As you've probably figured out by now, I'm in the business of psychotherapy. (Minus the pills, the degree, or slightest knowledge of psychological studies. Although, there was that one semester in college...) Really, most of the people I talk to for business are insane. Yet, I'm still shocked by the level of comfort people have when it comes to ripping apart a total stranger. Now, I'm not a solicitor. I call you based on your request for contact. (Cold calls were never really my thing.) Still though, more often than not, I reach people who act like I killed their first born when I call them. (Really, the "how dare you's" are a touch dramatic, don't you think?) What is it, though? What is it about a stranger on the other end of the phone that makes us snap? Is it the unknown of what they want? Is our time really too precious to exchange quick pleasantries with a stranger? Have we lost our fear of that bitch called karma?
Given my job, one would think I'd be less nasty and more forgiving to a cold caller. I'm not. One would also think I have a heart of gold, and let telemarketers finish what they have to say. I don't. I can't explain it, but something starts to rile me up the second I see an unfamiliar phone number on the Caller ID. This laid back, passive-aggressive girl (well, sometimes) turns into a two-headed demon. There is no rhyme or reason behind it (I don't think. That's what I'm trying to figure out), I just snap. Why are we, as humans, totally comfortable being confrontational, honest and abrupt to a stranger? Yet, in our personal lives, we maintain a balance between truth and politeness. I understand the comfort in anonymity, but this is a bit excessive.
Recently, I got a new phone number (no, you can't have it). Because I thought the days of carpet cleaners and newspaper companies calling your house at 2am (due, of course, to Al Gore's invention of the internet) were long-gone, I didn't even think to block my number right away. Bad move. Within the first three days of having said, new number, I had 46 missed calls. Now I'm barely ever home, so the chances of me catching these "people" in the act was slim to none. Every day I'd come home to a bevy of missed calls from Missouri, Minnesota and Newsday. None of which I have any interest in. This past week, while watching The Real Housewives Of New Jersey, I caught one. Missouri. Now, I had no intention of screaming or yelling. My plan was to simply say "I'm not interested." My plan was a huge failure. I ended up telling him off. I was possessed. As soon as I hung up the phone, I had a "what the hell?" moment. This poor guy wasn't calling to ruin my life, or even really calling to bother me. He was just doing his job. Annoying? Yes. Worthy of a verbal beating? No. When relaying this story to my friends, I was told that I did the right thing (Keep in mind, I included the verbatim rant I went on when I told them) No one seemed to have a problem with it. Scary,right? (You know you're from New York when...) Ultimately, I decided I can't handle solicitors with the dignity and poise I hoped I could and signed up for the "do not call" list.
So, where am I going with this? How is this going to help you better-understand real estate? Well, real estate's a people business. It boils down to this, everyone is a stranger, until they're not (how profound, right?). You're a stranger to your customers until they feel comfortable around you. And customers, you're strangers to agents until they have your loyalty. My point (I knew I'd get here, eventually) is that in this very small world, we have to make a conscious effort to treat people well. You never know who you're speaking with (especially over the phone), and you never know how that person will impact you later on. I know (well, I hope) for most of you this isn't something new. We are well-trained in our business to always put our best foot forward, but do we carry it further? I'm saying we should constantly be looking over our shoulders, and biting our tongues even when we're alone, at home, yelling at telemarketers.
Monday, June 28, 2010
Monday, June 21, 2010
Section Hate.
What is one of the most difficult, frustrating real estate transactions out there? No, not short sales. I'm talking about Section 8 rentals. I can't even believe the overwhelming amount of Section 8 inquiries I'm seeing, lately. For those of you who don't know, Section 8 is a government program set up to help house low-income families. Basically, Section 8 gives you a budget and housing requirements, (I.e. Number of bedrooms to occupant ratio..) and then you find the property. If you use a real estate agent in the transaction, Section 8 is supposed to pay the broker fee. Before the tenant can move in, a caseworker will come to inspect the property. Due to the disdain and avoidance from real estate agents for these types of rentals, New York State has created a law saying that we, as agents, cannot refuse to work with Section 8 clients. Additionally, a landlord can only advertise if they accept government programs, not the opposite. On a personal note, I've had nothing but negative experiences with Section 8. They lack respect for both the broker and the client. More so, the broker. I think governmental housing programs are a fantastic concept. However, they lack (at least I've found) the necessary organization to carry out a successful real estate transaction.
