No, this law only applies to transactions in escrow from the date the bill was passed and all new short sales moving forward.
Q. Since the lender is no longer able to require a borrower to pay additional compensation in exchange for a short sale approval, does the lender have the right to reject the short sale?
A. Look at numbers 3 and 4. In number 4 it states that the law does NOT PROHIBIT a borrower from voluntarily offering a contribution in HOPES of obtaining a short sale. How I interpret this is the lender can reject the short sale in order to see if they can obtain a contribution where the hardship is not strong and the homeowner does not offer anything in good faith.
We still need to make sure our clients are true candidates for a short sale. If the homeowner clearly shows in his financials that he has money to contribute and it is therefore not a traditional hardship you will want to have an upfront conversation with the homeowner to lay the groundwork. The lender may or may not accept your short sale so a contribution may be in your client’s best interest.
If the homeowner can clearly show in their financials there is nothing to give they have a better shot at getting it approved. There are no guarantees so the best you can do is pre-qualify all clients and set proper expectations.
Q. Does this mean that the lender will no longer expect other parties to contribute?
A. This is one that really needs to be read all the way through. The lender can still ask for a contribution from agents and possibly relatives. Wells Fargo seconds almost always do this. Again, I would make sure that you set proper expectations with your clients in regards to voluntarily contributing depending on their circumstances to minimize your risk of coming out of pocket.
First lien holders are getting better at contributing 10% to the seconds but it is hard to say what their number will be until we get the approval in hand. Remember when they would only contribute 6%. Well I can tell you from experience that seconds are getting smarter and tougher and that they will try to pull dollars from as many places as possible to squeeze as much as they can. Remember that they are taking the biggest loss.
We still need to do our due diligence in the beginning to have a smooth closing in the end.
Please join # 1 Real Estate Attorney “ David Bright” and myself on 7/28/2011, at the Tamarack Beach Resort between 11am and 1pm for an educational event. We will be discussing important topics in the short sale market including this new senate bill, Equator and MARS rules. Please RSVP as there is limited seating at 858-764-7300 or email Lana@lotusrealtygroup.com.
(Quote) The very essence of leadership is that you have to have vision. You can't blow an uncertain trumpet.
Theodore M. Hesburgh
REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?
Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.
LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS
At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...
Call today to find out how Lotus Realty Group can assist you in closing your short sale transactions or go to WWW.LotusRealtyGroup.com
SB-458
1. As of 7/15/2011 Senate Bill 458, prohibiting a deficiency after a short sale for one-to-four residential units, regardless of whether the lender is a senior or JUNIOR LIEN holder.
2. Effectively immediately on all transactions closing escrow.
3. A lender cannot require a borrower to pay any additional compensation in exchange for a short sale approval.
4. The law does state that this does not prohibit a borrower from voluntarily offering a monetary contribution to a lender in hopes of obtaining a short sale.
5. A lender is permitted under the new law to negotiate for a contribution from someone OTHER than the borrower, such as other lenders, agents, relatives, and the like.
When we receive great news like this it is easy to overlook some key points or not read between the lines and think it through. I have had several calls on items 2-5 so here are the Q&A in order:
Q. If my client completed a previous short sale or the home was foreclosed on does this law apply?
A. No, this law only applies to transactions in escrow from the date the bill was passed and all new short sales moving forward.
Q. Since the lender is no longer able to require a borrower to pay additional compensation in exchange for a short sale approval, does the lender have the right to reject the short sale?
A. Look at numbers 3 and 4. In number 4 it states that the law does NOT PROHIBIT a borrower from voluntarily offering a contribution in HOPES of obtaining a short sale. How I interpret this is the lender can reject the short sale in order to see if they can obtain a contribution where the hardship is not strong and the homeowner does not offer anything in good faith.
We still need to make sure our clients are true candidates for a short sale. If the homeowner clearly shows in his financials that he has money to contribute and it is therefore not a traditional hardship you will want to have an upfront conversation with the homeowner to lay the groundwork. The lender may or may not accept your short sale so a contribution may be in your client’s best interest.
If the homeowner can clearly show in their financials there is nothing to give they have a better shot at getting it approved. There are no guarantees so the best you can do is pre-qualify all clients and set proper expectations.
Q. Does this mean that the lender will no longer expect other parties to contribute?
A. This is one that really needs to be read all the way through. The lender can still ask for a contribution from agents and possibly relatives. Wells Fargo seconds almost always do this. Again, I would make sure that you set proper expectations with your clients in regards to voluntarily contributing depending on their circumstances to minimize your risk of coming out of pocket.
First lien holders are getting better at contributing 10% to the seconds but it is hard to say what their number will be until we get the approval in hand. Remember when they would only contribute 6%. Well I can tell you from experience that seconds are getting smarter and tougher and that they will try to pull dollars from as many places as possible to squeeze as much as they can. Remember that they are taking the biggest loss.
