You have spent months getting your blog in order. Making sure your lead generation system was working perfectly, thinking of and writing numerous blog posts per day, constantly tweaking your site so that it is a sleek SEO driven machine.Maybe you have spent thousands of dollars on a marketing campaign to get you the same result. You are now positioned as THE expert in your local real estate market.

Due to your marketing and promotional prowess, you receive a call from a prospective seller who wants your expert advice on a real estate subject. You answer the question relying upon your years of knowledge and experience. Then the conversation takes an alarming turn. The prospective buyer informs you that they already have their house listed with another agent and that agent has not been able to sell their property.

In addition to the property being listed, the questions you answered so skillfully just moments ago are now going to be used by the seller to prove that the current agent is wrong AND that they are completely incompetent. Remember, you are the expert so you have the right answers.

How do you handle this ethical conundrum? On one side you have a seller who is in desperate need of a real estate expert, on the other side you have an ethical obligation not to speak negatively about another agent.

To be honest my first reaction was to just answer each question from the seller openly and honestly and let the chips fall where they may. But after more reflection, I started thinking that by answering the questions from the seller, I was directly interfering with another agents client that they had a contractual relationship with. To me that is unethical.

Also add this into the mix when you are forming your replies. Every agent has had a listing with “uncooperative” sellers who will not take advice and then blame the agent for the property not selling. By only talking to the seller, we only get one side of the story.

This is a paradigm that I believe we will be seeing more and more often as real estate professionals become the local experts in their respective real estate markets.

Short Sale Tip # 4: Property Improvement & Repair Estimate Report

When things go bad…they usually go real bad. If a homeowner has not paid his mortgage in many months, it is likely that the house has been neglected. 

If funds were not on hand to pay the mortgage, then it is probably safe to say that they have not been able to perform proper maintenance and repair and the property may not in the best of shape. Especially if it is vacant or has been vacant for some period of time.

It is most probable that the mortgage lender does not know this. Unless the lender is local, it is quite hard for them to have an accurate assessment of the property from their desks in California, New York, Chicago, Texas or some other distant location.

With the advent of automated valuation models (AVM’s), many banks are using the former appraisal together with an AVM to perform a “desktop valuation” of the property.

The number they have in mind can be tens of thousands of dollars higher than it’s true value.

We’ll talk about the BPO and comparables later, but before either of them can be properly completed, you are going to have to justify your estimation of value and substantiate your offer in order for the bank to look at your deal.

Having an extensive repair and improvement report performed by a local and licensed general contractor will significantly enhance your repair report.

You are going to want to take extensive pictures of both the interior and exterior to add substance to your corresponding repair estimate.

In our Mock Short Sale Package that’s a part of our free Short Sale course, we show you how to put this repair estimate together.

Short Sale Tip # 5: Homeowner Financial Package

Now that you are asking for a reduction in their payoff, and after you have submitted a real tear-jerker of a Hardship Letter, the bank wants to see how the hardship has truly affected the homeowner financially.

The homeowner needs to provide you with the following information:

• last 2 years W-2
• current financial / balance statement
• last 3-4 months bank statements
• last 2 years of tax returns
• last 4 pay period pay stubs
• a copy of a statement of all 401k or retirement accounts

The homeowner financial information is important because the mortgage lender will want to see a snapshot of the borrower’s current financial situation. The bank statements and financial statements must show that the borrower is in a dire situation that is not likely to change.

Also by getting this information from the homeowner early in the process you will be able to determine if they are going to be able to comply. If they can’t and something smells fishy at least you will know about it early on.

After all, when Mr. Homeowner applied for his mortgage he gave the bank what was assumed to be a realistic and somewhat verifiable assessment of his financial health when he received the mortgage.

However..be extremely careful….if the foreclosure is within 2 years of receiving a mortgage or refinance, make sure the before and after pictures are somewhat related.

Bank Fraud is rampant and submitting these documents could open a can of worms if either the before or after information is not explainable.

Short Sale Tip #13 : 5 Questions To Ask The Seller…Before Taking The Listing For a Property in Foreclosure

In a down market, when the phone rings, agents and investors often can’t wait to get that next listing or contract. They rush out before really thinking about their plan of action and what makes the most sense.

To us, working a deal so that it generates the highest potential profit is the way to assess a deal. One of the ways we sniff out the good deals is by asking the Seller 5 simple questions. While the questions are simple, they are quite pointed and exploratory. Once answered, we have immediate insight as to how we are going to format the contemplated transaction.

Within the first 10 minutes of speaking to the homeowner, we already know where we are headed with a deal. Let me not forget to add…these questions are asked over the phone BEFORE we even leave for the appointment. I’ll tell you why in a moment.

Question #1. Can you resume making your monthly payments if the bank waives your arrearage? I want to find out if this homeowner is really motivated. I want to know if this homeowner is at the end of his rope and realizes that all hope is basically lost.

2. What kind of repayment plan can you stick to? I want to know if the bank continues to call the homeowner, which they will, if he is a candidate for a loan workout, and if he is, I want no parts of this transaction. There is no way I am going to spend my time working on a short sale only to find out in a couple of weeks that the homeowner has been able to save their home and has worked things out with the bank. While great news for the homeowner, it means I don’t get paid.

3. Have you tried to re-finance? I want to now if he is talking to anybody else. Sometimes a mortgage broker or other agent will tempte the pre-foreclosure homeowner with mailings and letters designed to let the homeowner has a chance at being qualified for re-financing. I also want him to tell me..and himself that he knows his credit is shot and that re-financing is out of the question. It kind of slams the door on homeowner and lets him know that his chances to save the house are slim and none…and that slim just hopped a bus to Alberquerque!

4. Can you borrow any money from family or friends or your church? Is there an Uncle Charlie in the wings, is he speaking to the congregation? I also want to know how strong his will is. When one is humbled enough to basically beg then you have a Mustang with a broken spirit. Remember, we did not put the homeowner in this position…the position was there before we answered the phone call. If you have a weak stomach for this remember, it was your marketing piece to a person in foreclosure that set this plan in action. Don’t get squeamish now! If you choose to work the foreclosure market, you need to understand what you are going to be dealing with and understand the nature of this niche of real estate.

5. Have you spoken to an attorney about filing bankruptcy? I want to know if he has spoken to any attorney and if he is presently represented, and I also want to know if he can afford to hire an attorney in the near future. Undoubtedly when I present my offer he is going to say that he wants his attorney to look it over. If I know in advance that he does not have an attorney I know it’s a ploy and I am close…real close…why? No one uses the “attorney” ploy if they do not want to do the deal. If the homeowner did not want the deal they would just say no! This ploy means I am close to getting what I want.

Here’s a bonus for reading! The most important question.

6. If I can get the bank to allow you to sell your property for less than what you owe, how much would you need to move on with your life? The pre-close! A-B-C..”always-be-closing”. I ask this question and then just shut up..dead silence. I let him know that there may be some money coming which is more than I bet anyone has told him.

I am letting him know that I know the ride is about to stop and I am letting him bow out gracefully. When he mentions the number…the number does not matter, I know he’s mine. He needs the cash bad and he’ll take just about anything I offer him.

You see..he just admitted he wanted out. The number is not what the question was designed to ferret out. I wanted him to tell me he was ready to walk away. Now we set the appointment going out to the home KNOWING the following:

a. the homeowner is out of options

b. has basically no money

c. probably is not represented

d. WANTS OUT BADLY!

Above I told you there was a reason why we ask these questions BEFORE we go out to the house. Actually there are two reasons, first we will re-state the answers to him, in front of the spouse (we won’t take a one-legged appointment), and secondly and more importantly, it tells me what documents to take out for this particular meeting.

Can you tell me what documents to take on this appointment? It does not matter if you are an agent or an investor. You also need a special type of person to tag along as well. Who is this person?

Short Sale Tip # 6: Controlling The BPO

Today’s Tip is about the BPO…or where the show begins!

This is the most important “process” of a short sale. It is an aspect of the short sale process that you MUST control…and attempt to influence. Short sales can be won or lost based upon the outcome of the BPO. If you fail to justify to the evaluator why the number you need is correct, then your chances of getting your short sale accepted at the price that you want, are pretty low

The BPO ( Broker’s Price Opinion), is the lender’s field review of the property to determine what they will assert as the value of the property in question.

The lender may often use the services of a local real estate agent to perform this valuation and will use it in conjunction with an AVM to impute it’s value of the property. As you can imagine, there is quite a bit of room for err in arriving at this number.