Two years ago, I took on a Section 8-approved client. I thought, "Wow, this is great. They have a government-determined budget and can only have a certain type of house. Plus, the government is paying me. What could possibly go wrong?!" The answer? Everything. Everything possible went wrong. I showed the client a million homes in a million different areas for months.(At the time, landlords could say that they didn't accept programs, so the houses that did accept programs were few and far between). They ended up taking a house on the South Shore of Nassau County. The inspection went well, the house was nice and we seemed to be on our way to a goodbye and a check. Little did I know, the matriarch of the family not only half-asked her paper work, she was pregnant with her fifth child. Meaning, the housing requirements would change. Section 8 determined the house met their needs anyway, and allowed them to proceed. Leases were signed, tenants moved in, landlord moved out (so we thought), and on we went. After a week of not getting a check on what should have been an easy deal, I started to question what was going on. The other agent and I became friendly enough during the transaction and were both concerned about our fees. She called the caseworker to find out what was going on. Nonchalantly, the woman told her that the proper paperwork had yet to be submitted from the tenant and payment would be held until then. I was baffled. So, the tenant had already moved in, yet her paperwork was incomplete? Weeks went by, then two months and still, no check. In this business, it's important to know when to cut your losses. I had enough. The $800 wasn't going to make or break my year. After losing hope and giving up, I received a phone call from the tenant. She said that the house wasn't suitable, the landlord was verbally abusing them, and had yet to fully move out. I basically told her it wasn't my problem. While I felt for her, (really, I did...) I don't work for free. I told her that I'd help her if she submitted her paperwork that day and I had a check in my hand from Section 8 the following week. Apparently, things weren't that bad. Not only did I never hear from her again, I still haven't received payment for my completed transaction. Here's the kicker: Out of sheer curiosity, I drove by the house about three months ago to see if they were still living there rent free. At this point, I'm sure you're not shocked to find out that they were.
The moral: Well, I guess there's two. The first, as I said, know when to cut your losses. Not everything is worth a battle. The other agent wanted to take them to small claims court. To me, that would have been a huge waste of time and effort. Don't get me wrong, I was pissed. I ran these people around like I was selling them a $3,000,000 home, but it just wasn't worth the energy. And second, know who you're getting involved with. I think it's unethical to not allow real estate agents the right to refuse Section 8 clients. As independent contractors, we should have the right to refuse working with anyone. Ethics go both ways. We're not volunteers, we need to get paid. As much as I enjoy real estate, I'm not doing it for my health (maybe my health insurance, but not my health). For most of us, real estate is our career. I will hold your hand and your child all through the process, but at the end of it, I need to be paid. Am I saying avoid Section 8 deals like the plague? No. I'm just saying to watch your back in any situation. No one cares about your payment except for YOU. Take care of yourself, and know what you're getting into.
Two years ago, I took on a Section 8-approved client. I thought, "Wow, this is great. They have a government-determined budget and can only have a certain type of house. Plus, the government is paying me. What could possibly go wrong?!" The answer? Everything. Everything possible went wrong. I showed the client a million homes in a million different areas for months.(At the time, landlords could say that they didn't accept programs, so the houses that did accept programs were few and far between). They ended up taking a house on the South Shore of Nassau County. The inspection went well, the house was nice and we seemed to be on our way to a goodbye and a check. Little did I know, the matriarch of the family not only half-asked her paper work, she was pregnant with her fifth child. Meaning, the housing requirements would change. Section 8 determined the house met their needs anyway, and allowed them to proceed. Leases were signed, tenants moved in, landlord moved out (so we thought), and on we went. After a week of not getting a check on what should have been an easy deal, I started to question what was going on. The other agent and I became friendly enough during the transaction and were both concerned about our fees. She called the caseworker to find out what was going on. Nonchalantly, the woman told her that the proper paperwork had yet to be submitted from the tenant and payment would be held until then. I was baffled. So, the tenant had already moved in, yet her paperwork was incomplete? Weeks went by, then two months and still, no check. In this business, it's important to know when to cut your losses. I had enough. The $800 wasn't going to make or break my year. After losing hope and giving up, I received a phone call from the tenant. She said that the house wasn't suitable, the landlord was verbally abusing them, and had yet to fully move out. I basically told her it wasn't my problem. While I felt for her, (really, I did...) I don't work for free. I told her that I'd help her if she submitted her paperwork that day and I had a check in my hand from Section 8 the following week. Apparently, things weren't that bad. Not only did I never hear from her again, I still haven't received payment for my completed transaction. Here's the kicker: Out of sheer curiosity, I drove by the house about three months ago to see if they were still living there rent free. At this point, I'm sure you're not shocked to find out that they were.