We still need to do our due diligence in the beginning to have a smooth closing in the end.
Please join # 1 Real Estate Attorney “ David Bright” and myself on 7/28/2011, at the Tamarack Beach Resort between 11am and 1pm for an educational event. We will be discussing important topics in the short sale market including this new senate bill, Equator and MARS rules. Please RSVP as there is limited seating at 858-764-7300 or email Lana@lotusrealtygroup.com.
(Quote) The very essence of leadership is that you have to have vision. You can't blow an uncertain trumpet.
Theodore M. Hesburgh
REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?
Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.
LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS
At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...
Call today to find out how Lotus Realty Group can assist you in closing your short sale transactions or go to WWW.LotusRealtyGroup.com
Wednesday, July 13, 2011
Substitute a new buyer without restart in Bank of Americas Equator
LOTUS REALTY GROUP
I received the below email from Bank of America yesterday. I am sure some of you may have received the same but just in case I wanted to make sure you were all up to date on the latest news and programs and as usual give my advice on how to utilize this information to your benefit.
Bank of America now allows real estate agents to submit a backup offer on a transaction if the original buyer has walked away from the sale. This means you will no longer have to initiate a new short sale; instead, you can continue with the original transaction in Equator and still work with your same short sale specialist. This change will save you time by not having to repeat a number of process steps.
When a Backup Offer is ready
you should send a message to your short sale specialist via Equator when the original buyer is no longer interested in the property. Your short sale specialist will then respond to you within two business days and ask if you have a backup offer ready to submit. If you have another buyer prepared to make an offer, the short sale can proceed without having to repeat the short sale initiation steps. The short sale status in Equator will change to "Marketing," and you will be directed to complete the following tasks within 14 business days:
· Complete the "Listing Data" task.
· Provide the marketing description.
· Review the marketing plan.
· Upload the offer. (To do this in Equator, locate "My Properties," then "Offers" and select "Place New Offer.")
If the "Listing Data" task is not completed and the new offer is not uploaded within 14 business days, the file will be closed.
When No Backup Offer Is Ready
This new process applies only if there's an available backup offer when a buyer walks. If you do not have a backup offer ready to be submitted, the short sale will be declined. In that case, you should return to marketing the property and initiate a new short sale in Equator once you receive another offer.
We work with many Equator transactions and obviously one of the biggest frustrations when we lose a buyer is starting all over as Equator typically works one offer at a time. This new system is great however, I wanted to remind everyone to pay attention to the last paragraph. If there is not a back up offer to replace the one you lost, you will have to start over and re initiate the short sale.
I would make sure that you have a couple back up offers on standby to avoid this issue. Time lines are much longer when we have to start all over and this only frustrates buyers therefore, we run the risk of creating a revolving door. If there are sale dates that we have to postpone, starting over will definitely pose a problem.
Setting expectations with the buyers is another way to keep them on the line. Knowing the time frame is key and sharing that with them. Every transaction is different and some will take longer than others so do not over promise and under deliver. I would also make sure all buyers are pre qualified and are not putting in offers all over San Diego County. We need to create a level of commitment which can only be accomplished by setting proper expectations and due diligence.
General Time Line: (These are subject to change with every deal)
1. File submitted
2. 7-10 days to upload into the system
3. 2-3 weeks processing time
4. Order BPO
5. 7-10 days for BPO to be submitted and assigned to a negotiator
6. Negotiator can take anywhere from 2-4 weeks to negotiate the file
7. Submit to the investor for final approval
8. Investor can take anywhere from 1-3 weeks (plus or minus)
It has been my experience when I slow down and do things properly in the beginning my transactions go much more smoothly in the end.
(Quote) Efficiency is doing things right; effectiveness is doing the right things.
"Peter Drucker"
REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?
Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.
LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS
At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...
Call today to find out how Lotus Realty Group can assist you in closing your short sale transactions or go to WWW.LotusRealtyGroup.com
I received the below email from Bank of America yesterday. I am sure some of you may have received the same but just in case I wanted to make sure you were all up to date on the latest news and programs and as usual give my advice on how to utilize this information to your benefit.
Bank of America now allows real estate agents to submit a backup offer on a transaction if the original buyer has walked away from the sale. This means you will no longer have to initiate a new short sale; instead, you can continue with the original transaction in Equator and still work with your same short sale specialist. This change will save you time by not having to repeat a number of process steps.
When a Backup Offer is ready
you should send a message to your short sale specialist via Equator when the original buyer is no longer interested in the property. Your short sale specialist will then respond to you within two business days and ask if you have a backup offer ready to submit. If you have another buyer prepared to make an offer, the short sale can proceed without having to repeat the short sale initiation steps. The short sale status in Equator will change to "Marketing," and you will be directed to complete the following tasks within 14 business days:
· Complete the "Listing Data" task.
· Provide the marketing description.
· Review the marketing plan.
· Upload the offer. (To do this in Equator, locate "My Properties," then "Offers" and select "Place New Offer.")