When the bank orders the BPO you need to be involved in every step. You need to be the contact that the evaluator contacts to gain entry to the property.

It is a very good idea for you to arrange for the homeowner not to be home so you can lead the evaluator through the house pointing out every problem point that you already know of.

Don’t assume anything. Sometimes they arrive and do not even know the property is in foreclosure.

Be armed with the following:

1. The comps that you researched and believe to be indicative of the “current” value of the property

2. A completed repair and improvement estimate from a licensed contractor

3. Copies of any code violations , if any

4. Bring copies of the documents you intend to include in your short sale package.

5. Submit ANYTHING you have that helps justify your number and that which makes the evaluator’s job easier.

Remember, they are only making $30-$90 bucks or so to perform this BPO and although we want this person to scream “uncle”…we want to provide him with documentation he can use to justify our number. This is important because we also let the evaluator know we are sending all of this information to the lender and the last thing an agent or broker wants is to seem incompetent in the eyes of what they are hoping is going to be a listing client.

Be assertive, helpful and courteous without being argumentative. You need this guy to be comfortable with you as you never know when you may run across him again.

Sometimes, if you strike up a good rapport, they will tell you whether or not they can hit your number. Be smooth, be upfront and be yourself.

Smile, be helpful, hold the dog, turn on the lights, bring an extra bottle of water…remember, this guy’s attitude can mean the difference in your deal.

Short Sale Tip # 7: Confronting The 1099 Issue In Short Sales

Can you imagine losing your home AND being hit with a huge IRS bill?  Well if the short sale is not performed correctly and the short sale proposal request is not properly formatted, you may end up sticking the homeowner with a huge and possibly overwhelming tax burden from which they may never recover.

I would not want to be on the other end of that lawsuit when the homeowner comes calling!

Often times, a lot of real estate agents and even more homeowners are unaware of the difference between the 1099 issue and the possibility of a deficiency judgment. That difference is explained in tomorrow’s installment of the Short Sale Tip Series but in confronting the 1099 issue there are two very important things to know.

1. The Mortgage Forgiveness Debt Relief Act of 2007 relieves the homeowner of any potential liability in regards to the shortfall that may occur in a short sale. However, for the most part, this only applies to foreclosures on primary residences.

2. All is not lost on the investment property or second home if the borrower can prove insolvency. The threshold for proving insolvency is much lower than qualifying for bankruptcy. Basically if one’s debts verifiably exceeds their assets they may be absolved with the use of the IRS Form 982.

This may be too complicated for an agent to be involved in and we do not recommend an agent give accounting advice but you can indeed advise the borrower to seek out the counsel of a CPA or tax attorney to see if the IRS Form 982 can help them avoid a possible 1099.

WARNING: Do not let an uneducated agent, broker or advisor tell you otherwise…you can not be issued a 1099 AND a Deficiency judgment. Stand firm and understand that these two animals don’t cross paths. Don’t be fooled by those who tell you they do.

Hardship letter

2 ways to avoid foreclosure, both painful You may not suffer any tax consequences for the amount due on your mortgage loan that is forgiven. The Mortgage Forgiveness Debt Relief Act of 2007 allows … 

Thinking About a Mortgage Default? Beware The Taxes Due That’s the Mortgage Forgiveness Debt Relief Act (otherwise known as “The Don’t Kick ‘Em When They’re Down Act”). But it doesn’t apply to every mortgage. …

Short Sale Tip #12 Overcoming Objections with the Homeowner Part 1

We are getting many questions from our attendees as to how to overcome objections with the homeowner, but we are surprisingly getting MORE questions as to how to overcome objections from the inexperienced or uneducated agent representing the homeowner…isn’t that a twist?

Too many Homeowners are not only misguided and made hysterical from the media influences that they are pummeled with, then the situation is compounded by the Homeowner having an agent who is totally misinformed and winging it.

Here are some of the objections we are hearing and some ways you can overcome those objections…with either the Seller or the agent:

1. Deed-in-lieu-of Foreclosure: The ole..I am just going to give the property to the bank routine

Objection Defense: Well Mr. Uninformed (insert Seller name or Agent Name)…that may work for you but there will be some work for you to get them to accept the deed and from my experience lenders rarely accept them…do you understand that banks are not in the real estate business and that their business is lending money.

Let’s see if you would even qualify for a deed in lieu of foreclosure avoidance option as banks are somewhat hesitant to take a deed back…let’s look at the criteria most banks look at:

a.your home must be on the market at current market value

b. the home must be uninhabited to complete the process (meaning you have to be out)

c. deed-in-lieu of foreclosure, if not negotiated, drafted and recorded correctly is just this side of bankruptcy, and it very well could drop your credit score by a hundred points or more, depending where it is in the process when the bank forecloses. It also can and most likely still show up on your credit as a foreclosure.

d. most banks will not accept the deed in lieu of if you have subordinate liens (2nd mortgage) that they otherwise would have foreclosed off. So if you have a second mortgage you could very well not qualify.

This pretty much is the poison pill to the DILF

e. and this may be the most important criteria…the bank will usually want you to be current on your payments so a deed in lieu of is great for those in the early stage of foreclosure but not when you are 3+ months behind

2. Short Sale Will Leave Me with a Big Tax Bill so I will need to sell it for full value or just let it go to foreclosure.

Objection Defense: What??? Let it go to foreclosure??? do you realize your credit will be ruined and the bank may come after you in the future for a deficiency judgment (FYI…we go over this in class), why would you do that if we can save your credit and show you how to avoid being hit by the possible tax consequences. (This is especially important with the new law removing the liability of the 1099 on primary residential property.

Mr. Seller..If I can show you how to avoid the dreaded tax liability you fear, would you be willing to let us go through with a short sale proposal to your lender?

Objection eliminated! Now you just have to explain in detail to Mr. Seller how he can avoid his tax liability. Well..you are not an accountant so you can’t!

However, you have taken our class so you have been given all of the documents and tools necessary to determine the likelihood of Mr. Seller being hit with a large tax liability.

Here’s a free hint…If Mr. Seller qualifies for a short sale, then it is highly likely that he will be able to avoid the tax liability associated with a short sale.

Once you know what kind of Seller qualifies for a short sale, you will know what kind of Seller can avoid the 1099 issue.

We don’t engage in “water cooler discussions”. We will show you, despite what you may have been told in the office, just how a homeowner can avoid the 1099 induced tax liability.

Short Sale Tip # 9: The Role Of Mold In Obtaining A Big Short Sale Discount

Ever see a really good horror movie? Want to see one? Check out the bill or quote you will receive for black mold remediation.

Black mold is the great equalizer in negotiating a short sale with a lender. The potential for liability is EXTREMELY high if black mold is found to be present in a property.

When we work a short sale, one of the first things we look for is evidence of black mold. When we do, we call in remediation specialists who perform a complete workup for us so we can submit it to the bank as a part of our short sale package.

This report alone can be 10-20 pages. MOLD IS SERIOUS AND CAN IN SOME INSTANCES CAUSE DEATH!

There are some who will tell you that mold is no big deal and mold testing is not necessary. It is interesting to note that those who make such irresponsible statements also disclaim everything they say and require you to sign forms saying they “disclaim” any mold…or even others who warn you to wear a respirator and rubber gloves when cleaning mold. Why? If mold is “no big deal”, why bother signing a disclosure or protecting your lungs and skin from it? The answer is; because mold can be a very big deal and the only way to really know for sure is by proper testing for mold.

The Institute of Medicine’s Damp Indoor Spaces and Health Review concluded (betcha did not even know that such a review panel even existed) that black mold left untreated can cause major problems.

Left to have its way inside a building, damp or moist items such as wood, paper, drywall, and some types of insulation, provide food sources for molds. FOOD???

Yes…it’s alive! It’s alive….!!

If you believe that banks do not want to own properties taken back by foreclosure, then you also have to realize that those properties with active black mold spores rise to the top of those properties the bank does not want. That potential liability is WAY more than a bank wants to take on.

Once you get a mold remediation quote back you will see why this is such a big deal. A small mold issue can cost upwards of $8,000.00 – $10,000.00 to remediate. Imagine if there are mold spores found on a few walls or in the air ducts of a home…the cost to remediate could be prohibitive.

According to the Toxic Black Mold Information Center, “once mold infests the home, it s very expensive to clean up. To make matters worse, many home insurance companies are denying mold claims”. The actual average cost you will pay to a mold remediation specialist, “for one wall that is contaminated, is about $3,000.00″ states Kevin Bristol President of Advance Mold Remediation.