The moral: Well, I guess there's two. The first, as I said, know when to cut your losses. Not everything is worth a battle. The other agent wanted to take them to small claims court. To me, that would have been a huge waste of time and effort. Don't get me wrong, I was pissed. I ran these people around like I was selling them a $3,000,000 home, but it just wasn't worth the energy. And second, know who you're getting involved with. I think it's unethical to not allow real estate agents the right to refuse Section 8 clients. As independent contractors, we should have the right to refuse working with anyone. Ethics go both ways. We're not volunteers, we need to get paid. As much as I enjoy real estate, I'm not doing it for my health (maybe my health insurance, but not my health). For most of us, real estate is our career. I will hold your hand and your child all through the process, but at the end of it, I need to be paid. Am I saying avoid Section 8 deals like the plague? No. I'm just saying to watch your back in any situation. No one cares about your payment except for YOU. Take care of yourself, and know what you're getting into.
Thursday, June 17, 2010
Chump Change.
Well, we all know what the biggest topic of today is: The First-Timer Buyer Tax Credit. I've heard a million different versions of what's going on, all of which have yet to be confirmed. As far as I know, (and keep in mind, I'm mid-transit so I might be about an hour out of the loop) they are most likely extending the credit until September.
I have to admit, I'm actually little annoyed at the moment by a conversation I had with someone who feels that the First-Time Buyer Tax Credit was, and will continue to be, a huge waste of time. They called the credit "excessive" and "ineffective." Naturally, I asked "What business do you work in?" They said "real estate." They then asked me if I really think that the tax credit had that big of an impact on business.(A little piece of me wanted to smack him. I refrained.) Wake up, People! That tax credit drove almost all of our business this past year! Without that $8,000 worth of buyer-courage, we'd be twiddling our thumbs and looking for supplementary income. I can't even begin to tell you how many people I had spoken to from summer of '09 until April who's motivation to buy was solely credit-driven. In short, I'm a fan of the tax credit.
We then spoke about the possibility of another extension, or another credit being offered. Again, big fan. Buying your first house is horrifying, and it's nice to know that you have the encouragement of your country to move forward with such a huge decision. I do agree that if you're buying a home, $8,000 shouldn't make or break you.(That was another one of their arguments) It's not the amount though, it's the principle. Because people are so scared to buy and spend their money, they take comfort in knowing the people running this country are not just saying "go ahead, it's okay," but are offering financial rewards for helping stimulate the economy. Lately, business on my end has been slow. As I've said before, there are a lot of window-shoppers. Everyone's looking, but not too many people are ready to pull the trigger. However, the agents I work with are super busy because, as most of them will tell you, they're finishing up the last of their tax credit-buyer's transactions. It's fairly obvious from my end of this business that another tax credit similar or the same to the previous one, would continue to stimulate sales. Otherwise, I feel a lot of people will continue to wait for what's next. Most people are at a standstill because the market is so finicky. Whatever direction the market goes, directly effects the amount of sales actually happening. If the government were to re-encourage first-time buyers to buy, the market would naturally pick back up.
Because majority of first-time buyers are buying in the 300K to 500K range, we should re-stimulate them now. We have such an overwhelming amount of inventory in that price range (especially on Long Island), that it could only benefit us to have more qualified (this is key) people out there searching within that price point. It's basic logic, People. Qualified Buyers + Abundance of Inventory = Increase in Sales. If you're going from a market where everyone is just poking around and unqualified (i.e. now) to a market where finances are in order and there's a nation-wide deadline, sales have to pick up.
There is no great moral to this, My Friends. It is not my job to sway the opinions you are entitled to have. All I can say is that I, personally, think the tax credit is one of the best governmental ideas this administration has had so far. I'd love to know what other people think about it, as there really seems to be great divide amongst my colleagues. I understand why someone would say we're giving away money, but it goes along with the logic of spending money to make money. This economy will not reboot itself. It's not an iPod. If we do not make the appropriate efforts to fix what we've essentially created, we will find ourselves in much deeper water than we're in now.
I have to admit, I'm actually little annoyed at the moment by a conversation I had with someone who feels that the First-Time Buyer Tax Credit was, and will continue to be, a huge waste of time. They called the credit "excessive" and "ineffective." Naturally, I asked "What business do you work in?" They said "real estate." They then asked me if I really think that the tax credit had that big of an impact on business.(A little piece of me wanted to smack him. I refrained.) Wake up, People! That tax credit drove almost all of our business this past year! Without that $8,000 worth of buyer-courage, we'd be twiddling our thumbs and looking for supplementary income. I can't even begin to tell you how many people I had spoken to from summer of '09 until April who's motivation to buy was solely credit-driven. In short, I'm a fan of the tax credit.