If the "Listing Data" task is not completed and the new offer is not uploaded within 14 business days, the file will be closed.
When No Backup Offer Is Ready
This new process applies only if there's an available backup offer when a buyer walks. If you do not have a backup offer ready to be submitted, the short sale will be declined. In that case, you should return to marketing the property and initiate a new short sale in Equator once you receive another offer.
We work with many Equator transactions and obviously one of the biggest frustrations when we lose a buyer is starting all over as Equator typically works one offer at a time. This new system is great however, I wanted to remind everyone to pay attention to the last paragraph. If there is not a back up offer to replace the one you lost, you will have to start over and re initiate the short sale.
I would make sure that you have a couple back up offers on standby to avoid this issue. Time lines are much longer when we have to start all over and this only frustrates buyers therefore, we run the risk of creating a revolving door. If there are sale dates that we have to postpone, starting over will definitely pose a problem.
Setting expectations with the buyers is another way to keep them on the line. Knowing the time frame is key and sharing that with them. Every transaction is different and some will take longer than others so do not over promise and under deliver. I would also make sure all buyers are pre qualified and are not putting in offers all over San Diego County. We need to create a level of commitment which can only be accomplished by setting proper expectations and due diligence.
General Time Line: (These are subject to change with every deal)
1. File submitted
2. 7-10 days to upload into the system
3. 2-3 weeks processing time
4. Order BPO
5. 7-10 days for BPO to be submitted and assigned to a negotiator
6. Negotiator can take anywhere from 2-4 weeks to negotiate the file
7. Submit to the investor for final approval
8. Investor can take anywhere from 1-3 weeks (plus or minus)
It has been my experience when I slow down and do things properly in the beginning my transactions go much more smoothly in the end.
(Quote) Efficiency is doing things right; effectiveness is doing the right things.
"Peter Drucker"
REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?
Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.
LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS
At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...
Call today to find out how Lotus Realty Group can assist you in closing your short sale transactions or go to WWW.LotusRealtyGroup.com
Wednesday, July 6, 2011
This real-estate scam can land you in jail......
This real-estate scam can land you in jail
In some cases, ‘flopping’ is a crime with serious consequences
http://www.marketwatch.com/Story/story/print?guid=1B883062-A0CE-11E0-9F46-002128049AD6
Dear friends and colleagues,
I wanted to share this article with you I read on Market Watch. Those of you who have attended one of my events with my Real Estate Attorney “David Bright" know how passionate we are about education in the short sale market to ensure we are all operating above board and in the same return protecting all parties involved in the transaction. Please take time to read it.
I found this very interesting. As a listing agent in a short sale transaction our fiduciary duty is to the seller and the lender. To help the homeowner experiencing a true hardship; to find a serious and committed buyer and bring the lender the highest best offer. PERIOD. There is no easy way around it. No short cuts. Though this process can be very frustrating at the end of the day if the process is done properly then it will be a win win for everyone. If it is not, then we run the risk of potential legal ramifications. I don’t know about you, but I would much rather be able to close my eyes at night and actually sleep.
The BPO agent’s fiduciary duty is to the lender. I personally have only ran into issues with BPO agents driving my values up not down. Which is why I have developed the listing history method. This helps me when I am in a value dispute situation. So, now we have" Flippers and Floppers" to watch out for. Ha!
It is unfortunate to me that so many people are willing to create situations such as these. This is not a market to mess around with. Our number one goal should be to help homeowners who really need the help avoid foreclosure. The only way to do that is to take on qualified clients; know what the lender is looking for and act accordingly to reach that goal upholding our integrity and ethics. .
I believe if we truly have our client’s best interest in mind all of our good intentions and efforts will come back tenfold.
(Quote) "There are seven things that will destroy us: Wealth without work; Pleasure without conscience; Knowledge without character; Religion without sacrifice; Politics without principle; Science without humanity; Business without ethics."
— Mahatma Gandhi
REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?
Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.
LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS
At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...
Call today to find out how Lotus Realty Group can assist you in closing your short sale transactions or go to WWW.LotusRealtyGroup.com
Thursday, June 30, 2011
CITI Mortgage short sale incentives for borrowers
C.A.R News line came out with an article yesterday stating that the Senior Vice President of CITI Mortgage, the mortgage servicing arm of Citigroup, has announced they will be offering borrowers an average $12,000 in incentives to complete a short sale. CITI has a little over 16% of delinquent loans in a short sale program. Adding that has increased from 4% from 2 years ago.
In 2009, CITI offered an average of $1500 to qualified borrowers. In 2010, CITI increased incentives between $3000 and $5000. Present day, $12,000 for 2011.
Not only has CITI reached out to the borrowers instead of waiting for the borrowers situation to get worse and get them involved in their short sale program; Increased the amount of money at the close of escrow to help borrowers get back on their feet, they have also streamlined there short sale process. In 2009 the process was an average of 120 days from the listing to close. The average turn time in 2011 is 83 days.
