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REAL ESTATE AGENTS DO NOT HAVE SPECIAL POWERS. WE ARE NOT SAVIORS. SOME FOLKS JUST CAN'T BE HELPED BY A SHORT SALE OR A REALTOR®

* * * * HARD CORE REAL ESTATE TALK * * * *

LISTEN UP FOLKS!! It's time for an wake up call for real estate agents and brokers to . . . .

COME BACK TO EARTH!

A thoughtful article by Neal Bloom read this morning made me realize that all of the hoopla about Short Sales, Foreclosures, Deed in Lieu Of, etc., may have caused some agents to lose focus on the limits of their real estate license or individual experience. The current market correction caused by the mortgage mess has certainly led many agents dip their toes into niche markets that have never been their core business, residential real estate listings and sales.

IS THIS SHORT SALE LISTING GOING TO BE INCOME PRODUCING OR A DRAIN ON THE AGENT'S MARKETING BUDGET? Real estate agents are usually expected to generate their own business. That means promoting your services to home buyers or sellers. Agents who have been in business for many years, prior to 1985 have learned from experience that, for some prospective home sellers, the services of a real estate agent cannot help them out of the hole that they have usually dug for themselves. There are few clues that should cause an agent to use caution before committing to a Short Sale listing:

Agents and Brokers need to watch for the Red Flags:

* Home owner is already 3-4 month in arrears when you are called.

* Home owner has no cash although they have not made mortgage payments for 3-4 months.

* Home owner 3-4 months in arrears claims not to have received a letter from the mortgage company.

* Home owner wants to sell by Short Sale and buy another property.

* Home owner has contacted the mortgage company and the mortgage company sent a Short Sale package - 3 months ago.

* Property is an active Short Sale listing by another brokerage.

* Home owner is in a HUD Forbearance Program and is 13 month in arrears and has no cash.

* Caller is not the home owner but a relative, child, neighbor, friend, partner, etc. of the home owner.

* Home owner does not live in the property. Property is vacant, rented or has family or friends occupying the property.

* Home owner owns several properties and lives in another one.

* Home owner has refinanced and done cash out loan in 2005.

* Home owner has no documents. They are all in storage in another town.

* Home owner says, "if it is meant to be" ,you can save their home.

* Home owner says, "if we lose our home, it is God's will".

* Owner wants you to tell them what LEGAL options they may have.

* Property is scheduled for foreclosure auction next week.

* Property was auctioned last week.

FACT: THERE ARE NO SHORT SALE STANDARDS IN THE MORTGAGE INDUSTRY.

DOES THE REAL ESTATE AGENT UNDERSTAND THE SHORT SALE PROCESS? For some of the more experienced agents, the current market for foreclosures and short sales has meant opportunity. We have managed a number of Short Sale transactions and realized a return on our investment of time and money. For many, however, it has meant a tremendous loss of time, disappointment and loss of opportunity for main stream business. Representing a Short Sale Seller is more complicated than simply taking a listing and entering it in the MLS.

FACT: Many homes are not suitable for a Short Sale transaction.
FACT: Many home owners are not eligible for a Short Sale transaction.
FACT: Many agents should not take Short Sale listings.

Sadly, many real estate brokerages are not equipped to offer training for their agents in the short sale or foreclosure market. Local Associations of REALTORS® are just beginning to bring the MLS listing rules and forms up to date to reflect the foreclosure and/or short sale disclosure and procedures. Local Associations of REALTORS® are just beginning to offer training to their members in the intricacies of managing Short Sale transactions. The frenzy for Short Sales is into it's third year. Mortgage resets that precipitated defaults on the part of many home owners began seriously in mid-2006.

WARNING: If an agent or broker does not understand the short sale process, they should not promote their services as a listing agent for short sales. Some consumers should not become clients. Fact is, with a Short Sale transaction, the SELLER has to qualify as well as a buyer. Many agents are not experienced qualifying SELLERS.

REALTORS'® Pledge of Performance and Service: Article 11 REALTORS® are knowledgeable and competent in the fields of practice in which they engage or they get assistance from a knowledgeable professional, or disclose any lack of expertise to their client.

Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988.

Posted by Lenn Harley, Real Estate Broker, Maryland & Virginia on 08/18/2008 07:42 AM

Comments (40)

short sale, mortgage mess

Post is included in group: ABC's of Real Estate Marketing
Post is included in group: Club Chaos
Post is included in group: Mortgage, Foreclosure & Elder Abuse Housing Fraud
Post is included in group: SubPrime Loans and the real estate market.
Post is included in group: The Ninety-ninth Percentile

40 Comments on REAL ESTATE AGENTS DO NOT HAVE SPECIAL POWERS. WE ARE NOT SAVIORS. SOME FOLKS JUST CAN'T BE HELPED BY A SHORT SALE OR A REALTOR®

AUG

2008

I have another good one, a short sale is listed by a discount brokerage. In my area, if they are, then how can you expect them to work the short sale for a small fee. Gee they don't even set up showings, or negotiate offers, how are they going to invest the time to see the short sale package through to completion?