We then spoke about the possibility of another extension, or another credit being offered. Again, big fan. Buying your first house is horrifying, and it's nice to know that you have the encouragement of your country to move forward with such a huge decision. I do agree that if you're buying a home, $8,000 shouldn't make or break you.(That was another one of their arguments) It's not the amount though, it's the principle. Because people are so scared to buy and spend their money, they take comfort in knowing the people running this country are not just saying "go ahead, it's okay," but are offering financial rewards for helping stimulate the economy. Lately, business on my end has been slow. As I've said before, there are a lot of window-shoppers. Everyone's looking, but not too many people are ready to pull the trigger. However, the agents I work with are super busy because, as most of them will tell you, they're finishing up the last of their tax credit-buyer's transactions. It's fairly obvious from my end of this business that another tax credit similar or the same to the previous one, would continue to stimulate sales. Otherwise, I feel a lot of people will continue to wait for what's next. Most people are at a standstill because the market is so finicky. Whatever direction the market goes, directly effects the amount of sales actually happening. If the government were to re-encourage first-time buyers to buy, the market would naturally pick back up.
Because majority of first-time buyers are buying in the 300K to 500K range, we should re-stimulate them now. We have such an overwhelming amount of inventory in that price range (especially on Long Island), that it could only benefit us to have more qualified (this is key) people out there searching within that price point. It's basic logic, People. Qualified Buyers + Abundance of Inventory = Increase in Sales. If you're going from a market where everyone is just poking around and unqualified (i.e. now) to a market where finances are in order and there's a nation-wide deadline, sales have to pick up.
There is no great moral to this, My Friends. It is not my job to sway the opinions you are entitled to have. All I can say is that I, personally, think the tax credit is one of the best governmental ideas this administration has had so far. I'd love to know what other people think about it, as there really seems to be great divide amongst my colleagues. I understand why someone would say we're giving away money, but it goes along with the logic of spending money to make money. This economy will not reboot itself. It's not an iPod. If we do not make the appropriate efforts to fix what we've essentially created, we will find ourselves in much deeper water than we're in now.
Wednesday, June 16, 2010
We Salute You, Mr. President.
Just a quick link to peruse while sipping your morning coffee!
Presidential Homes Hit By Housing Crash
Presidential Homes Hit By Housing Crash
Tuesday, June 15, 2010
Thursday, June 10, 2010
Buyer Beware.
In today's world of corporations ripping off their loyal customers to support their own "yacht club lifestyles," it's hard to ignore a consumer-fueled resource like Craig's List. For those of you who don't know what Craig's List is, (and really, if you don't know, pop your bubble and explore the world a little bit) it's a web site in which anyone can post any service/product they have to offer. Services offered on the site range from car sales, to job applications, to real estate, to sex solicitation. Really, anything. While there is some regulation of what can/cannot be posted, it's minimal at best. I can see why some would argue that Craig's List is "creepy," and "unsafe." I don't disagree. I mean, given the amount of scandal associated with the web site I can't disagree. However, I'm a strong proponent of people bartering on their own behalf's and being in full control of their negotiations (How strange given my profession, right?). It's your money, and you should be able to do with it what you please. I, personally, have rented an apartment via Craig's List. However, I'm a licensed agent. If you lack the knowledge of what you're trying to buy/sell, it's imperative that you enlist the help of a professional. I say this from the overwhelming experience of speaking with hundreds (seriously) of people who have tried to buy/rent a home via a self-bartering web site, and have gotten royally screwed. I get at least two phone calls per day from someone asking me if a Craig's List post is a "real" listing. 99.9% of the time , it's not. You know the saying "If it's too good to be true, it's probably not true?" Well, apply that here. If you think you found a 3bdr/3bath on Park Ave for $1,900 per month, sadly, you thought wrong.