I wanted to lay this out for those who did not read the article and explain how some of this can be misunderstood and can cause one to give misleading information to the borrowers but in the same return, may be a great way to encourage a borrower to take action.
As a short sale negotiator I see a lot of different programs out there banks are trying to implement. But keep in mind that there is still a pre qualification process.
To ensure the following:
a) Borrower is eligible to be in the short sale program
b) Receives the $12,000 incentive
c) Turn time of 83 days
The following needs to take place:
1. Borrower has to be pre qualified and fit the parameters of a short sale with proper expectations set.
2. Short sale has to meet the NET requirements the bank is looking for.
3. Have a complete short sale package submitted with all applicable documents.
The banks have definitely been pro active in completing short sales however, the deal still needs to makes sense. If you do not have a qualified borrower, that will kill the deal right away. The bank has a certain NET in mind. If you cannot meet the net requirements with the offer you submit, a listing history is necessary to negotiate with the bank. If you submit a short sale package that is in complete how successful do you think you will be getting an approval in 83 days if the bank is constantly tracking down documents, fighting the value of your offer or questioning your clients hardship? The goal is to streamline your own process before it hits the negotiators desk at the bank. This will help you achieve what you want in the time you want.
These incentives are a great way to encourage borrowers to take action and get involved in the short sale program but it is important that you do not over promise and under deliver. We preach about this a lot at Lotus Realty Group. I get a lot of calls about these types of incentives from borrowers and it becomes apparent very quickly that they do not understand the process in which it takes to get them there. And it all starts with asking the right questions and Pre Qualifying.
Extra Tip:
Before marking your calendar from 83 days to start, please keep in mind that if you do not follow the suggestions in this blog you will most likely run into longer time frames. Here is a typical time line:
1. File submitted
2. 7-10 days to upload into the system
3. 2-3 weeks processing time
4. Order BPO
5. 7-10 days for BPO to be submitted and assigned to a negotiator
6. Negotiator can take anywhere from 2-4 weeks to negotiate the file
7. Submit to the investor for final approval
8. Investor can take anywhere from 1-3 weeks ( plus or minus)
(Quote) You can't move so fast that you try to change [a situation] faster than people can accept it. That doesn't mean you do nothing, but it means that you do the things that need to be done according to priority.
“Eleanor Roosevelt”
Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.
LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS
At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...
Call today to find out how Lotus Realty Group can assist you in closing your short sale transactions or go to WWW.LotusRealtyGroup.com
In 2009, CITI offered an average of $1500 to qualified borrowers. In 2010, CITI increased incentives between $3000 and $5000. Present day, $12,000 for 2011.
Not only has CITI reached out to the borrowers instead of waiting for the borrowers situation to get worse and get them involved in their short sale program; Increased the amount of money at the close of escrow to help borrowers get back on their feet, they have also streamlined there short sale process. In 2009 the process was an average of 120 days from the listing to close. The average turn time in 2011 is 83 days.
I wanted to lay this out for those who did not read the article and explain how some of this can be misunderstood and can cause one to give misleading information to the borrowers but in the same return, may be a great way to encourage a borrower to take action.
As a short sale negotiator I see a lot of different programs out there banks are trying to implement. But keep in mind that there is still a pre qualification process.
To ensure the following:
a) Borrower is eligible to be in the short sale program
b) Receives the $12,000 incentive
c) Turn time of 83 days
The following needs to take place:
1. Borrower has to be pre qualified and fit the parameters of a short sale with proper expectations set.
2. Short sale has to meet the NET requirements the bank is looking for.
3. Have a complete short sale package submitted with all applicable documents.
The banks have definitely been pro active in completing short sales however, the deal still needs to makes sense. If you do not have a qualified borrower, that will kill the deal right away. The bank has a certain NET in mind. If you cannot meet the net requirements with the offer you submit, a listing history is necessary to negotiate with the bank. If you submit a short sale package that is in complete how successful do you think you will be getting an approval in 83 days if the bank is constantly tracking down documents, fighting the value of your offer or questioning your clients hardship? The goal is to streamline your own process before it hits the negotiators desk at the bank. This will help you achieve what you want in the time you want.
These incentives are a great way to encourage borrowers to take action and get involved in the short sale program but it is important that you do not over promise and under deliver. We preach about this a lot at Lotus Realty Group. I get a lot of calls about these types of incentives from borrowers and it becomes apparent very quickly that they do not understand the process in which it takes to get them there. And it all starts with asking the right questions and Pre Qualifying.
Extra Tip:
Before marking your calendar from 83 days to start, please keep in mind that if you do not follow the suggestions in this blog you will most likely run into longer time frames. Here is a typical time line:
1. File submitted
2. 7-10 days to upload into the system
3. 2-3 weeks processing time
4. Order BPO
5. 7-10 days for BPO to be submitted and assigned to a negotiator
6. Negotiator can take anywhere from 2-4 weeks to negotiate the file
7. Submit to the investor for final approval
8. Investor can take anywhere from 1-3 weeks ( plus or minus)
(Quote) You can't move so fast that you try to change [a situation] faster than people can accept it. That doesn't mean you do nothing, but it means that you do the things that need to be done according to priority.