This cost will include a mold inspection by a professional, mold sampling sent into an independent lab to determine what type of mold you have, and removal and cleanup. This cost also includes, “all of the helmets or protective wear that the technicians wear, the machines that they use which are called negative air machines that filter out the dirty air, and all of the chemicals, as well as the encapsulation coating” says Bristol.

As for Property Damage, the very nature of mold is to decompose matter. Over a period of time, mold can destroy anything and everything it comes in contact with.

The loss of value in your home if it has toxic black mold is determined by the extent of the mold. There have been homes where the mold was so wide spread the entire home had to be destroyed and rebuilt. In most cases however, the mold can be removed by just removing one wall or floor and replaced with new.

In some states, you even need to disclose on the sale of the home that it had toxic black mold at one time. It’s that serious.

Black mold is a serious issue in a home and it could mean a HUGE discount from the bank if it is found in a property that you are working on for a short sale.

Short Sale Tip # 8: The Role of Loss Severity In Short Sales

Do you speak “banker-ese”? If not, you are leaving HUGE amounts of money on the closing table! When performing a short sale you have to be sure that you are negotiating from a position of strength. Do you know what Loss Severity is?

Continuing our Short Sale Tip, have you ever heard of the term Loss Severity? If not, roll up your sleeves, get a cup of coffee and snuggle up to some banker talk. Loss Severity is the technical term for the bank’s internal auditing and

calculations to determine how bad they are going to get hit on a foreclosure.

Loss Severity is the rate of loss on a liquidated mortgage and is defined as follows:

the outstanding principal on the mortgage loan – the realized loss over
the outstanding principal on the mortgage loanFor example, let’s say Mr. Smith owes the bank $300,000.00 and if the bank forecloses on Mr. Smith and eventually gets a judgment for fees, unpaid interest, and legal costs now the bank is owed $315,000.00.

 The bank then sells the REO property for $265,000.00. On that sale of $265,000.00 the bank had commissions and holding costs, maintenance costs, closing costs, and taxes and they actually only netted about $240,000.00.

Then the bank would have realized a loss of $75,000.00. ($315,000.00-$240,000.00). Based upon this scenario, the Loss Severity Rate would be about 25%.

Lately, this would be a GOOD deal for most banks. Data obtained from from LoanPerformance Inc. indicates that the national average of the severity of losses for mortgage holders on foreclosed properties is peaking around 30-40%.

How bad is it, New Hampshire which is never mentioned in foreclosure discussions is one of the best in keeping foreclosures to a minimum and their Loss Severity rate is approximately 29%!

Are you ready for the big ending…the average national Loss Severity rate is 41%. Please understand..this actually means that for every $100,000.00 that banks are lending out, if the property goes into foreclosure they can only expect to recover on average about 60-70%…that’s amazing!

So do you think the bank wants your client’s home..NO WAY!

The bank does NOT want the house. It wants to be paid off so it can make more money and have more money to lend out and profit from). So now you know the truth. Every agent involved in a short sale needs to understand what is going on in today’s financial market. You are the professional…it’s time to get paid like one…but you need to be educated like one.

In our seminar workshop we’ll show you how to “get ugly” and negotiate like a pro with a banker that’s trying hard not to tip his cards to you. We say this is a bad poker game and we’re prepared to show you how to go “All-In” and win the big pots..the BIG discounts!

I challenge you..no I ABSOLUTELY compel you, to find one single seminar that gives you this kind of information. We do..you know why..we actually DO short sales and we can show you how to successfully do them as well.

You’ve probably seen Dateline NBC’s expose called “To Catch A Predator”. Well it seems there are more than just a few people who find flipping short sales to be predatory.

They think that people who engage in such activity are short sale predators who seek to be leeches upon the downtrodden.

Well, nothing could be further from the truth. While making substantial profits on distressed properties might not set well with some, it’s far from illegal. It’s actually the American Way!

Have we fallen so far as a Country that the pursuit of unbridled Capitalism is frowned upon? I’ve heard all of the names and have brought shield to all of the swords. Yes, I’ve endured being called a bottom feeder, short sale fraudster, low baller, and quite a few names that I can’t print here. And now unfortunately here we go again.

Man this is really getting quite tiresome. I mean Really? Having to defend a completely legal way of making a great profit. Have we come to that in America now?

But those insults have always been brought forth from those on the other side of the table from us.

We make no excuses and do not seek refuge for making handsome profits buying and selling houses. Why should we? Everything is above board, legal and actually necessary to help the banks rid themselves of some seriously bad non-performing assets.

We have taught thousands of real estate investors AND real estate agents across the Country how to effectively execute short sales. We have written books and interviewed some of the brightest minds in business and in real estate regarding the management and coordination of distressed properties.

But in the end, it’s up to the individual practitioner to actually do something. The old adage you can bring a horse to water but you can’t make him drink aptly applies here. We’ve certainly had our share of detractors and we have been challenged by some of the best in the business but in the end, no one can ever tell us how flipping short sales is illegal.

I’m not interested in discussing morality. When we complete a short sale we put dollar sin our pocket, the bank gets paid off per the terms of their approval letter and within the realm of our spirited negotiations.

And the homeowner walks away without a foreclosure on their record with no 1099 or deficiency judgment shadowing them as they move forward. So are we short sale predators? Our clients don’t thinks so.

Usually when we hear flak from our detractors we tell them one thing and then we never hear from them again. It’s pretty simple. If flipping short sales for profit is illegal or fraudulent, please quote me the exact Statute that says as much.

The story ends there. Angrily the accuser parts with an epithet of us being morons or idiots or some other insult of the day. We just cash the checks!

Do we stand behind what we teach? Absolutely! We stand behind what we teach 100%. We stand behind what we teach so confidently that we are now offering our readers and viewers what has become one of the top selling, often imitated short sale course on the market, absolutely for free!

If you want to learn how to really be a short sale predator and piss off the liberals who find making money to be bad then learn how you can make money flipping short sales by enrolling in the Short Sale Video Course for free!

I don’t care if you are a real estate investor, or a real estate agent. If you want to make money by being proficiently trained in the short sale aspect of real estate investing then there’s nothing holding you back but yourself.

Don’t worry about people accusing you of walking the earth as one of those short sale predators. Wear the name proudly and go make some money. If you need any help whatsoever, we’re here to help you be as successful as you possibly can be.

We know real estate investors all over the Country who are unashamedly making a lot of money buying and selling short sales. It only takes a bit of effort and you can be one of them. We encourage you to use our system but we know that there are a number of systems out there that show you many techniques on how to make money flipping short sales.

Just do something..you have to act. We’ll get back to you soon with some more info on how you can succeed being a short sale predator. Just remember, that’s not a bad thing whatsoever and don’t let anyone purport to tell you otherwise.

Negotiate from a point of absolute strength. Make your paperwork bulletproof, make sure the Seller is protected, and make sure everything is on the HUD. If you do that, you’ll have no problem looking yourself in the mirror each morning and what the naysayers have to say won’t matter one iota!

Don’t forget to subscribe to our YouTube Channel by clicking the logo below.

Dateline NBC – To Catch A Predator With Chris Hansen – Breaking … Dateline NBC news stories, video and headlines from the “To Catch a Predator” series with Chris Hansen. View stories, suspect profiles and video from “To …

If you’re a Realtor in South Florida and more specifically, Fort Lauderdale, we want to talk to you. You see we know that there are a ton of foreclosures here in our neck of the woods.

We also know that most of the homeowners in foreclosure never have an opportunity to receive the benefit of a short sale because most Realtors won’t touch those problem properties. You know what I’m talking about. We’re talking about those junkers in the hood. The deals for $50k, $60k or maybe as low as $40k.

We know these deals present more problems than they’re worth. Who wants to toil and slave over a short sale that they’ll never find a buyer for, that may never approved… for what would amount to a real small commission? Well…we do! We want these problem properties and we’ll pay you for sending them our way.

(Video Transcript)

Hey Everybody…it’s Barry and Barry from Real Estate Radio USA. Listen we all know that there are a ton of foreclosures down here in South Florida…

And we know that there are a bunch of properties on the MLS that you may have a listing on…

But what we’re looking for are those deals that you turned down. You know the real junkers out there.

We know that a lot of realtors don’t want to be bothered with short sales on houses that are in the hood or need a ton of renovation

or are in such disrepair that they could only be listed at a price where the commission isn’t worth it for you to take on

but we also know that a lot of homeowners still reach out to agents to help them out, not knowing that their houses don’t really fetch much interest

That’s why we are talking to you right now. If you know of a house that is a real junker and is not something that you want to get involved in, please let us know.