This topic has been brewing in my head for some time, but after a really over the top experience I had today, I felt compelled to impart some knowledge on all of you. I spoke to a woman this afternoon who was asking me about a property that she was already "renting." I sarcastically use the term renting because she paid two years up front, and hasn't been allowed in the home yet. She told me the lease has (according to her "landlord") been on the kitchen counter inside the house for three months, but they haven't been able to get into the property because of an "alarm code issue." Believe me when I tell you, I know this sounds ridiculous and I almost hung up on her. After some poking and prodding, she told me that the landlord lives in Dubai, she lives in England, the property is in The Hamptons, and they found the property online. She also told me that they mailed the required monies directly to the landlord and do not know his full name. At this point, I wasn't sure what was going on, but I knew that someone had taken advantage of her. Naturally, my next question was regarding the amount of money that actually changed hands. She said, "$5,000,000." I almost choked on my gum. Even I, having a lot of real estate fraud experience, couldn't believe what I was hearing. I triple-checked that I had the amount right, tried to rationalize why someone would send that amount of money to stranger, and then decided to continue listening to her. She casually stated that the rental equaled 2.5 Million per year. It was supposedly a fully-furnished home, filled with amenities such as a personal chef, and maid staff. Out of a combination of curiosity, horror and pity, I pulled up the property's public record. Now, public records can sometimes be wrong, but the assessed property value is usually within a certain range from the actual market value. Meaning, it's relatively accurate. The house they were "renting" was most recently assessed for a sales value of $780,000. Also, there were no records of real estate transactions (buying, selling or renting) since 2006. At this point, I let her know my findings, but sadly couldn't do much else. Yes People, this ridiculous story actually happened. I know you're probably thinking "Well, that person's an idiot." Think about it though, they're not from the U.S., and have no real estate experience. They are the ultimate easy-target. While I personally don't spend over $50 without knowing exactly where it's going, I can't speak for other people. Sadly, things like this happen all the time. Just three days ago, I spoke to a college-aged student who was hoping to rent an apartment in Manhattan. After already sending her out-of-country landlord money and giving out her social security number, she called me. Again, the property didn't exist, and there was nothing I could do. Obviously, this situation is more common than the aforementioned one. Regardless, people are being played left and right.
Here are three signs that, I've come to find, point to a listing being a scam:
1. The first tell-tale sign of a fake listing is the price. If nothing else you've seen in the area is comparable price-wise, you need to question A. Is it "real?" and B. If it is real, what's wrong with it? A great web site to check out to find out more pricing info is streeteasy.com. I have access to every system out there, and I use streeteasy more than anything else. Granted, it has mostly Manhattan listings, but it's still a great resource that could end up saving you a ton of money. If you're on Long Island, I would highly recommend checking out MLSLI.com.
2. Another common theme in these bogus listings are foreign landlords. I'm not sure why, but almost all of these issues I've dealt with have had an international landlord attached to them. The most common are Dubai, and England. My guess, is that they're less traceable.
3. If you are immediately asked for your social security number, run. They do not need it. Unless you are working with a real estate agent, there is no reason to give out your personal identification number. A real estate agent would obviously use your social to run credit, but if an agent isn't involved, you should run the credit yourself. There are many web sites that do it for free, the most popular being freecreditreport.com (You know, the one with those annoying commercials). You will be able to produce the standard credit report on your own, while maintaining your privacy.
The moral of this is plain and simple: Buyer Beware. If you are going to enter into a deal on your own, make sure you've successfully covered your behind. If you don't, you have no one to blame but yourself. I'd also highly recommend having a lawyer involved. If you're unwilling to work with a real estate professional, at least have some type of legal representation backing you in case something goes wrong - and believe me, something will go wrong.
This topic has been brewing in my head for some time, but after a really over the top experience I had today, I felt compelled to impart some knowledge on all of you. I spoke to a woman this afternoon who was asking me about a property that she was already "renting." I sarcastically use the term renting because she paid two years up front, and hasn't been allowed in the home yet. She told me the lease has (according to her "landlord") been on the kitchen counter inside the house for three months, but they haven't been able to get into the property because of an "alarm code issue." Believe me when I tell you, I know this sounds ridiculous and I almost hung up on her. After some poking and prodding, she told me that the landlord lives in Dubai, she lives in England, the property is in The Hamptons, and they found the property online. She also told me that they mailed the required monies directly to the landlord and do not know his full name. At this point, I wasn't sure what was going on, but I knew that someone had taken advantage of her. Naturally, my next question was regarding the amount of money that actually changed hands. She said, "$5,000,000." I almost choked on my gum. Even I, having a lot of real estate fraud experience, couldn't believe what I was hearing. I triple-checked that I had the amount right, tried to rationalize why someone would send that amount of money to stranger, and then decided to continue listening to her. She casually stated that the rental equaled 2.5 Million per year. It was supposedly a fully-furnished home, filled with amenities such as a personal chef, and maid staff. Out of a combination of curiosity, horror and pity, I pulled up the property's public record. Now, public records can sometimes be wrong, but the assessed property value is usually within a certain range from the actual market value. Meaning, it's relatively accurate. The house they were "renting" was most recently assessed for a sales value of $780,000. Also, there were no records of real estate transactions (buying, selling or renting) since 2006. At this point, I let her know my findings, but sadly couldn't do much else. Yes People, this ridiculous story actually happened. I know you're probably thinking "Well, that person's an idiot." Think about it though, they're not from the U.S., and have no real estate experience. They are the ultimate easy-target. While I personally don't spend over $50 without knowing exactly where it's going, I can't speak for other people. Sadly, things like this happen all the time. Just three days ago, I spoke to a college-aged student who was hoping to rent an apartment in Manhattan. After already sending her out-of-country landlord money and giving out her social security number, she called me. Again, the property didn't exist, and there was nothing I could do. Obviously, this situation is more common than the aforementioned one. Regardless, people are being played left and right.