“Eleanor Roosevelt”
Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.
LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS
At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...
Call today to find out how Lotus Realty Group can assist you in closing your short sale transactions or go to WWW.LotusRealtyGroup.com
Thursday, June 23, 2011
Who is a potential candidate for a short sale?
There are three types of homeowners that are candidates for short sales. Each one has its set of expectations and guidelines. It is important to determine which type you are dealing with so you are able to set the proper expectations up front and determine if this is a listing you want to take on. As each will have their own set of battles you will want to choose your battles wisely.
The first type of homeowner is one who has a true hardship and has become delinquent on their mortgage. They have had a change in income or lost their job all together. There may be a divorce or illness. There may be significant damage to the property and they are unable to repair it back to a livable condition. This homeowner has very little or NO money in the bank and may be living off their credit cards which are close to being maxed out. Due to their delinquencies they are already in foreclosure status and a sale date is approaching. This homeowner could be experiencing one or more of these hardships or all of them. Sounds like they could use some help, yeah?
This type is a no brainer. The homeowner will have a lot of questions and concerns. They will need a Real Estate Professional to guide them through the process.
Here are some important things to do while on your listing appointment:
1. Ask all the right questions. You still need to pre qualify them and get all the key pieces of information to help you while negotiating with the bank.
2. Bring your short sale package with you. Go through the short sale package with them and explain the importance of filling it out properly and gathering all the applicable documents.
3. Bring your listing agreement. Have in place the set listing price and 3 price reductions. The financial institutions like to see the home listed within 24-48hrs of taking the listing.
4. Set proper expectations in regards to timelines, the importance of getting requested documents over to you as soon as possible and the possibility of the bank asking for a small cash contribution or new promissory note. The possibility of a contribution request from a homeowner who has a genuine hardship and has NO money is not likely but it is possible. It is negotiable but you do not want your client to have any surprises. This lessens their anxiety level and they will definitely appreciate that.
5. Advise them to speak with a Real Estate Attorney and a CPA for any questions pertaining to deficiency and tax ramifications.
6. If the sale date is a week or two away and the homeowner is 12 months or greater delinquent on their mortgage, you may not be able to help this homeowner.
The second candidate is the homeowner that has not missed a payment yet but knows they are headed that way due to the downturn in the economy. They can see the train coming and want to get off before the impact hits. This homeowner does have some money in savings but it is dwindling down slowly due to having to draw from it every month to cover their bills. They may have some other assets. They may have to take a job in a different location that promises to pay more and for that reason they have to leave. The home cannot be sold traditionally due to the declining values in the neighborhood and they owe much more than the home is worth. I can appreciate these circumstances.
This type is also a no brainer. These circumstances are still considered a hardship and will give you a good argument when negotiating with the bank.
Consider this:
This home owner is NOT delinquent so you are not fighting against foreclosure timelines. Make sure you are marketing this property for a substantial amount of time to show the bank a listing history.
The third type you will run into is the home owner that is NOT delinquent and CAN afford to make their payment along with all of their other monthly bills and have a nice surplus left over. They have a nice checking and savings account. They may have other properties that are cash flowing. The main reason for wanting to short sale is because he or she owes more than the home is worth and they want out. This type is tricky. The bank may or may not work with this type.
Here are some important things to consider BEFORE taking this listing:
1. Clearly this is not a traditional homeowner in foreclosure status.
2. The bank may approve this short sale but it will most likely be on the following terms:
a) The bank may ask for a cash contribution. The amount requested will most likely be more than it would be for a homeowner with a true hardship.
b) The bank may ask for a new promissory note. This may be anywhere between $10,000 to $40,000.
c) The bank may ask for both.
What you want to determine is if the homeowner is willing to do A, B, or C. If they are not willing to do any of them you may not want to take the listing. You will only be wasting your time.
We are not just pre qualifying homeowners on paper but we also want to feel their level of cooperation. If they are not willing to do what it takes to get the job done everyone will lose in the end.
Extra Tip
You cannot give advice on tax ramifications. You need to direct them to a CPA but after evaluating all three sets of circumstances, which type of candidate would MOST LIKELY experience tax ramifications?? Think about it.
(Quote) Working hard and working smart sometimes can be two different things.
Byron Dorgan
REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?
Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.
LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS
At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...