These are the deals that we really want. We want to do short sales on those really crappy properties. It doesn’t matter what neighborhood or what condition.

All you have to do is refer the deal to us and we’ll pay you a referral fee. You don’t have to do anything whatsoever other than find us the properties.

We’ll handle the entire short sale. It’s real simple for you. We know that you’re not goping to do a ton of work for a tiny commission on a $50,000 deal

So here’s a way to help out some people who may have approached you and you won’t have to do anything…it’s found money

So if you have a deal you want to run by us, please email or call us and let’s see if we can’t make some money together.

We look forward to hearing from you soon.

Note: This article was written over two years ago on February 2, 2008, but given the recent turn of events we thought it appropriate to kick it back to the top! So for over two years…we’ve been warning agents…unbelievably they did not listen.

Time and time again, I keep reading the above-referenced headline in email after email sent to me by the obviously inexperienced, unqualified, unprofessional and completely oblivious real estate agent.

In this foreclosure explosion there has been the seemingly overnight proliferation of the so-called “short sale expert”. There are literally scores of real estate agents, with little or no experience, actually lying to their clients and posturing to the client as if they indeed had the requisite knowledge to properly handle a short sale transaction.

The local real estate boards and many brokerages have been complicit in this activity by hosting the most cursory and topical meetings imaginable, and subsequent to, sending their agents out into the field pretending to be short sale specialists.

Ever wonder why the credibility and prestige of real estate agents is so measurably low? Using your clientele as guinea pigs for your own amusement might be one of the reasons.

How many of these so called newly dubbed short sale experts told their clients that they descended upon that they have had no practical experience in the field? How many of these imposters actually told their client that they have never successfully completed a short sale and were going to try it out on their property?

These freshly anointed short sale experts armed with new business cards showing their new specialization might just end up being the next wave of real estate agents to find themselves on the other end of a misrepresentation lawsuit.

Take the case of this one young man I recently read about. This neophyte had the bold-faced audacity to write a post recently on Active Rain wherein he actually admits to the AR community that he used and compromised a homeowner’s position as a “learning experience”! Is this working in the best interests of the client? (update April 9, 2010…as you will see, Active Rain has removed the post lest the idiot agent be put in too much of a position of liability…but we know who he is…and we’ll be following up with him!)

Amazingly while some commented as to how hard it is for some agents to earn a commission on a short sale, no one chastised him for his actions. Well one person did and the author promptly deleted the post calling him on his actions…twice! He actually deleted it twice so there would appear to be no criticism for his action. Perhaps there were indeed more who stood up against this malfeasance and apparently fraudulent representation, who knows if they met the same fate.

The recent lawsuit involving the Ummel’s in California alerted and cautioned the consumer as to blindly believing or trusting a real estate agent. In fact we were admonished by the defendant’s in the case to “perform our own due diligence”. We are additionally told that we need to be savvy in our real estate transactions and not to just accept any information an agent provides us.

Are we now expected to know that in addition to performing our own due diligence that we also should not believe an agent when they say they are an expert in a niche of the business? I guess what is turning out to be the rule is not to believe ANYTHING a real estate agent says. And if we do, it’s our fault.

I don’t think that will hold up in Court. I think hundreds, maybe thousands of agents may end up in Court being sued by homeowners who trusted that they actually knew how to execute a short sale. I think you can see that advertisement now…

“Were you in foreclosure recently? Did a real estate agent approach you saying they were a short sale expert? Did you end up having your home foreclosed anyway and auctioned off? Well give us a call. You may be entitled to monetary damages. We’ll sue your agent and get you the money you deserve!”

If you took a short sale listing without any experience and allowed the homeowner to be duped by not disclosing your inexperience and allowing their home to be auctioned off it is not going to be hard to prove your ineptitude.

We recently ran a report in the local MLS here and found over 75% of the properties in foreclosure that were represented in the MLS as potential short sales, ended up being auctioned off anyway. Many were lost after the agents turned down offers from investors to buy the properties and negotiate on their own.

We also have been contacted by many attorneys who are diligently working to determine agent culpability. In obtaining this information they are looking to the level of experience the agent represented to the client and how the client was harmed by the agent’s incompetence. The results were more than compelling. They could also be cause for many, many lawsuits.

Here are some of the things we found that were misrepresented and completely adverse to the homeowner’s best interest:

1. Agents representing themselves in print and online as short sale experts without ever previously completing a short sale transaction.

2. Agents not informing their clients that they were indeed not experts and in fact never successful in a short sale transaction

3. In an extremely time sensitive transaction, Agents not returning phone calls or summarily dismissing offers without ever submitting them to the homeowner or understanding the complexity of the transaction.

4. Agents not having the requisite skills, knowledge or historical experience to properly package, submit and negotiate with the Client’s lenders on behalf of the Seller and prospective Buyer.

5. Agents sending offers to the bank for approval when the bank is not the owner of the property. Did you actually tell the client that the bank would choose what offer they should accept?

The bank would have to agree to accept a discount on their payoff which would allow the sale to close, but in no instance, are they Party to the contract. Since they are not Party to the Contract just how did you give them authority OVER the homeowner to instruct you as to what offers to accept or decline?

Let me guess, you asked your broker or someone in your office if that is what you should do or your broker demanded that you do a short sale in that manner. I guess you weren’t the expert after all. An interesting question is was your broker an expert?

I can see attorneys licking their chops already. Didn’t anybody think about the ramifications of hordes of commission hungry agents running haphazardly across the Country feeling duly deputized by their brokers as short sale experts with little or no experience in that type of transaction?

We have recently spoken with MANY attorneys who are looking into this and finding and determining that this could indeed be a breach of fiduciary responsibility and a cause of action for substantial damages.

If you thought the Ummel case opened the door of litigation against real estate agents, I think we may see a legal tsunami once the ineptitude of the “short sale expert” is brought to light.

It will not be hard to prove damages and there will be overwhelming information that can be discovered via subpoena and otherwise.

If you were guilty of violating your fiduciary role as the agent working on behalf of the Seller by advertising yourself as a short sale expert when you indeed were not, you might want to might want to speak with a good attorney.

And for Pete’s sake, don’t you know people can read what you write on AR and other Internet websites and blogs?

You’re making things too easy for the lawyers to give you one of “life’s lessons“.

Hey Short Sale Expert…Do You Have A Good Lawyer?  … However, that may be a matter for you to collect upon outside the transaction in your own lawsuit. In the short sale transaction you may …

Short Sale investing can provide the savvy Real Estate Investor with the opportunity to realize substantial profits. However you have to know how to execute a Short Sale correctly. We’ll show you how. 

[flv:http://www.realestateradiousa.com/videos/shortsaleinvesting.flv 590 332]

Short Sales pose a unique opportunity for an Investor to make a good deal of money while helping out a homeowner in financial distress.

If you read the lies in the media or listen to the whining of most Realtors you would think that short sales should be avoided like the plague. Nothing could be further from the truth.

Short sales have all of the hot button criteria that indicate a large profit is for the taking.

1. Short sales provide the most motivated of Sellers

2. Banks are not in the business of owning property and as such would much rather liquidate a non-performing asset

3. The Government is urging the banks to settle these debts much quicker than before

4. There is ample funding available to buy short sales

5. Short sales can often be purchased at a substantial discount.

So what’s the problem? Why isn’t everyone doing this? Because the biggest impediment between you as an investor and a five figure payday is a real estate agent who doesn’t know what they are doing and has positioned themselves between you and the Seller.

So we teach you and show you how to try and work with Realtors when you can and how to remove them from the picture when you can’t.

Click on the image below and you will receive a free trial to the #1 short sale course on the market. I’m sure once you begin your journey through the short Sale Video Course that you will agree that the comprehensive information found in the 25+ videos gives you the knowledge and confidence to take on the most challenging Short Sale transaction.

Short Sale in Real Estate – How to Handle a Real Estate Short Sale The fundamentals behind a short sale in real estate, why lenders may accept a real estate short sale, how to do short sales, and how a short sale … 

Field Guide to Short Sales What is a short sale? A short sale is a sales transaction in which the seller’s mortgage lender agrees to accept a payoff of less than the balance due on … 

The new exit strategy: A short sale – BusinessWeek For all the homeowners who are upside down and can no longer make their mortgage payment (because of either a job loss, divorce, or an option ARM that’s …

Short sales: A better alternative to mortgage modification – Mar … Mar 29, 2010 … After taking a back seat for years, short sales have become the hottest thing in distressed-property sales. And that may help end of the …

Recently we have been using a killer ninja like marketing letter to reach homeowners in foreclosure. When I say this is ninja I mean like uber-ninja. It’s so much of a guerilla marketing tactic that I doubt most real estate investors would dare to use it.