Here are three signs that, I've come to find, point to a listing being a scam:
1. The first tell-tale sign of a fake listing is the price. If nothing else you've seen in the area is comparable price-wise, you need to question A. Is it "real?" and B. If it is real, what's wrong with it? A great web site to check out to find out more pricing info is streeteasy.com. I have access to every system out there, and I use streeteasy more than anything else. Granted, it has mostly Manhattan listings, but it's still a great resource that could end up saving you a ton of money. If you're on Long Island, I would highly recommend checking out MLSLI.com.
2. Another common theme in these bogus listings are foreign landlords. I'm not sure why, but almost all of these issues I've dealt with have had an international landlord attached to them. The most common are Dubai, and England. My guess, is that they're less traceable.
3. If you are immediately asked for your social security number, run. They do not need it. Unless you are working with a real estate agent, there is no reason to give out your personal identification number. A real estate agent would obviously use your social to run credit, but if an agent isn't involved, you should run the credit yourself. There are many web sites that do it for free, the most popular being freecreditreport.com (You know, the one with those annoying commercials). You will be able to produce the standard credit report on your own, while maintaining your privacy.
The moral of this is plain and simple: Buyer Beware. If you are going to enter into a deal on your own, make sure you've successfully covered your behind. If you don't, you have no one to blame but yourself. I'd also highly recommend having a lawyer involved. If you're unwilling to work with a real estate professional, at least have some type of legal representation backing you in case something goes wrong - and believe me, something will go wrong.
Wednesday, June 9, 2010
You Want A Foreclosure? I'll Give You A Foreclosure!
Out of sheer curiousity, I googled "best cities to buy a foreclosed home." Aside from hundreds on hundreds of results popping up, I actually found some interesting/informative articles (You see what I do for your people? I spend my day searching the internet.) This one really caught my eye. I like that on top of listing the cities, they provide the "non-foreclosure median price" and the "foreclosure median price." I've never seen it laid out that way, and found it very helpful to have a basis for comparison. Enjoy!
The Best U.S. Cities to Buy a Foreclosed Home.
The Best U.S. Cities to Buy a Foreclosed Home.
Wednesday, June 2, 2010
Falling Short.
Short Sales. Those two words have single-handedly changed the way we operate our businesses (both personally, and on a corporate level). Some of us, (myself included) think short sales can be a great option in this market. I, of course, recognize that these types of homes are not for everyone, but overall, wouldn't steer away from showing them. As a friend of mine put it today "short sales are the new market." Whether we like it or not, it's happening. We need to embrace, understand and adapt to avoid extinction. (How "Animal Plant" of me, right?) While I know quite a few agents who avoid short sales like the plague regardless of the inflated commissions offered, (*The bank has more wiggle room to offer higher commissions. As opposed to the standard 2%, you may find them offering 3.5%) I truly feel they are doing both themselves and their clients a disservice. They are significantly limiting their inventory by not showing majority of what the current market has to offer. Am I saying it's a good idea to show short sales to buyers who clearly don't qualify to buy one? Obviously not. However, I do think we need to expand our thinking when it comes to options for our clients.
I think before any further discussion is had, we need to acknowledge that maybe not everyone knows what a "short sale" is. A short sale is a "pre-forclosure." Let me guess, not sure what a pre-forclosure is either, huh? Great. According to Wikipedia, a short sale is "a sale in which the proceeds fall short of the balance owed on the property's loan. It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers." Basically, a bank (the lender) is willing to take less for a property than the seller owes. Hence, "short" sale. They are literally falling short on the proceed amount. For obvious reasons, most sellers prefer this option (if they qualify for it) over foreclosure. While both negatively impact your credit, you will be eligible to purchase a home again in two years, as opposed to the 5 year restriction of a foreclosure. Don't get me wrong, neither are fun. It's really a matter of the lesser-evil, at this point.
