Nov. 21, 2008 - Forclosure story 1

Recently, my eyes were opened, not only to the shift in the real estate market, but also to the shift in the real estate as a business.  Always striving to be ahead of the curve, I decided to invest time and money in educating myself in the future of real estate and the wave that is hitting my market.  Actually, it's not really a wave, it's more like a tsunami.  With the unscrupulous banking practices, the recent escalating prices of homes, and the crash in our economy, we find that much of our inventory are "distressed properties".  My opinion is that almost 100% of the homes on the market in my area are distressed properties.  What do I mean by that?  Common, you have to be desperate these days to put your house on the market to compete with short sales and foreclosures! 

So that is how my saga began.  I decided to learn about Short sale and Foreclosure property transactions.  I received two designations in the last several months, CDPE and LMC.  I found both informative but in different ways.  Loss Mitigation Certification is a great starter course to give you a general idea of what it means to deal with foreclosures.  Certified Distressed Property Education is a "how to" manual in dealing with short sale.  I was glad to take them, as it "whetted my whistle".  But the two coursed combined did little to prepare me for the ins and outs of distressed property business.

I dove in head first.  I googled everything I could find on doing BPO's and handling REO's.  My goal was to sign up with as many companies as I could to do Broker Opinion of Value.  Getting paid a few bucks here and there was better sitting in my office waiting for the phone to ring.  I also figured that if I got a lot of this business, I could stream line my system to be efficient at it.  What I found was the reports were long and tedious and the pay was lousy.  When I spoke to a friend of mine who was already doing BPO's, she was surprised that I was not "winging" it like her.  She called me to detailed.  I like to think that I just have integrity.  This story would probably be better left for another time as it's a side line to my blog.

So I digress.  Getting back on track, I inadvertently started getting requests for REO property listings.  I say inadvertently because after going through the LMC course, I realized that these distressed properties might be over my head and wallet.  I felt uncomfortable with evicting people, putting bills in my name, being responsible for the homes' condition, billing and getting reimbursed, and having multiple hands in my pocket at the closing table, leaving me with little if anything to show for the work I've done.

But I did get listings!  Whether I wanted to or not, the wave of the market was taking me for a ride.  All I have to do was to hold on for dear life and hope that I get washed up on the beach.  I was lucky in many respects.  The first proposed listing was a 2 year old house in a nice area.  Although, condition of the home was not showing signs of the actual age, I am confident that at the right price, I can sell it.  Also, the REO company hires a management company to change the locks and maintain the home.  Boy, was I glad that this will be my fist experience.  Well, I got a second property listing request a few weeks later. 

And this is where my story really begins. 

Foreclosure Story 1.

 I received an email request to list a property in a nearby town.  The paperwork I received had a request for a BPO with interior pictures, a request for MLS insertion and a "listing agreement".  I researched the property and found that it was still listed with a local agent.  I found out that the property has been on the market for 154 days, originally listed for 189,900 and now for 131,500.00.  My paperwork stated that I would be listing the property at $124,500.00.  It also went over how the commission was going to be broken down. 

Where do I begin?  First order of business was to go see the property.  On my first visit, I found that I was given the wrong combination to the lock box and once I managed to open the lock box, the key was missing.  I had to go back to the property for the second time.  My initial impression was that the neighborhood was of a mixed use.  The street was busy, the houses were too close.  The drive way was a dug pit, the stairs were a tripping hazard, the Porch could have structural issues and the roof looked tired.  I was concerned that the price I was supposed to put the property on the market, was too high.  My initial conversation with the rep who assigned me the listing, concluded in one resounding synopses.  If I don't take this listing, I will not get any more from this company.

After my second visit, I was disheartened to find out that the basement was cluttered with junk, the attic had a pool of water and the roof showed signs of leaks.  There were cast iron pipes and other outdated utilities.  The house itself had potential, but my estimate was that it needed approximately $56K worth of work.  My comparative market analysis showed that as is, the property was worth about $45K and with repairs, it would be approximately $110K.  Taking a listing at $124,000 as is, would be foolish.  Also, the convoluted compensation required explanation.  I had my suspicion as to what all those numbers meant, but I could not imagine that this company wanted to take .65 of 3% they were offering and then charge me another 30% referral fee.  Not to mention that they dictated what I payed a cooperative agent, which was less what I typically offer.  When all is said and done, I figured I would be making approximately $1,000.00.  My second conversation with the REO representative, confirmed my suspicion.  And then something happened that even now shocks me.  I told the rep that I would take the listing.

When I take listings for a typical seller, my marketing cost approaches $1,000.00, how can I take this listing and offer the same service, I can not.  I then looked at other bank owned properties on the MLS and noticed that the agent typically put one picture up and that's it.  No virtual tour, no multiple photos, no Internet marketing, not even a descriptive paragraph extolling the positives of the property.  Wow!  Can I really do so little?  I decided that I have to change my mindset.  My initial business plan dictated that I treat all of my clients and listings the same.  Whether I am listing a starter condo or a luxury home, my clients demand and deserve the same attention to detail and care.  Now I am faced with a property that even the banks care very little about. 