However if you are involved in real estate investing to actually make money, then this is a serious ”take no prisoners” approach that will pay off in a BIG way.

Caution: The use of this letter is not for the meek and timid. Using this letter will piss off so many Realtors that you may have to watch yourself in line at the grocery store! Seriously…we have had some of the most vile emails and voice mails left by Realtors (you’ll see how fast the Code of Ethics goes out the window) that it would make your head would spin and even the most hardened Teamster blush.

But you know what…I don’t care. I am so tired of calling and emailing Realtors offer after offer and getting their pompous aloof attitude. You’d think that they were actually closing some deals. At least you would think so based upon the pablum they spew when their feathers get riled…and boy does this marketing letter get them riled up.

Now for the good news. We are getting an unbelievable response rate. So great that we can only send out 20 or so letters per week! What would you say if I told you that we get a 30-40% response rate? Yep…we get to speak to 6-8 homeowners per week who want and have to sell their home. How do we know they need and have to sell their homes? Because they are already listed! Told ya it was diabolical!

You see we drive the neighborhood we farm or do a search on Realtor.com and pull up the homes that are listed. Then we cross reference that with the foreclosure list from the Courthouse and BAM! Instant lead list of Sellers who want and need to sell their homes.

What makes it so easy is we give the homeowner the ammunition they need to expose their “Short Sale Expert Comelately” as being inexperienced and we impart a bit of scarcity by letting them know that we know when the bank is taking back their home and tell them they better call us before it’s too late.

I could go into more strategies…but I don’t think I will have to. You real estate investors out there who do this as a business will see the value in this piece. As for you agents who might get ticked off, don’t get mad at the playa…get mad at the game.

If you actually answered your phone and new how to perform comps you probably would close more deals but I don’t have time to hold your hand anymore and in our market, I don’t need you anymore either. So you brought this on yourselves!

Now before the lynch mob comes calling understand this. For nearly 3 years we have been writing and speaking to Realtors across the country and telling them that they needed to change things up and improve their proficiency. Some listened, most have not, and they just rely on a silly business model of getting as many listings as possible without any regard for actually learning how to increase closing efficiency.

So I think there has been plenty of fair warning. It’s money time and there is just too much opportunity in real estate investing these days. When we can make as much as $10,000.00 on a $30,000.00 house or as much as $100,000.00 on a $400,000.00 house, this is no time to be messing around with the weak or coddling the wicked.

So we’re going to take as many deals away from as many agents as possible, and from our efforts a couple of things will happen. Sellers will avoid foreclosure and some agents will be forced to step up their game or they’re going to starve. Either way we generate huge profits.

So here’s the letter to homeowners in foreclosure. If you use this letter you are admonished to tread carefully as undoubtedly some will strike out at you. But when you cash that check for 5 figures on your first deal, you’re not going to care one bit.

So let the games begin!

p.s. there are some really covert ways that you can implement in the utilization of this letter. Do you know how? I’d love to hear how you think that you could use this letter so feel free to leave a comment below.

oh yeah…I almost forgot, we have charged as much as $1,000.00 to develop a marketing piece for our clients. So this one is a real gimme and I hope it helps you make some money out there.   

 UPDATE: Here is the short sale letter / postcard that some marketing minded agents asked to take a look at for their business campaigns.

2nd Update: We have unleashed this marketing campaign in earnest. Check out this article for more information. 

Can new program curb foreclosures? Sarasota Herald-Tribune, There already are about 4.5 million homeowners in foreclosure proceedings or 90 days delinquent on their mortgages. Preventing even a fraction of potential … 

New mortgage plan still has holes, White House concedes Hilton Head Island The effort to have banks forgive principal gives greater incentive for homeowners in foreclosure-troubled states such as California, Florida, …

Aurora Buys, Fixes, Flips Foreclosed Homes KMGH Denver, Garcia said it’s no coincidence that where the city has fixed up property, nearby homeowners are doing the same thing.

Give homeowners a break Long Beach Press-Telegram, … than to force a foreclosure. However, the state government sees that debt relief as some sort of income on which former homeowners ought to pay tax. …

Are you one of the many new breed of Short Sale Realtors? Can you tell me why you are a Short Sale Realtor? It’s an honest question. One that should not require a whole heck of a lot of thought. So please tell me why?

This isn’t being posed as rhetoric. I really want to know why? You see when we speak to audiences around the Country. Audiences made up of agents and investor alike, the same question keeps popping up over and over.

That question being, “How can we make more money in real estate?”.

The answer, while quite obvious, always leaves me shaking my head. I get everything from wanting to be my own boss, to helping people, to meeting great people. Seldom in the top 3 answers is the statement that they want to make more money.

Buy lately, as we speak to more and more Realtors, a growing and surprising trend is emerging. They want to know how to make more money. I know why they feel this way. After sitting at a couple of closings and watching us and other investors take down checks for 5 figures on just about any deal, they look at their paltry commission checks and wonder why they can’t do the same.

It’s often made me wonder as well. I slum sometimes and visit some of the real estate social networks and I hear agents whining about how this buyer walked away and how this bank is such a pain in the tuckus and how they aren’t making any money and it makes me shake my head. I’m not insane, but I keep asking myself the same thing over and over. If you’re not making the money that you want to make, if the industry has changed too much, if the liquidation business isn’t for you…then why stay in it?

I don’t think that I’m alone in thinking that we’re all here for a short while so we should make the most of life. So why are you complaining about being an agent instead of grabbing life by the horn and controlling your own destiny…and paycheck?

I read a post today on my favorite real estate website of all time, Activerain, where this agent said she had something like 20 short sale listings and none of them were closing. So of course we all know what the Realtor handbook says, yep, get more listings.

I don’t seek out listings, maybe because I’m not a real estate agent, but I can tell you that if I right now had 20 people who had or needed to sell their homes to avoid foreclosure I would make a shi&load of cash on those deals. I mean so much money that I would take the year off. Maybe even next year too!

A few of us were hoisting some cold ones at a local restaurant here in South Florida and we were celebrating yet another successful, 5 figure check getting deal and we were actually laughing when someone brought up how the Realtor’s face looked when she saw the HUD.

We found this duplex in the hood that had a pretty good cash flow on it and new we had a buyer who would be drooling over the ROI. So we submitted a contract on the duplex for $30,000.00. Right away the Realtor said the immediate response of “the bank will never accept it”.  I told her I wasn’t worried about the bank, as I only needed her Seller to accept it. The bank wouldn’t have much choice.

Yada, yada, yada, we get the approval for $35,000.00 we sell it to our buyer for $60,000.00 and we walk with $25,000.00 at closing. The entire deal took under 3 weeks. Meanwhile the Realtor walked with a little over $900.00 bucks, which she has to split with her broker.

So you tell me why she didn’t buy the duplex herself and then collect $25k at closing?

Next week we have a closing on a home that we got under contract for $160,000.00 and are immediately re-selling it for $200,000.00. We’ll be picking up a check for $40,000.00 while the agent will be picking up a whopping $6,000.00.

So in those two deals alone we will have pocketed $65,000.00 while the Realtor’s involved picked up a measly $7,000.00. We made nearly 10 times what the Realtors made. So why are Short Sale Realtors listing homes instead of buying them?

Now you see why if I had 20 Sellers in my pocket…ummm…I mean listings, we’d be booking a suite at the Venetian for a month!

So why is it that Realtors are not buying these deals instead of hoping for 20% of them to close? In all seriousness, please tell me if this makes sense to anyone. Below is a short poll. You can be completely anonymous but we’d love to hear what you have to say…and if you’re feeling a bit more courageous, leave a comment below.

FYI…you’re allowed to choose more than one answer.

[poll id="7"]

Banks Foreclose Even When Short Sale Imminent KPHO Phoenix, PHOENIX — Valley Realtors homeowners who are trying to sell their home through a short sale will often still end up in foreclosure. … 

Business Helps Homeowners Walk Away KPSP Local 2, Homeowners, in foreclosure or short sale, could face thousands of dollars in state taxes. Say you have a $300000 dollar mortgage, your home is short-sold or … 

Pace of house flipping picks up San Francisco Chronicle, East Bay Realtor Kerri Naslund specializes in helping buyers with short sales. She is skeptical that banks will become more efficient with the transactions. … 

Short sales long on complexity Victorville Daily Press, Realtors expect the number of short sale houses to rise in the Victor Valley over the next year. Meanwhile, they hope for a reduction in the confusion over …

Short Sales have become the buzz word in the real estate industry, but here we are, a few years into the fall of the housing market and still, only 15% of Short Sales close nationally. Why is that? What is causing the failure of so many of these transactions?