There are obviously some notable problems with short sales (there wouldn't be much of an argument if there weren't problems, right?) The biggest problem I find is the element of "the unknown" throughout majority of the transaction. The buyer, seller and brokers have little to no control over anything that may occur. The bank's the head honcho, we just follow suit. Aside from the process (usually) taking 6 months or more, the bank can pull out at any time. Meaning, you can be in contract between yourself and the seller, and the bank can still reject your offer. The deal can die at any moment, and you can't do a damn thing about it. If you're making one of the most important purchases of your life, I'd venture to guess you wouldn't want to gamble your money like that. Another issue is that the bank isn't required to see all offers, and they will most likely, not counter. Because short sales are being called the quote unquote "good deals," all buyers want in. Most short sales have multiple offers on them. (I'm personally waiting to hear the results of an offer a buyer put in on a home that had 44 offers on it. We are "in contract," but it means absolutely nothing until the bank accepts). The bank has so many options at their disposal, that they have no need to counter. Additionally, the bank does not allow you to change your offer once it's submitted. The bank sets a cut off date for offers, and then selects the best choice from what they have. The only time a bank will counter is if it comes down to two similar "deals," and they want to push one off of the fence. Then, and only then, will you get a counter request from the bank. Lastly, banks prefer all-cash buyers (don't we all?). They have the foresight to know that some of today's mortgaged buyers, will become tomorrow's short sale sellers. At this point, it's really hard to negotiate a short sale deal without a substantial down payment and liquidity. I'm not saying it doesn't happen, but it doesn't make the deal easy. While all of you first-time buyers may not "mind" the idea of purchasing a short sale, the bank minds the idea of you.
Well, now that I've spouted off all the negatives, let's look for some positives, shall we'll? As mentioned before, short sales are a great option for investors/all-cash buyers. In the scenario that you have the cash ready, willing and able, the bank (most banks) will accommodate by closing quicker. Remember, they want to get rid of the house just as much as you want to purchase it. The bank is taking a loss merely by approving the short sale, in the first place. The quicker they sell it, the better. I'm not saying short sales can't be an option for a mortgaged buyer as well, but right, they will have to meet very stringent qualifications. Another great thing about short sales, is that you're getting a house at true market value. The bank has nothing to gain by overpricing a home. Keep in mind, short sales are different from foreclosures. You're not going to get a $2,000,000 property for $999,999. It's not happening. However, because the bank/seller wants to get rid of the property, they more often than not, price to sell. Something that's nice about a short sale vs. foreclosure is that the owner is still very much involved in the sale. While they may not be making a profit, they're also not being evicted from their home and then having it published in the local paper (Short sales allow the seller to maintain anonymity. Where as a foreclosure is public record). In laymans terms, short sale sellers are less pissed off. As a buyer, this will greatly benefit you. Short sales and foreclosures are both sold "as is." Because the short sale seller is less agitated, there is less of a chance that they've destroyed the property. Hence, benefiting the buyer.
The Moral: Short sales are unavoidable. Eventually, we will all be in a situation where either we personally, or someone we know is dealing with one. We need to be prepared, and really take the time as agents, buyers, sellers, investors, whatever...to educate ourselves on what's not-so-slowly becoming most of our market. There will always be "regular" sales, but I think if we looked at current market data, we'd all be amazed how "regular" sales pale in comparison number-wise to short sales. We're at a point in our market that these properties need to sell. If they don't, we will stay in this rut we've been in. We won't be able to produce more "regular" inventory without successfully selling off the bank-owned properties. Short sales are here to stay, are you?
I think before any further discussion is had, we need to acknowledge that maybe not everyone knows what a "short sale" is. A short sale is a "pre-forclosure." Let me guess, not sure what a pre-forclosure is either, huh? Great. According to Wikipedia, a short sale is "a sale in which the proceeds fall short of the balance owed on the property's loan. It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers." Basically, a bank (the lender) is willing to take less for a property than the seller owes. Hence, "short" sale. They are literally falling short on the proceed amount. For obvious reasons, most sellers prefer this option (if they qualify for it) over foreclosure. While both negatively impact your credit, you will be eligible to purchase a home again in two years, as opposed to the 5 year restriction of a foreclosure. Don't get me wrong, neither are fun. It's really a matter of the lesser-evil, at this point.