They are not equipped to do it.

I understand why folks need to list with them to save money, respect their model, but not on a short sale, it just is not going to happen.

Lenn, when I read Neal's post, I remember thinking about the emotional toll it can take on agents - most of us have issues when it comes to being at arm's length from the seller's circumstances.

In the close-in DC metro area, 99.9 percent of the agents listing short sales are totally clueless, and there are some big time heavy hitters from the planet's largest real estate brokerages in there. Yikes!

Lenn - I could not agree with you more. I spoke with an agent yesterday who is trying to negotiate for her buyer. The LISTING AGENT DID NOT HAVE A LISTING AGREEMENT - but put it in MLS because "they knew they were going to get one."

The Agent with the BUYER wanted to know why she needed to put the taxes in her "HUD" to the bank... "Wouldn't taxes be paid by the Escrow?"

"Well, I asked - what if they didn't escrow? The back would pay the taxes to protect their position..."

This is NOT the type of transaction someone with no experience should try!

Lenn - Trying so hard to flag this for a feature...seems to be broken **sigh** I read Neal's post this morning. Some times you just can't help no matter how much you would have liked to. Agents need to know their limitations and when to walk away.

Thanks Lenn...I wish we were superman or women. But unless they get to us early there probably isn't much light at the end of the tunnel. I'd rather they call me before they are late to tell me they are going to be late. Then at least I have time to do something or try something. It's irrelevant to me that they aren't late are aren't yet a short sale. Let's face it if they aren't late and they are calling to you tell you they will be then it's really already a short sale or will be. I just will list it and get the process started...there isn't any special rules and between you and I ...I think time is the most important aspect of the short sale for the agent. If we have no time then we have no chance of saving it...Short sales and foreclosures are on a time line and by the time we get an interested party the owners are already 2-3 payments late so I just take it and hope we are successful...I'm in no way a super expert but by getting in the trenches and doing it ...I'll learn more along the way.

Thanks for the mention.

Lenn, I don't do short sales, I would refer them to someone who does specialize in these transactions. However, I do think it is interesting that the agents who were tops in sales in 2004 - 2006 are now the top listing agents of foreclosures and short sales. I wonder how weird that type of "repeat" business must feel?

Lenn, I'm with you. Just like cluttered, broken-down homes where the seller is unwilling to do anything to make the home competitive for the price they want, there are some listings we might have to think twice about taking. I've had short sale situations that worked out fine, but there is a slippery slope there. We need to be very careful not to end up working for free, *again*. It is too easy to end up making a heroic effort to help, with nothing to show for it at the end.

Our business has such a deep sense of service, we commit to our clients LONG before there's any chance of being paid for our work, and LOTS of risk that we'll never be paid at all. How many other workers in this country are willing to work first and MAYBE be paid after? Many do not realize that we aren't sitting behind a desk making a salary the way they do. And there is nothing wrong with wanting to be paid for our work is there?

Missy. I just added a line: Some agents should not take Short Sale listings. My focus on this post was to alert agents about home owners. But, it goes hand in hand. Experienced agents usually know when a home owner contact isn't going to be a viable listing. I turn away 2-3 a day.

Patricia. My experience also. Just calling on Short Sale listings to get info from the listing agent can make you want to scream. But, I'm a very patient woman. I'm a very patient woman. I'm a. . .

Eleanor. I love that. Did that agent think that the "escrow" has a fund to contribute money to transactions???

Oh by the way...I've never even marketed myself as the short sale expert...they usually read my blogs or just call me and ask how they can get out of it and would I want to try helping them. Honestly I prefer not to get calls just for shorts...I need some regular transactions. The chances are slimmer with a short sale so I'm not out there lobbying for them...they just call me.

I've got enough listings that arent in that situation and they aren't selling even at market value.

Neal. I don't mind short sale inquiries. I can determine by speaking with the caller is they have a viable short sale. However, I've had most of the exprienced listed in the post.

I remember writing a post some time back that short sales are nothing new. I've done several over the years and had a good handle on them before the current proliferation. I also have several experienced referral agents for short sale listings.