Therein lies the enigma. In an economy that needs real solutions, those charged with energizing the housing industry are opting out. Many real estate agents simply choose to ignore either side of the table. They don’t know how to successfully represent homeowners and don’t know how to bring in real buyers either.

The homeowner who is entrusting their well being to the “professional” is unaware just how inexperienced and uncaring most real estate agents are. It takes a very well educated real estate agent with a team of professionals to realistically navigate the labyrinth of the short sale process.

In this Short Sale 2.0 market, I believe that it is time for homeowners to take it upon themselves to learn how a short sale is supposed to be done. Don’t rely upon an agent who is experimenting with Short Sales to hold your livelihood in abeyance.　

The news isn’t getting any better on the economic front, but I don’t have to tell you that if you are in foreclosure or an agent trying to make a living in the real estate industry. Just this week the Treasury Dept. reported reported a 176% jump in short sales and deed-in-lieu proceedings from the first quarter of 2008 to the first quarter this year.

However it’s only going to get worse as the epidemic of foreclosure filings is expected to surge again as result of the expiration of federal, state, local and lender-imposed moratoriums expire.

So you’re hearing it here first. The assault on homeownership will continue and it is expected to be worse than ever. While loan modifications may help those who can afford to make some payments, the reality is that most homeowners who are in foreclosure are upside down (owe more than the home is worth), and will need assistance in selling the home to avoid foreclosure.

So here we are faced with quite the quandry. Homeowners needing assistance to effect a successful Short Sale and real estate agents who are not prepared to adequately assist them.

So what are these vulnerable homeowners to do and how can the agents who actually care about their career respond?

The answer is education and action. It is time for the homeowner to take a much more visible role in the Short Sale process. In addition to just submitting documents, learn how the Short Sale process is supposed to run and take note where the agent managing your case is dropping the ball. This is your financial livelihood so you need to take a more active role. In order to do so, you need to know what you need to look for.

You need to know what the signs are that indicate that your agent may not be up to the task of representing you.

Agents, you need to understand that you work in a transparent age. The walls of secrecy are being torn down around you. If you are going to succeed at what you do then you are going to be required to demonstrate proficiency.

Client and agent alike need to be on the same page. An attorney preps his client before trial and goes through days if not weeks of pre-trial preparation. The days of agents taking listing agreements and winging it are gone. You’ll only survive in this economy if you are well prepared and an expert in your field. The posers will be found out. In fact many “out” themselves on forums and certain websites and complain and whine about not wanting to do short sales.

So what’s the answer and how is harmony achieved between client and agent in their short sales? That’s the second part…action!

If you, as a homeowner, want to know what is going on in your foreclosure proceedings then you need to be able to follow it from default filing to the untimely end of the judge’s gavel.

As a real estate agent you need to be able to openly and expertly represent your client to the best of your abilities and that means knowing what you are doing.

In looking at the needs of both the homeowner and real estate agent to effect a successful close to the Short Sale transaction we found a site that provides a TREMENDOUS amount of information for both parties to be able to work together to facilitate the Short Sale transaction.

Take a look at the Short Sale resource center that is helping thousands of real estate agents and homeowners to successfully complete Short Sales.

6 housing trends in a still-shaky market CNNMoney.com, Meanwhile, short sales — when a lender agrees to let a homeowner sell for less than he owes — are also expected to spike, reports Moody’s Economy.com. …reports Moody’s Economy.com. Contributing to the jump: a streamlined approval process and a new government program that gives servicers financial incentives to arrange short sales instead of foreclosing on a troubled property.

Government to push lenders to do short sales – SFGate The Treasury Department spent 2009 pushing banks to modify mortgage payments so that distressed homeowners would not be displaced. Next month, the government will start a program encouraging owners and banks to sell some of those same homes. The program, scheduled to begin April 5, focuses on transactions known as short sales, in which a lender allows a homeowner to sell a house for less than, or short of, what is owed on the mortgage.

A few days ago I called out the National Association of Realtors  for not giving their members clear and concise info and for hiding behind their desks.

Well the saga continues in regards to many NAR members having no clue as to how to execute short sales, much less understanding how to seriously profit from them.

I’ve known for awhile that the Realtor Code of Ethics was bullshit…but, this time, it’s not just me who has had enough.

A video was brought to my attention that you have to see. I’d like you to take a look and tell me what you think. I’d love to hear your comments as to what the guy in the video says.

What the guy in the video is mad about is something we encounter almost daily and no one seems to do anything about. I feel for the young guy. He’s out there trying to conduct business and make a dollar and he’s running into the same old tomfoolery that we are all confrionted with on a daily basis.

I get so frustrated it makes me want to scream. The worst part is I get emails and calls from many agents who are simply afraid of speaking out. So I am giving this guy an open forum here on Real Estate Radio.

This kind of stuff needs to be shouted from offices across the Country. Get mad and tell the brokers harboring these idiots that you’re not going to take it anymore.

Why would everyone simply turn a blind eye to this. I love the fact that the guy in the video is speaking out. For all of the Realtors who say I always bash agents, mark this day down. I herewith salute and applaud this guy!

So take a moment and check this out and then you tell me…is the Realtor Code of Ethics a crock or what!

What Is It That The National Association Of Realtors Doesn’t Want You To Know?

We here at Real Estate Radio haven’t been the friendliest of blokes towards the NAR and we have been quite vocal about the puppeteering of Lawrence Yun but now we have even been left scratching our heads.

You see we get so many emails and calls from investors and agents alike and many of the questions that we get surround what a Realtor can and can’t do.

So we decided to find the most credible source we could find that would once and for all explain to our audience just what an agent could do to make more money in a transaction.

So we called the National Association of Realtors and talked to their head legal counsel and arranged an interview. Ralph Holmen agreed to do the interview and so as not to blindside Mr. Holmen and out of respect, we forwarded him the list of questions that we would be asking in the interview.

Now please bear in mind, he accepted the interview early in the Morning, and then, after the tribal council conferred at the NAR, he withdrew his consent and cancelled.

Hmmm…what is the NAR hiding? What is it that they do not want Realtors to know? Are Realtors being treated like mushrooms … you know, kept in the dark and fed a whole heaping pile of bullshit? Well I think so and I’d love to know what you think.

I understand that they are headquartered in Chicago and we all know how the political playbook is accustomed to being run in the Windy City, but is it possible that Blago has nothing on the NAR?

Is it possible that we all should come to expect that backroom dealing and covert ops are the norm in those parts? Heck, one guy has parlayed it all the way to Pennsylvania Avenue…but that’s another story altogether.

Here is the email thread in its entirety so you can see for yourself what the National Association Of Realtors is afraid to discuss:

Initial email from Real Estate Radio USA:

Barry Johnson bjohnson@realestateradiousa.com
03/19/2010 11:41 AM
To: rholmen@realtors.org

Subject: Real Estate Radio Interview

Hi Ralph,

It was a pleasure speaking with you today. If possible, can we do the interview on Tuesday, March 23 anytime after 2:30PM EST. The interview will only last around 20-25 minutes and it will be pre-recorded, so there is no pressure.

Please take a look at the questions. They are the most often asked questions we get asked from agents and homeowners/buyers. Please review and let me know if you would like to make any changes or even add any questions.

1. Is the NAR Code of Ethics designed to be a guidepost or is it a finite document that Realtors must adhere to?

2. The COE seems to be a document that has a lot of disclosure related concerns, why is disclosure so important?

3. The Contracts that most Realtors use seem to be quite advantageous to Realtors, why were they written that way?

4. What is and what isn’t a material fact that should be disclosed to a potential homebuyer?

5. What happens if those material facts, if known, are not disclosed?

6. Is the NAR lobbying at all for any stronger qualifications on someone becoming a Realtor?

7. What’s the difference between a Realtor and a real estate agent?

8. As foreclosures are permeating the industry, we see lots of short sales, is there any restriction on a Realtor buying short sales or foreclosures?

9. Are there any restrictions on a Realtor buying their own listing?

10. Here’s a scenario we get a ton of questions on. Let’s say a Realtor has a short sale listing. They decide that working the short sale for a commission is not as lucrative as buying the property and then flipping houses like an investor. Can an agent do that?