Call today to find out how Lotus Realty Group can assist you in closing your short sale transactions or go to WWW.LotusRealtyGroup.com
The first type of homeowner is one who has a true hardship and has become delinquent on their mortgage. They have had a change in income or lost their job all together. There may be a divorce or illness. There may be significant damage to the property and they are unable to repair it back to a livable condition. This homeowner has very little or NO money in the bank and may be living off their credit cards which are close to being maxed out. Due to their delinquencies they are already in foreclosure status and a sale date is approaching. This homeowner could be experiencing one or more of these hardships or all of them. Sounds like they could use some help, yeah?
This type is a no brainer. The homeowner will have a lot of questions and concerns. They will need a Real Estate Professional to guide them through the process.
Here are some important things to do while on your listing appointment:
1. Ask all the right questions. You still need to pre qualify them and get all the key pieces of information to help you while negotiating with the bank.
2. Bring your short sale package with you. Go through the short sale package with them and explain the importance of filling it out properly and gathering all the applicable documents.
3. Bring your listing agreement. Have in place the set listing price and 3 price reductions. The financial institutions like to see the home listed within 24-48hrs of taking the listing.
4. Set proper expectations in regards to timelines, the importance of getting requested documents over to you as soon as possible and the possibility of the bank asking for a small cash contribution or new promissory note. The possibility of a contribution request from a homeowner who has a genuine hardship and has NO money is not likely but it is possible. It is negotiable but you do not want your client to have any surprises. This lessens their anxiety level and they will definitely appreciate that.
5. Advise them to speak with a Real Estate Attorney and a CPA for any questions pertaining to deficiency and tax ramifications.
6. If the sale date is a week or two away and the homeowner is 12 months or greater delinquent on their mortgage, you may not be able to help this homeowner.
The second candidate is the homeowner that has not missed a payment yet but knows they are headed that way due to the downturn in the economy. They can see the train coming and want to get off before the impact hits. This homeowner does have some money in savings but it is dwindling down slowly due to having to draw from it every month to cover their bills. They may have some other assets. They may have to take a job in a different location that promises to pay more and for that reason they have to leave. The home cannot be sold traditionally due to the declining values in the neighborhood and they owe much more than the home is worth. I can appreciate these circumstances.
This type is also a no brainer. These circumstances are still considered a hardship and will give you a good argument when negotiating with the bank.
Consider this:
This home owner is NOT delinquent so you are not fighting against foreclosure timelines. Make sure you are marketing this property for a substantial amount of time to show the bank a listing history.
The third type you will run into is the home owner that is NOT delinquent and CAN afford to make their payment along with all of their other monthly bills and have a nice surplus left over. They have a nice checking and savings account. They may have other properties that are cash flowing. The main reason for wanting to short sale is because he or she owes more than the home is worth and they want out. This type is tricky. The bank may or may not work with this type.
Here are some important things to consider BEFORE taking this listing:
1. Clearly this is not a traditional homeowner in foreclosure status.
2. The bank may approve this short sale but it will most likely be on the following terms:
a) The bank may ask for a cash contribution. The amount requested will most likely be more than it would be for a homeowner with a true hardship.
b) The bank may ask for a new promissory note. This may be anywhere between $10,000 to $40,000.
c) The bank may ask for both.
What you want to determine is if the homeowner is willing to do A, B, or C. If they are not willing to do any of them you may not want to take the listing. You will only be wasting your time.
We are not just pre qualifying homeowners on paper but we also want to feel their level of cooperation. If they are not willing to do what it takes to get the job done everyone will lose in the end.
Extra Tip
You cannot give advice on tax ramifications. You need to direct them to a CPA but after evaluating all three sets of circumstances, which type of candidate would MOST LIKELY experience tax ramifications?? Think about it.
(Quote) Working hard and working smart sometimes can be two different things.
Byron Dorgan
REALTORS, what is in your business plan this year? What are you doing to create a system that will allow you to build your short sale business? How often are you out there prospecting and how do you know if you are taking the listings that are going to be successful and not a waste of your time?
Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.
LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS
At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...
Call today to find out how Lotus Realty Group can assist you in closing your short sale transactions or go to WWW.LotusRealtyGroup.com
Thursday, June 2, 2011
Important Q&A in a Short Sale transaction
I was recently asked by the AREAA foundation to be one of speakers on a short sale panel with a few other short sale negotiators and two attorneys one in which is my Real Estate attorney and friend David Bright. Many of you know and respect him. Those of you who do know him understand along with my company Lotus Realty Group that we are very passionate about educating REALTORS on all facets of the short sale market.
I wanted to share with you some of the questions that REALTORS were inquiring about and give you some of the feedback David and I shared with the group.
1. In regards to a homeowner’s financials, what should we not submit? Do we not show the stocks, bonds, 401k, and checking accounts with large balances?