However, like you, very few of the consumer calls result in a listing by anyone in my network. That's not to say that the owner doesn't get an agent to list their home as a short sale. It just means that they're not going to take our time and resources for a situation that is NOT a viable short sale. I believe that's your exprience too.

In fact, several short sale calls that I've received have turned into viable listings because there was significant equity.

Fact is, I know from speaking to many listing agents about the status of short sale listings that the majority of short sale listings are not properly researched, listed or managed.

Lenn, we agree as well. Just the other day we put in an offer for our clients on a short sale and then we had to explain to the listing agent what to do. No kidding.

Lenn... now, this is hard core real estate. You are 110% correct, in regards to that so many got into this niche, but that it's not for everyone. Some of these red flags are priceless. I always loved the one from the consumer that tells me that they haven't made a payment in 4 to 10 months, but that they have no money. What did they do with even part of the payment? The other one which I have heard a few times. They want to sell this property and buy another one... what? You couldn't even save this property. Come back to me in 3 years, which is what FHA allows. But, 3 years from the date when the house was sold.

jeff belonger

Jeff. I've heard them all.

Once an agent hears that the home owner has not made a mortgage payment in 3 months and they don't have any money, a smart agent should know to be careful, very careful.

Suzanne. You got the message!!! Too many agents treat real estate sales and not like a business. They take what they can get whether it be unmarketable listings or unqualified buyers and hope for the best.

When your business is contingency based, the numbers have to work before making the decision to proceed.

Audrey. I believe that it is the Stockholm Syndrome.

Article 11 is very explicit about REALTORS® working outside of their field of expertise whether it is foreclosures, short sales, commercial real estate, land sales, etc. I run into agents every day who list commercial properties and have no clue. Thanks for the reminder.

Lenn,

This is to Michael's comment...

They should have that rule for the loss mitigation department...the people are way out of what they really are qualified to say. I feel it's a bunch of underpaid order takers...I wish we could get someone from those departments to come answer a few questions...such as how much they love their job...but I haven't seen any lurking...they must be dodging bullets. I still think a Realtor is more qualified to to answer those questions even if we tell the client there are no promises.

Lenn - It is amazing....you have shared so much regarding the perils of the short sale process and you have only touched the tip of the iceberg......It is not quite a black hole.......The situation does remind me of the Viet Nam conflict..............you could not tell the enemy from the villagers....each listing appointment is a mine field and very few of the consumers in arrears are wearing black pajamas.

Lenn, I'm a reluctant "short sale expert". In my market I have no choice but to work this side of the market. I'm actually finding that I enjoy it!!! But you are absolutely correct that we can't help them all. I just turned down a listing last week because the guy had 2 mortgages and a tenant living in the house who didn't know the owner hadn;t made apayment in 6 months!!! I said no. It turned up listed with a new agent.

Not a huge fan of reblogging but something is making me want to reblog this. Your "FACT" points are SPOT ON!

Thanks for writing this Lenn!

Lenn - some really sound advice here. I have found a number of folks on the liust siude that seemed to have little clue, but some others who really had a good handle on these types of transactions. I feel pretty comfortable on the buy side but definitely not the list side and would refer one on to someone with more experience than me.

Jeff

Michael. So do I. I especially see this in commercial listings. Good Grief! Our MLS is not even the primary search system for commercial.

Neal. Your comment to Michael made me chuckle. Expertise in Loss Mitigation is an oxymoron.

John. I realize that I've only touched the tip of the icebery. However, I submit that it is not a "black hole" for you because you understand the Short Sale process. Which, of course, is why I send folks to you.

Bryant. You have just repeated many, many of my experiences with owners. I would expect you to handle short sale listings. In fact, I would expect nothing less. I also know that you know when to say "Thanks but NO THANKS".

Thanks, Lenn! The whole short sale arena, to those of us that haven't dealt with it in a way that affords consistency, has been answered: the only way to achieve a modicum of consistency is to delve a WHOLE lot more deeply than simply accepting a listing and crossing fingers.

Lenn,

As Bryant said...I also have not much choice as most of the properties on the market here are shorts so why not try then if it won't cost me too much time and money but there are so many to handle at one time...and I try to put them in priority order.

Renee. Be my guest. We are all "feeling our way" with reBlogging. In fact, if this post doesn't get featured, I may reBlog it myself. Can I do that???

Jeff. There isn't as much risk on the buy side. However, if we don't know the process, we can't really advise a buyer properly. As more and more active listings are short sales, buyer's agents need to know how to advise their clients. I referred several buyer in Jan/Feb to an agent who did not have a handle on these transactions and lost several buyers. That agent/broker has been in the business for 25 years.