11. Can an agent partner with a prospective buyer to buy a property and later flip it at a profit?

12. There are some investors out there who are looking to partner with Realtors on Short Sales. Wherein the agent gets a listing, and partners with an Investor to buy, renovate and re-sell the property and earns a substantial profit, can they do that?

13. If none of the above scenarios are allowed, is there anytime that an agent can buy their own listing?

14. What constitutes a conflict of interest in a transaction involving an agent?

15. The reason for this interview is because we get so many agents who say this is illegal and that is illegal. There is so much watercooler talk. Where can an agent get correct legal advice in their own market?

I look forward to hearing form you soon,

Barry Johnson
www.RealEstateRadioUSA.com

Here is Mr. Holmen’s reply some 4 hours later:

Ralph Holmen rholmen@realtors.org*
03/19/2010 3:12 PM

To: Barry Johnson bjohnson@realestateradiousa.com
Subject: Real Estate Radio Interview

After conferring, we’ve decided that we’d prefer that I not do the interview. Good luck with your show.

Best regards,
Ralph W. Holmen
Associate General Counsel
National Association of REALTORS
430 N. Michigan Ave.
Chicago, IL 60611
Phone: 312.329.8375; Fax: 312.329.8256
RHolmen@Realtors.org

Ok…so notice the time stamps and more importantly notice that Mr. Holmen said “we’ve decided“. So it seems that a meeting was actually called to discuss these questions and someone realized that they may be opening a hornet’s nest if agents were actually told the direct truth and ordered Holmen to cancel his appearance.

I think it’s quite obvious that something is a bit fishy. But hey, I could be wrong so here’s what we’re going to do. We’re going to get some high profile real estate attorneys who actually aren’t afraid of telling it how it really is and we’re going to hear what they say about these questions.

We’ll be posting an update to see if we can get them on the air on Monday in Holmen’s stead. In the interim, we’d love to hear what you have to say about Holmen’s decision to cancel and more importantly what you think they may be hiding up in the NAR offices.

Also, we’d love some dialogue as to what you think about the questions that we were going to ask Mr. Holmen and what you think the answers are.

Stay tuned…this story is just beginning. What say you?

As I am constantly in search of constant promotion and link love, I recently ventured over to Trulia Voices.

I love the format. Consumers post questions about real estate and anyone who subscribes to a certain criteria that you choose, will receive the questions via email and then you have the opportunity to post your answer to the consumer…to the consumer!!

Great idea, great concept, and in its simplicity, a great way to interact with the consumer in a honest and open fashion. You are allowed to suggest an answer according to how you would handle a certain situation or dilemma that the consumer may have or be facing in the near future.

Of course, it is to be expected, that with a gazillion Realtors on the planet, that one answer may differ from another’s answer. We all have different life and vocational experiences that we can look to for our answers.

That’s what makes blogging so special. I may have one belief, you may have another and we can truly voice (no pun intended) our opinion as to what we feel is a suitable response to the consumer’s inquiry.

How wrong I was. Why did I ever go over to Trulia Voices? Yes, I probably received some of my sought after link love (no I didn’t check the “no-follow” tag), but I was not prepared for my other bonus.

Vilification as if one was an interloper! I began answering the questions that were being asked directly. I was giving the answers that I felt best solved the consumers problem or inquiry. I did not know that isn’t the way to respond.

Excuse me for speaking my mind and responding openly and honestly to an inquiry from the public. I didn’t see the response guidelines that said there was a specific manner in which to communicate with the consumer according to the amended Code of Realtor Mandated Responses on Trulia Voices. I now realize what I was supposed to do. Now I need a shower.

Most of those who choose to answer over at TV seem to be following some golden oldie real estate agent playbook. Most of the answers seem to be straight from the NAR manual for Standard Operating Procedures. There indeed must be such a book.

If I could find that book I am sure it would read as follows:

1. Never answer a question directly. Always make the consumer think you know more than you do by actually avoiding the question by telling the consumer to seek out a local professional.

2. Always, and I do mean always, tell the consumer that they need to seek out a local real estate professional for any question. (did I say this already…now you are getting the point of Trula Voices)

3. Never, ever, tell a consumer that any Realtor will EVER take a reduced commission.

4. Never say another Realtor was wrong (but secretly submarine him by clicking the thumbs down button)

5. Always tell the consumer that they received a lack of responses because they just don’t understand how the business works

6. Always be sure to tell the consumer how much a Realtor does to make sure the transaction goes smoothly and to reinforce the need to have a “local Realtor involved.” (regardless of the question the “local Professional will always have the answer..like the Ace Hardware man.)

7. At all costs, try not to DIRECTLY answer the question. That would be way too easy!

8. An issue previously discussed by Jay Thompson and Jonathan Dalton, Always answer as many questions as possible, even if you have no idea as to the answer or don’t live or work in the area. It does not matter. gotta get those points and improve those “rankings”. Seems I have hear about people commenting for the sake of points elsewhere…hmmm.

Actual Question courtesy of TV: “Looking for a Realtor willing to take a 2% commission on a new construction and give 1% back after closing.”
Written by an actual Buyer looking to do a deal and not one response was an affirmative “I’ll do it!”.

An Actual Answer: ” The lack of responses to your question should tell you a great deal, but I’ll try to bring it down to laymen’s terms. Imagine your boss coming to you and asking you to work a full 40 hour week, plus another 10 hour’s overtime. But after he pays you and you receive your check, he wants you to give the overtime payment back to him.

If you did agree to that, might you be inclined not to work as hard or diligent? If you do find such a hungry and desperate
agent, look at the bigger picture – not just the monetary aspect.”

Wow..Thanks, Sparky..I bet the consumer who asked that question feels fulfilled. You certainly told him, albeit “in laymen’s terms“. If you were unwilling to do as asked..why did you bother answering? Oh yeah, must be that darn playbook!

Another Answer: “An agent who is willing to take a 2% commission; share it with a selling agent; and give back 1% would actually lose money. You would need to find a real dumb agent to accept such a deal and I would not want him or her representing me.”

You would actually lose money?? I’m sorry…did he ask you to come out of pocket with any cash? Did he ask or state that this was the entire commission? C’mon, do these people even believe the words they are typing? I am not a mathematical genius but 1% of something is a lot more than 100% of nothing.

Rudy and the guys at Trulia came up with an amazing concept. A way for the consumer to interact with the consumer directly. An open line of communication wherein an agent could simply anwser a question and like writing a blog post, become an authority figure.

By answering a question with a clear and concise answer the agent could build credibility not just with the person asking the question but with other consumers reading the answers.

Instead, on TV we see question after question answered in party line talking points telling the consumer to “call me”, or ” work with a local Realtor” or “let me send you some information”.

This is a Web 2.0 world people! You can’t force old school marketing down the throat of today’s consumer. Everyone knows the stat, 84% of prospective homebuyers begin their search on the Internet. While we know that to be true, we can not be sure where that search actually begins.

It can be on your blog, on Realtor.com, on Remax.com or one of a million websites. It could even start on TV.

If it is starting on TV you are wasting a valuable resource and not working with a clear understanding of today’s instant information age.

Not to digress , but I love Twitter. I have just 140 characters to convey a message. That’s it, no more. Better make it clear and concise or the message is lost.

Today’s consumer doesn’t want to hear the mumbo jumbo that most Realtors are serving up on TV. If they wanted to consult a “local professional” they already would have!

They want an answer to a question. Answer it! Don’t use the space to advertise yourself or defend your profession or talk down another answer. Answer the question asked. Period!

Expose the others as professionally inept. Go ahead, this isn’t Romper Room…take the opportunity that the consumer is giving you to shine and DIFFRENTIATE yourself from the rest.

This is your moment on stage. You have direct communication from a consumer who is casting a line in the water looking for the most credible, authoritative person he or she can find. Don’t blow the opportunity with a talking point crafted response.

It might sound good to the other Realtors but it’s going to make you look just like what the consumer thinks you look like. We’ve all seen the studies, it’s obvious that now is the time to break from the pack and howl like the big dogs!

Trulia has given you the opportunity to be a purple cowand most agents just aren’t seizing the opportunity. You don’t get a second chance to impress. You have that one moment to answer the question and after you’ve answered..it’s over. You had better make it work.

I assume, even though I should not, that the reason people answer questions on TV is to make money. The eventuality of the Q&A is to lead to a consummated transaction. That being true, the opportunity is forever wasted if you do not give the customer that what they are looking for.

Trulia Voices is like a great restaurant, with great food and a wonderful ambiance. Unfortunately the wait staff doesn’t understand the menu and won’t serve up what the customer is looking for.