There are obviously some notable problems with short sales (there wouldn't be much of an argument if there weren't problems, right?) The biggest problem I find is the element of "the unknown" throughout majority of the transaction. The buyer, seller and brokers have little to no control over anything that may occur. The bank's the head honcho, we just follow suit. Aside from the process (usually) taking 6 months or more, the bank can pull out at any time. Meaning, you can be in contract between yourself and the seller, and the bank can still reject your offer. The deal can die at any moment, and you can't do a damn thing about it. If you're making one of the most important purchases of your life, I'd venture to guess you wouldn't want to gamble your money like that. Another issue is that the bank isn't required to see all offers, and they will most likely, not counter. Because short sales are being called the quote unquote "good deals," all buyers want in. Most short sales have multiple offers on them. (I'm personally waiting to hear the results of an offer a buyer put in on a home that had 44 offers on it. We are "in contract," but it means absolutely nothing until the bank accepts). The bank has so many options at their disposal, that they have no need to counter. Additionally, the bank does not allow you to change your offer once it's submitted. The bank sets a cut off date for offers, and then selects the best choice from what they have. The only time a bank will counter is if it comes down to two similar "deals," and they want to push one off of the fence. Then, and only then, will you get a counter request from the bank. Lastly, banks prefer all-cash buyers (don't we all?). They have the foresight to know that some of today's mortgaged buyers, will become tomorrow's short sale sellers. At this point, it's really hard to negotiate a short sale deal without a substantial down payment and liquidity. I'm not saying it doesn't happen, but it doesn't make the deal easy. While all of you first-time buyers may not "mind" the idea of purchasing a short sale, the bank minds the idea of you.
Well, now that I've spouted off all the negatives, let's look for some positives, shall we'll? As mentioned before, short sales are a great option for investors/all-cash buyers. In the scenario that you have the cash ready, willing and able, the bank (most banks) will accommodate by closing quicker. Remember, they want to get rid of the house just as much as you want to purchase it. The bank is taking a loss merely by approving the short sale, in the first place. The quicker they sell it, the better. I'm not saying short sales can't be an option for a mortgaged buyer as well, but right, they will have to meet very stringent qualifications. Another great thing about short sales, is that you're getting a house at true market value. The bank has nothing to gain by overpricing a home. Keep in mind, short sales are different from foreclosures. You're not going to get a $2,000,000 property for $999,999. It's not happening. However, because the bank/seller wants to get rid of the property, they more often than not, price to sell. Something that's nice about a short sale vs. foreclosure is that the owner is still very much involved in the sale. While they may not be making a profit, they're also not being evicted from their home and then having it published in the local paper (Short sales allow the seller to maintain anonymity. Where as a foreclosure is public record). In laymans terms, short sale sellers are less pissed off. As a buyer, this will greatly benefit you. Short sales and foreclosures are both sold "as is." Because the short sale seller is less agitated, there is less of a chance that they've destroyed the property. Hence, benefiting the buyer.
The Moral: Short sales are unavoidable. Eventually, we will all be in a situation where either we personally, or someone we know is dealing with one. We need to be prepared, and really take the time as agents, buyers, sellers, investors, whatever...to educate ourselves on what's not-so-slowly becoming most of our market. There will always be "regular" sales, but I think if we looked at current market data, we'd all be amazed how "regular" sales pale in comparison number-wise to short sales. We're at a point in our market that these properties need to sell. If they don't, we will stay in this rut we've been in. We won't be able to produce more "regular" inventory without successfully selling off the bank-owned properties. Short sales are here to stay, are you?
Tuesday, June 1, 2010
A Poll, If You Will.
I'm having a hard time wrapping my mind around something, and I'm hoping to gain some insight from my lovely readers. In my business, e-mail correspondence is imperative to a successful working relationship. Similarly to "real" life, if someone doesn't respond to you in a reasonable amount of time, it's obvious you're being ignored. Now, I'm not not saying I've never taken a few hours to respond to an e-mail, but that's probably the maximum. Unless I'm ignoring you, you get a response. The whole point of e-mail is to engage in a quick conversation. If I wanted a conversation to drag on and keep missing someone, I'd make a phone call. I guess my issue is this, if someone who you work with/for e-mails you, wouldn't you agree that it's common courtesy to respond? I'm curious to know how often you, as an professional/friend/human being A. check your e-mail, and B. How quickly you respond?
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