Laurie. Indeed. You can be seriously crossed up by just crossing your fingers.

I tried to feature it, first thing this AM but was getting the proxy error....

Proxy Error The proxy server received an invalid response from an upstream server.

The proxy server could not handle the request GET /action/flag/flag_post/646882. Reason: Error reading from remote server

Yep still getting it.

Missy. Mmm. I have to go test this and see if it's just me?????

You know I'm paranoid.

GOOD NEWS!!! THE ENTIRE SYSTEM IS DOWN. IT'S NOT JUST MY BLOG.

Lenn- Thanks for this post. With the proliferation of short sales, there has also been a proliferation of seminars on short sales.

To think that in 2-3 hours you can teach/learn to list and negotiate short sales, is ridiculous. I did take one CE course on foreclosure and short sales because I'm occasionally put in the position of showing a short sale listing, to my buyers. If an agent wants to enter this niche, certainly they should learn as much as possible, first. But, I do not particularly want to solicit short sale listings and I'm tired of all the promotions, for these "classes." I put most of them in the same category as "lead generator" offers and "learn to buy and sell real estate with no money down."

Lenn - as usual, a great gem and I wish I could get this post in the hands of every realtor and shaky homeowner out there. We have managed to navigate several short sales but a friend is working on one representing the Buyer and everytime she tells me about the listing agent's responses - which are really no response - I am very nervous. I think they may be wasting everyone's time.

We have taken some classes and always learn something new, but the most important thing I have found out about this type of listing is stay in touch with everyone, seller, lender, and buyer's agent. It is very time consuming and definitely not for someone looking for a quick buck. We view it as a service to our community to try to keep as many homes in the hands of owners and not vacant waiting for vandalism.

Marilyn. One thing I've learned from this Short Sale experience is that for every agent listing them, there are probably a 1,000 that haven't a clue.

Buyers agents need to know the process too. Otherwise, they lose buyers, buyers lose opportunities and the agents may be preparing offers that neither the listing or buyer's agent haven't a clue and is going to go nowhere.

I believe a lot of good opportunities to find homes for buyers is lost by agent handling short sales poorly.

Sharon. Absolutely. Some things us old timers know from experience over the years from selling short sales or foreclosures is what to submit in an offer and what not to submit. The most important thing is to prepare the buyer.

Lenn after reading your post I had to bookmark it. Just about everything you have mentioned in the blog I have heard and experienced. It's also time consuming and especially being 2yrs in the business I've coming across people who want to short sales just to get out of a home. I'm definitely looking to reference this blog for dialog and listen more carefully for these sayings and situations. Thanks for the post

Jimmy. Thanks. Did you bookmark it 3 times?? HA! I see 3 comments above.

Lenn,

This is an excellent primer! Every one considering getting involved with troubled sellers should start with this article.

"REALTORS'® Pledge of Performance and Service: Article 11 REALTORS® are knowledgeable and competent in the fields of practice in which they engage or they get assistance from a knowledgeable professional, or disclose any lack of expertise to their client."

This is in my experience the most violated/ignored Article in the entire code. Lack of knowledge and or component help I'm sure has caused more home owners to lose there homes than anything except not making the payments. Many homes and or a portion of the home owners equity are salvageable until they list with the wrong REALTOR! Don't get me wrong, there is no better help, other than a rich Uncle, than a GOOD REALTOR. The problem is that it's hard for the distressed home owner to tell REALTORS apart.

Consumers so often belive it when some one says "I'm a good one!" What they need to find is one that others say "She's a good one" "He's great!"

Lenn Harley: She's a good one.

Bill

Thanks Bill. You know the difference. Unfortunately, many consumers are beyond help. Good agents simply tell them the facts.

Lenn, thank you for the reminders. I have not had to deal with this area much where I am. Our market is still at least walking even if we are not running! I am training to be a loss mitigation specialist for the future if need be and I did have the pleasure of saving one persons home.

As with law, Realtors are wise not to overstep their knowledge, license or bounds in any way. I am the first to admit that I just don't know that much about it. This article helps. Thanks again.

Later in the rain~Deb

AUG

2008

Deb.

Good for you. Any such training will help you in the future. If nothing else, you'll know when to take a listing and when not to.

Actually, I haven't seen any training that doesn't help us become more well rounded practitioners.

SEP

2008

Lenn...I agree that Agents should not take a short sale listing unless they know how to follow the process through successfully. If they do not, they are not only wasting their own time but the time and efforts of the sellers who may not have much time left, the time and efforts of the buyer's agents, and the buyer's who have high hope's of getting a "great deal", only to be dragged through a long and frustrating process in some cases.

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