Despite my many reservations, I decided to give it a go.  Late Friday evening, I did the paperwork on the BPO and by the time I emailed my forty or so photos with captions to the new rep at the REO company, I have estimated I spent 7 hours.  I decided to hold off on signing the agreement, because I wanted to confirm the new price.  I also did not put the house in the MLS because of the price uncertainty.  On Tuesday, when I did not get any acknowledgment back from the new rep, I called and left a message asking for a confirmation that she got my BPO.  On Wednesday, she sent me an email stating that she did, but still has not received the contract or the MLS listing.  I sent her an email back stating that I need to know at what price the client (the bank) wanted me to start the marketing.  I received a phone call from this rep.  The conversation went something like this:

"Jane, I don't typically spend so much time on assigning REO's and I don't usually make calls to agents"  I explained that I need to know at what price to put the house on the market.  She was very surprised that I have not put the house on the market (it has been 4 days since it was listed last).  I asked if she had a chance to review the the BPO and forward it to the client.  She said yes.  I explained that if I were to put the house on the MLS for such an overpriced amount in its' condition, that no one would look at it, and I would get a reputation of being an unrealistic real estate agent.  She told me that she doesn't understand why she is wasting her time with me and that she should reassign this listing to someone else.    She told me that another agent gave her a BPO and said that the property was worth $200K.  I told her that I am sure that agent did not go into the property.  I know he/she didn't because I am the only one who had access to the keys.  I did not have a chance to tell her that the house was on the market for over 154 days at a lower price and did not sell.  The conversation ended quite quickly with the rep's decision to reassign the listing. 

Good riddance to bad garbage, I say!  So, this is my first experience into the realm of bank invested properties.  I thought that I would have many posts dedicated to this house as the listing progressed.  Instead, it's just a sad tale.  Stay tuned to hear how things go with house #2 and the consecutive adventures of distressed property business.

Sep. 5, 2008 - buying a home, create your own team for hassle free purchase

Aug. 14, 2008 - Pricing strategy to sell your home

I recently met with a seller who wanted to sell his home because of a divorce situation.  He told me that he did not have a problem holding the home on the market for a while because he really wanted the best selling price.  When I asked him to let me know how long he wanted to market his home, he told me three months.  I showed him the comparative market analysis and explained that three months is actually a very quick turn around time since the average in his area was (unfortunately) closer to 300 days. 

I also explained that a house that is overpriced and is left on the market for too long will become less desirable and have a stigmatized of having something wrong with it.  Buyers like to feel that the house they choose is desired by many and sometimes many showings and even multiple offers solidify in a buyer's mind that the subject property IS the right house. 

This property was in a very good condition but had some deterring factors.  For better understanding of my strategy, let's just say the home was worth under $500,000.00.  It was also in a town with very few comparable homes.  I had to do more research, look at more properties, change the criteria I was looking at by changing the square footage and going back to 9 month of data. I included both available properties and sold to come up with the best course of action

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I took into account the few drawbacks that could not easily be changed. There was no garage and cigarette smoke would turn some buyers away. That said, I have looked at the competition. Many of the properties have central air, some are colonials (this is a split). I determined the top price of the home which would be almost within the market value. It is possible that the property will not get a lot of attention at the top price I suggested to the seller. My recommendation is to have 2-3 price adjustments which can occur every two to four weeks at $10,000.00 increments. This way, one is more likely to sell the home at the top of what it is worth and still be able to sell the property in a reasonable amount of time.

Aug. 4, 2008 - Real Estate Convention in Floriday

Jun. 5, 2008 - What makes a real estate agent a good negotiator?

Mar. 19, 2008 - Q: How can I tell if I’m looking at a good home? It’s quality? It’s desirability? It’s resale?

Feb. 4, 2008 - Real Estate Editorial In Central Massachusetts

Lately, I find a growing number of consumers wondering what is it that they receive for letting us sell their home. Today, home sellers have many options when it comes to hiring an agent or selling as a "for sale by owner". The most professional and experienced of the real estate community should have no problem justifying a 6% commission. In these times of competitive tactics by other agents and online discounters, I yearn to impress upon my customers the importance of service and the detriment of the lack of service in what amounts to be the biggest financial decision of their lives. The real estate business is interesting and mind-boggling to the consumer. Where else does a newly licensed agent make as much as a seasoned professional? When consumers don't know what they get for their money, how can they make the educated decision?