I want to remind you of what a true hardship is.
a) Change in income due to a pay cut
b) Job loss
c) Divorce
d) Illness
e) Insurmountable damages to the property
If we have a true hardship most likely there will not be huge balances in a checking account or stocks and bonds that are worth much so there is nothing to worry about as you have pre qualified your seller and asked all the right questions. If you have a situation where your homeowner does have stocks and bonds, etc. I would not hide that from the lender. If you do there is a good chance they will find out anyway and you will kill your chances. For example: If your client does not list his assets properly and some are showing on his tax returns as residual income then clearly the lender will question why it was not listed on his or her expense sheet. You want a clean proposal. What I would do is set proper expectation with your client. Explain that the short sale lender may ask for a cash contribution or a new promissory note at a lesser amount. Personally if a homeowner in this situation is not willing to contribute when there financials clearly shows they can, I would not take that on.
2. Can a short sale lender make the homeowner draw from their 401k to pay down there principal balance?
No, they are not allowed to force a homeowner to draw from their 401k however; it will be one of the determining factors when considering the ability to contribute a cash contribution or new promissory note.
3. What do you do when the 2nd lien holder wants more money than the 1st lien holder will allow and the 1st will not allow any other parties to contribute?
It has been my experience that the offer that you submit is going to be one of the determining factors in that decision. I would first make sure you have a strong listing on the property so you have all of your data to support your value. If you submit to low of an offer the 1st lien holder most likely will not be very gracious. 2nd lien holders typically want 10% of the balance.
If you have done this properly and you still cannot get the 1st to cover the full amount the 2nd is requiring then some STRONG negotiating is necessary. You can always go back to the first and argue to at least allow other parties to contribute. At that point, buyers and agent’s may have to come together to make it work. My suggestion would be to set expectation upfront with the homeowner and the buyer that money may need to be brought to the table. This will save REALTORS from pulling from their commissions.
4. Would it be okay to offer 1.5 to 2%% to a buyer’s agent in the MLS on one of my listings especially if I have to pay a negotiator fee?
Well, you can offer whatever you want but this could be very problematic in a couple different ways:
a) The idea is to get agents to bring clients to your listings. If you offer to low of a commission split you may steer buyer’s agents elsewhere. Is it worth that risk in this market?
b) In regards to the negotiator fee you can do it a couple different ways. You can put 2.5% to the buyer’s agent and 3.5 % to the listing agent but you may still run into the issue of buyers agents taking their buyers elsewhere. I always offer 3% on my personal listings. I would simply have a conversation with the buyer’s agent and see if they would be willing to split the negotiator fee with you. I have REALTORS who are very successful in doing that. The idea is not to focus on an l% negotiator fee if you are outsourcing. It is hard to prospect and get listings and do all the negotiating yourself. I have tried it. It is nearly impossible to fully serve your clients this way. Get 30 short sales in your pipeline where you are closing 2-3 listings monthly and I guarantee you the 1% to a negotiator will not be that big of an issue as the negotiator will allow you to focus on getting more listings and expanding your business, close deals and give your clients the best customer service possible.
5. Can I ask for 10% commissions to be granted from the short sale lender?
Short sale lenders are paying out 5-6% in commissions. I have never seen a short sale lender approve that high and quite honestly you do not want to start out the process frustrating the negotiator at the bank.
Extra Tip:
In the confidential remarks I would put the following verbiage:
All lender commissions are subject to lender approval. Any commissions below 6% are to be split 50/50 between agents.
There is no doubt that there are many techniques out there on how to negotiate and put short sale transactions together. My personal experience is that it is an art. A strategic approach with so many moving parts that it is imperative that we are structured, organized and have the proper legal counsel to ensure integrity and ethics for all parties involved.
I have done a lot of growing up in this business. Personally and professionally and I have not done it perfectly. One of the most valuable lessons I have learned recently is we cannot let how others are operating affect you and how you do business or how we show up in life in general. I always know when I am out of alignment. It has an effect on everyone around me. It is easy to get caught up in the currents of life and other affairs.
Insanity, doing the same thing over and over again and expecting a different result. Well, unfortunately many of us learn the hard way but as for me it is much easier and less painful to stay centered in what I know to be the most effective way. The easier and softer way. Everyone around will benefit from that. In a short sale transaction, doing what I know works and not veering off that path will only help to remain effective and efficient.
(Quote) Life brings what it brings. I might be young but I've learnt this: prepare for each blind corner with your strongest shoulder dropped, ready to smash through whatever is thrown at you next. Once the dust clears you will be standing tall, a champion, and a victor. NOTHING will be able to knock you down once you've taken the biggest hits this life has to offer, so come on life, BRING IT!"
Adam Johnson
Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.
LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS
At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...
Call today to find out how Lotus Realty Group can assist you in closing your short sale transactions or go to WWW.LotusRealtyGroup.com
I wanted to share with you some of the questions that REALTORS were inquiring about and give you some of the feedback David and I shared with the group.
1. In regards to a homeowner’s financials, what should we not submit? Do we not show the stocks, bonds, 401k, and checking accounts with large balances?