Like all restaurants in that predicament, the customer moves on un-satiated and quite unfulfilled. In doing so the wait staff goes home with sparse tips.

It’s not the restaurant (TV) that seems to be the problem here, it’s the quality of the service. In the end the customer relates the two as one.

While there are undoubtedly a number of agents who are using TV to their advantage (Ines from Miamism for one), there are far too many agents ruining the dining experience, if I may continue my metaphor.

I urge those Realtors who are willing to provide clear and concise answers and who have learned through their blogs what being an authority figure can mean to your business, to venture on over to Trulia Voices.

The consumer needs you.

The Reality Of Working With Inexperienced Realtors

If you find yourself in foreclosure and want to explore the option of avoiding losing the home to the bank, you need to make absolutely sure that the real estate agent you entrust to handle your Short Sale actually knows what they are doing.

As of today, in Broward County, Florida, there are over 8,000 homes on the market on the local MLS, 2,700 of them are listed as Short Sales. That’s a whopping 34% of all of the homes being marketed are in foreclosure and being offered as Short Sale candidates.

But how many of them actually sell? Well over the last 6 months, there have been 1215 closed Short Sales in Broward County. In that same period of time, over 8,000 previously listed homes in foreclosure have had failed Short Sale attempts.

So it’s easy to see that you have about a 14% chance of having your Short Sale succeed. I wouldn’t take those odds on a card game, much less on the sale of my home. Yet, we see homeowner after homeowner walking blindly into the bear trap of listing their home with an agent who has no clue about the process.

If you’re not sure what happens if your Short Sale fails, let me outline that for you right now.

1. You, as the homeowner will be forcibly evicted from your home, have your property repossessed by the bank, have your credit damaged for years to come and possibly be on the wrong end of a HUGE deficiency judgment.

2. Your Realtor will simply move on to the next listing they can obtain and give it a shot all over again with someone else.

What this means is that your financial wherewithal will be negatively impacted possibly to the brink of insolvency, while your agent, who has absolutely nothing to lose, simply offers you an apology…if that.

So what’s a homeowner to do? Well you need to take control of your situation and here are 10 steps that you can take to figure out if the agent you are speaking to has any idea as to what they are doing:

1. How many short sales have you closed? Easy question. All that is required is a simple answer. You don’t want to work with an agent who has never completed a transaction as complex as a short sale. End of story. Move on to the next agent if they don’t have history. And oh by the way…don’t take their word for it, ask to see some proof. Ask to see a redacted copy of a few HUD statements showing the deals actually closing.

2. Do You Have Another Job? As the real estate market turned and the economy went into the tank, many real estate agents either left the business or have taken jobs to make some money and sustain themselves. While there is nothing wrong with that…it does pose a problem for you as the Client.

You see most agents have been trained to simply “get the listing”. Their job is to get homeowners to list with them and to let other agents actually do the selling. That’s fine..I guess, in a conventional sale, but a short sale requires a certain tenacity and attentive ness. You can’t really be all that attentive if you’re working full time at Denny’s.

3. Is The Agent A Ghost? Before you agree to list your home with any agent, try to call them 3 or 4 times throughout the business day. Remember, if they aren’t answering your calls how it probably means they aren’t answering anybody else’s calls either. That’s not really a good way to effect a successful closing.

4. What Are You Going To Do To Market My Property? Do you hear that? That’s the sound of crickets. Market your property? You can’t possibly expect me to spend any time or money trying to market a short sale when only 14% of them ever close do you? This may be your financial livelihood but to the inexperienced agent it’s just another listing for them to stick on the MLS and “see what happens”.

5. How Are You Going To Price The Property? This is where most short sales fail. They are doomed from the start. Most agents are used to pricing homes near the top of the market and then gradually stepping the price down over time until they get an offer. It’s an old game and it’s archaic. Get an agent that wants to do that and you are pretty much assured of being part of the 86% of those who end up failing in their short sale attempt.

6. What Will The Bank Take? Nothing SCREAMS incompetency more than an agent who asks the bank to set the price. Some expert eh? Does the bank call you and ask you what interest rates should be? If your agent has any clue whatsoever they will know that you are going to be pretty much dead in the water if this question is asked of the bank. Think I’m wrong? Ask one of the 86%‘ers if they got the price the bank “approved”. I laugh when I see comments link the bank already approved the price. It’s like a neon light that says “abuse me and take my client’s home”.

7. What’s The Difference Between A Deficiency Judgment And A 1099? You’re going to love the doozie of an answer that you’ll get from this one. You can find out the truth about deficiency judgments here but suffice it to say most agents can’t discern between the two and by not knowing this information hands down, you as a homeowner are not being given the requisite information that you need to make an informed decision.

8. Which Offer Should I Accept? This one always exposes incompetence like a bright light does to a roach. You are the owner of the property. Not the bank. You decide which offer you will accept. You do NOT send all of the offers to the bank and let them decide. That is short sale suicide, yet it’s the Modus Operandi for so many real estate agents.

9. What’s A Lowball Offer? An agent will tell you that it’s someone just trying to “steal your home”. Then after you end up losing your home to foreclosure and the bank dumps it for less than the proverbial “low ball offer” your agent will be amazed as to what happened. You, as the homeowner, need to understand that you are in a liquidation status. It’s no longer a home…it’s a property. It’s a commodity and it is being salvaged. It’s in the discount bin. And it should be priced accordingly. Anyone else who tells you otherwise isn’t looking out for your best interests.

10. What Happens If The Short Sale Fails? I saved this for last because it pretty much underscores what I have written here. When you ask the agent this question there is only one answer. That answer is you are going to lose your home and the bank will take back the property.

So getting this direct answer from your agent will tell you if you are getting the straight scoop or if you are just another listing. Because if they know the answer to this question then every effort…every effort, must be taken to make sure that you are not part of the 86% who end up broke and effectively homeless.

So what’s a homeowner to do? Real simple, you need to list your home with an agent who brings the full package. The agent should be part of an experienced team of professionals who have successfully completed short sales.

If you ask the questions shown here and get bad answers then move on. If you have a problem finding a reputable crew to represent you, email us and we’ll do our best to set you up with some people who actually know what they are doing and who can competently represent you.

We have been seeing short sale approvals in as little as 3 days thanks to the professionals we are involved with. So please click the button below if you need help with a short sale. And although we are in Broward County, Florida, we have a network of professionals that we work with nationwide.

Now I Know Why So Many Agents Have Problems With Short Sales! Barry and I often ask each other what is up with so many agents and their continuing problems with short sales. It seems every day we hear from someone who has run into a wall with some inexperienced realtor posturing as a short sale expert instead of actually becoming a …

Sun Tzu and the Art of the Short Sale   What Sun Tzu teaches is so vitally important that this article will be the first of a three part series regarding the impact Sun Tzu could have on the real estate industry IF agents and investors follow his precepts. If you are not aware of just who Sun Tzu was, then … 

Top 10 Reasons Realtors Fail At Short Sales  Why do Realtors fail at short sales? There are arguably hundreds of excuses, but really only 10 or so REAL reasons. 1. Lack of Ability and Knowledge Short Sales for most agents represented the new chic way of making money in a volatile, foreclosure laden real estate market. So, they …

Hey Short Sale Expert…Do You Have A Good Lawyer? I was reading a post on my favorite real estate social network and the writer was stating something I hear quite often. That you need to be very aggressive in making sure the bank does not reduce your commission. In fact the writer of the post I mentioned said:

Urgent Short Sale Deal And The Lender Has Already Approved The Price Time and time again, I keep reading the above-referenced headline in email after email sent to me by the obviously inexperienced, unqualified, unprofessional and completely oblivious real estate agent. In this foreclosure explosion there has been the seemingly overnight proliferation of the so-called “short sale expert”. There are literally scores …

Sales of Previously Owned US Homes Probably Rose on Tax Credit Extension Bloomberg, on Fri, 26 Feb 2010 05:52:53 -0800 Distressed sales, which include foreclosures and so-called short sales for less than the value of the mortgage, accounted for 36 percent of all previously …

New Home Sales Take It on the Nose Seeking Alpha (blog), on Fri, 26 Feb 2010 03:09:14 -0800 That is why short sales are up so sharply. However, as might be expected, increased short sales can and have cut badly into the sales of new homes. …

Lenders more lax on liquidation Las Vegas Sun, on Fri, 26 Feb 2010 03:05:18 -0800 Of the properties on the market, 16 percent are owned by banks and 44 percent are homeowners trying short sales because they owe more on the mortgage than …