Each service provider (no matter what the business) has a value standard of their services based upon their expertise and knowledge. Many, like myself, know that they provide this service well beyond the minimal industry standard. They refuse to compromise the value of their service- and rightfully so. Once the service price is discounted, it is likely that the client will perceive that the value is not really held to the standard. When the home owner does not see the value of the service, he or she wants a reduction in fees. To explain what it is that I do for my clients, I have created a short list of duties I perform for my seller clients during the course of the contract. Since in a typical transaction there are two agents, the agreed upon fee is generally split in half. Therefore, I am performing the below list of responsibilities on behalf of the seller for my fee of 3%. The other 3% is offered to the agent who brings in the buyer.

1. Provide the Seller with 100% unconditional guarantee of satisfaction or they may cancel the contract at any time before they have an accepted offer on the property
2. Perform Staging Services - Evaluate the home, room by room to sell fast & get the seller the best price possible
3. Conduct interview - To clearly understand the sellers’ needs and be able to meet them
4. Research the marketing history of the house
5. Research town records on the house
6. Perform Comparative Market Analyses - To determine the value range of the home and the time it would take to achieve it.
7. Create a marketing strategy to ensure a quick sale at the optimum price
8. Measure all the rooms with ultrasonic electronic measuring device for accuracy
9. Explain all forms and agreements
10. Research the deed
11. Research any easements, abatements, leans or other legal items that come up
12. Set up a folder with information on the home used at showings
13. Photograph the home inside and out
14. Set up a virtual tour script
15. Set up a virtual tour
16. Creatively write about the house for various advertising venues
17. Create a brochure
18. Create a postcard brochure
19. Confirm that information went into Realtor.com properly and embellish listing
20. Disseminate advertisement on the numerous sites on the www
21. Disseminate advertisement to the sphere of influence
22. Place the advertisement in the monthly newsletter
23. Install a lock box
24. Install a sign
25. Order/install personalized rider
26. Create advertisement
27. Create fax back feedback form
28. Distribute brochures to neighboring businesses
29. Mail out brochures to neighbors (renters and/or owners)
30. Set up Open House advertisements
31. Add Open House information into Realtor.com listing
32. Install Open House rider and provide Balloons/directional signs
33. Host Open Houses
34. Invite a professional Mortgage Originator to the Open House – to pre-approve buyers
35. Provide mortgage breakdown sheet for your home
36. Create a book featuring your home and your town - to be left at the house and given to the buyers
37. Set up showings at your convenience
38. Accompany non represented buyers to all showings
39. Collect feed back and review with the seller on a weekly bases
40. Answer buyer’s questions in a timely manner
41. Provide monthly CMA updates and review with seller – to make sure that we stay competitive with the market
42. Continuously monitor to make sure that the proper paperwork is at the house
43. Send Realtor.com statistics on a regular bases to the seller

44. Keep seller's financial information/ thoughts confidential unless authorized to disclose
45. Make sure the buyers have a formal and legitimate pre-approval prior to presentation of the offer
46. Promote seller’s position
47. Contact selling agent for any clarification
48. Present the offer and review and explain to the seller
49. Explain language and contingencies and their ramifications
50. Help the seller make an informed decision
51. Contact the selling agent/ buyer with the seller’s response
52. Write the offer with un-represented buyer and explain forms
53. Include forms to protect the seller
54. Arrange to pick up the offer
55. Meet with the seller to get signatures
56. Create a team of professionals on seller's behalf to facilitate the selling process and coordinate between members of that team to ensure a smooth transaction
57. Create a contact information sheet for all parties
58. Get the signed documents to buyer/buyer’s attorney/buyer’s agent / seller’s attorney
59. Forward all pertinent documents to the buyer which may include Title V and deed information
60. Set up home inspection time
61. Be present at the home inspection and represent the Seller’s interest
62. Advise the seller based on the outcome
63. Help renegotiate after the home inspection and help address any concerns
64. Set up appointments for any home repairs and estimates
65. Pick up Radon Kit or make arrangements for it
66. Replace the “For Sale” rider with “On Deposit” rider
67. If necessary, put the house back on the market
68. Review the Purchase and Sale document.
69. Arrange for the seller to sign the document
70. Forward the Document to all parties
71. Send the seller a letter of closing responsibilities
72. Set up appointments for appraiser
73. Prepare comparable properties for the appraiser
74. Meet with the appraiser and give him comparable homes information
75. Set up appointment for fire marshal
76. Meet with the fire marshal
77. Do final water meter reading
78. Remind the seller of last minute items to take care of prior to closing
79. Set up appointment for walk through
80. Accompany and Represent the seller’s interests at the walk through and address issues that may arise.
81. Notify parties of the closing time and place
82. Review settlement papers on the Sellers’ behalf
83. Coordinate sellers closing if they are buying and selling
84. Set up key exchange
85. Represent the seller’s interest at closing
86. Become a resource for the buyer after the closing and answer any post closing concerns
87. Promote and Protect the interest of the seller at all times