I want to remind you of what a true hardship is.
a) Change in income due to a pay cut
b) Job loss
c) Divorce
d) Illness
e) Insurmountable damages to the property
If we have a true hardship most likely there will not be huge balances in a checking account or stocks and bonds that are worth much so there is nothing to worry about as you have pre qualified your seller and asked all the right questions. If you have a situation where your homeowner does have stocks and bonds, etc. I would not hide that from the lender. If you do there is a good chance they will find out anyway and you will kill your chances. For example: If your client does not list his assets properly and some are showing on his tax returns as residual income then clearly the lender will question why it was not listed on his or her expense sheet. You want a clean proposal. What I would do is set proper expectation with your client. Explain that the short sale lender may ask for a cash contribution or a new promissory note at a lesser amount. Personally if a homeowner in this situation is not willing to contribute when there financials clearly shows they can, I would not take that on.
2. Can a short sale lender make the homeowner draw from their 401k to pay down there principal balance?
No, they are not allowed to force a homeowner to draw from their 401k however; it will be one of the determining factors when considering the ability to contribute a cash contribution or new promissory note.
3. What do you do when the 2nd lien holder wants more money than the 1st lien holder will allow and the 1st will not allow any other parties to contribute?
It has been my experience that the offer that you submit is going to be one of the determining factors in that decision. I would first make sure you have a strong listing on the property so you have all of your data to support your value. If you submit to low of an offer the 1st lien holder most likely will not be very gracious. 2nd lien holders typically want 10% of the balance.
If you have done this properly and you still cannot get the 1st to cover the full amount the 2nd is requiring then some STRONG negotiating is necessary. You can always go back to the first and argue to at least allow other parties to contribute. At that point, buyers and agent’s may have to come together to make it work. My suggestion would be to set expectation upfront with the homeowner and the buyer that money may need to be brought to the table. This will save REALTORS from pulling from their commissions.
4. Would it be okay to offer 1.5 to 2%% to a buyer’s agent in the MLS on one of my listings especially if I have to pay a negotiator fee?
Well, you can offer whatever you want but this could be very problematic in a couple different ways:
a) The idea is to get agents to bring clients to your listings. If you offer to low of a commission split you may steer buyer’s agents elsewhere. Is it worth that risk in this market?
b) In regards to the negotiator fee you can do it a couple different ways. You can put 2.5% to the buyer’s agent and 3.5 % to the listing agent but you may still run into the issue of buyers agents taking their buyers elsewhere. I always offer 3% on my personal listings. I would simply have a conversation with the buyer’s agent and see if they would be willing to split the negotiator fee with you. I have REALTORS who are very successful in doing that. The idea is not to focus on an l% negotiator fee if you are outsourcing. It is hard to prospect and get listings and do all the negotiating yourself. I have tried it. It is nearly impossible to fully serve your clients this way. Get 30 short sales in your pipeline where you are closing 2-3 listings monthly and I guarantee you the 1% to a negotiator will not be that big of an issue as the negotiator will allow you to focus on getting more listings and expanding your business, close deals and give your clients the best customer service possible.
5. Can I ask for 10% commissions to be granted from the short sale lender?
Short sale lenders are paying out 5-6% in commissions. I have never seen a short sale lender approve that high and quite honestly you do not want to start out the process frustrating the negotiator at the bank.
Extra Tip:
In the confidential remarks I would put the following verbiage:
All lender commissions are subject to lender approval. Any commissions below 6% are to be split 50/50 between agents.
There is no doubt that there are many techniques out there on how to negotiate and put short sale transactions together. My personal experience is that it is an art. A strategic approach with so many moving parts that it is imperative that we are structured, organized and have the proper legal counsel to ensure integrity and ethics for all parties involved.
I have done a lot of growing up in this business. Personally and professionally and I have not done it perfectly. One of the most valuable lessons I have learned recently is we cannot let how others are operating affect you and how you do business or how we show up in life in general. I always know when I am out of alignment. It has an effect on everyone around me. It is easy to get caught up in the currents of life and other affairs.
Insanity, doing the same thing over and over again and expecting a different result. Well, unfortunately many of us learn the hard way but as for me it is much easier and less painful to stay centered in what I know to be the most effective way. The easier and softer way. Everyone around will benefit from that. In a short sale transaction, doing what I know works and not veering off that path will only help to remain effective and efficient.
(Quote) Life brings what it brings. I might be young but I've learnt this: prepare for each blind corner with your strongest shoulder dropped, ready to smash through whatever is thrown at you next. Once the dust clears you will be standing tall, a champion, and a victor. NOTHING will be able to knock you down once you've taken the biggest hits this life has to offer, so come on life, BRING IT!"
Adam Johnson
Call us today and let us show you a system that works to help you expand your business and effectively and efficiently close short sale transactions.
LOTUS REALTY GROUP
PROFESSIONAL SHORT SALE NEGOTIATORS
At Lotus Realty GROUP, helping people ethically succeed is at the forefront of who we are...
Call today to find out how Lotus Realty Group can assist you in closing your short sale transactions or go to WWW.LotusRealtyGroup.com
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