Coming Up Short Understanding the economy’s toll on the American Dream and how dedicated REALTORS® can make a difference

Coming Up Short

Understanding the economy’s toll on the American Dream and how dedicated REALTORS^® can make a difference

An insightful Q&A session with Julie Escobar and Will Weaver 

These are challenging times, to be sure. Our economic conditions, market fluctuations and, of course, the extraordinary efforts our media puts forth to fuel the negative all play a part in what has become a “perfect storm” for consumer fear and information. Perhaps none as evident as the market in Detroit, Michigan.

It’s there that I caught up with national speaker and short sale Will Weaver from the Floyd Wickman Team to discuss how that perfect storm affects our ability as a nation to realize the American Dream. Here are a few excerpts from that conversation:

 

Q: Will, you have an interesting take on what you believe to be the American Dream. Can you share that with our readers?

 

A: The American Dream means something different for everyone, really. Some would say it’s freedom or the pursuit of happiness, or the ability to work hard and get paid accordingly. Others believe home ownership defines the phrase. I believe it’s all of those things and more. In fact, historian and writer James Truslow Adams coined the phrase “The American Dream” in his 1931 book The Epic of America and shared that it is “that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement.”

 

Unfortunately, today’s shifting economy has created shortcomings and loss for many consumers who are working hard to live richer, fuller lives yet find themselves losing jobs, family and homes. What’s more unfortunate is that so many feel like they are all alone, with nowhere and no one to turn to for help.

 

Q: It’s something that affects so many people these days, Will. I know that you and a team of Floyd Wickman trainers specialize in teaching real estate professionals how to really be there for their customers with the information and resources they need to keep their heads above water. What can you share with them here?

 

A: First of all, get educated so you can educate. So many customers are in the dark as to their legal rights and the options that are available to them. They’re starving for information and an ally they can trust. I urge all real estate professionals to be both for them. A partner and I recently ran a full-page ad in four local papers inviting consumers to a free workshop called What Every Homeowner Needs to Know About Foreclosures and Short Sales. The response was tremendous, and the opportunity to really help some folks in need was priceless.

 

Q: What should agents teach their customers about those two things?

 

A: What worked for us was starting with a relatively simple format. Our goal was to give them the basics they needed to make the right decisions for their families. It’s always amazing to me to see the “light bulbs” go on for people who realize that there really is hope.

 

We covered a handful of important topics, including:

 

•         Definition of a short sale

•         The Top 10 short sale situations

•         Why a short sale is a win

•         Short sales vs. foreclosure

•         Steps to a short sale

•         Three stages of a short sale

 

Q: Well, then, I guess that begs the next question: “What is the definition of a short sale?”

 

A: Good question! The “short” in short sale actually refers to the fact that the payoff amount agreed to in the transaction is “shorter” than the mortgage balance on the property. Simply put, there is more owed on the home than it will sell for.

 

Q: And how about sharing the “Top 10” list with us?

 

A: I’m happy to! The Top 10 hardship situations are:

 

1.   health issues

2.   rate increase (3-5 year ARM expiration)

3.   predatory lending/borrowing

4.   divorce/separation

5.   overextension of credit/number of mortgages

6.   job loss or transfer

7.   two house payments

8.   distressed sellers

9.   declining market

10.  pre-foreclosures

 

Q: Short sale is a scary term for those who don’t understand what they are and how they work. Can you tell us why they can be considered a “win” for many of today’s distressed homeowners?

 

A: Short sales can be a win because they can provide a way to avoid foreclosure and, in many cases, bankruptcy. It’s important to note the differences in terms of the long-term effects on consumer credit. Let’s take a look at short sales vs. foreclosures:

 

Short Sale negotiated settlement seller’s credit bruised no attorney fees peace of mind buy again in two years liens negotiated

Foreclosure court settlement seller’s credit ruined big attorney fees no peace of mind buy again in 10 years all liens exhausted

                  

 

Q: That sure makes short sales look like a much better option for many. Do you have time to take us through the steps of a short sale?

 

A: To start, it’s important for consumers to find an advocate–agent they can really trust who will walk them through this often-emotional process. I would say that’s definitely the first step. Here they all are in a nutshell:

 

1. Talk to a REALTOR^®
2. List the property
3. Gather the needed information
4. Complete a hardship package
5. Get an offer accepted

 

Q: You mentioned three stages earlier. What are you referring to there?

 

A: There are three stages of foreclosure: pre-foreclosure, foreclosure and post-foreclosure. It is in this initial phase that we can help so many people lessen their credit damage, get out from under a tough situation and move on to the next stage of their lives. That offers great relief.

 

Q: There’s no doubt a lot of fine print that real estate professionals need to comprehend to be the best resource possible for their clients. Can we visit those in a future article, and can you tell agents how they can reach you to learn how to become the “short sale specialist” in their area?

 

A: Absolutely. I’m happy to help. There is a lot of fine print. As the old saying goes, “The devil’s in the details!” In our next article, we’ll explore:

 

• the components of a hardship package
• the benefits to a lender
• why lenders prefer to work with REALTORS^®
• the truth about loss mitigation companies
• when a short sale isn’t a good idea
• how commissions are paid

 

I welcome agent questions and comments via email at shortsales@floydwickman.com. I think it’s our job and our responsibility to help protect the American Dream whenever and however we can. I am reminded of a great quote by President Lincoln: “I am a firm believer in people. If given the truth, they can be depended on to meet any national crisis. The great point is to bring them the real facts.” That’s my passion: to bring people the facts.

 

Will Weaver has more than 12 years of real estate experience and is a three-time graduate of Floyd Wickman’s results-getting training systems. He also is a Floyd Wickman Certified Trainer and Speaker. Will brings an enormous amount of expertise to the field of short sales and truly teaches from experience rather than theory. His work with lenders and sellers in this arena brings him great pride, as he has been able to bring hope to many clients facing tough situations. Will can be reached at 800.910.5351 or shortsales@floydwickman.com. You also can discover the step-by-step methods to your own short sale success by visiting www.willshortsale.com for Products & Services

 

Julie Escobar is Director of Corporate and Convention Marketing for ProspectsPLUS! and has more than 20 years of sales and marketing experience in the real estate industry. If you’d like to find new ways to grow your business, generate effective leads and create a long-term referral base, email Julie today at julie.escobar@prospectsplus.com. You’ll also find a library of her articles at www.prospectsplus.com. While you’re there, sign up for a free monthly e-newsletter by clicking on Master Marketing Newsletter™.  

 

ShortSales Can and Do Make a Difference…

Short Sales Can and Do Make a Difference…

A Personal Look at This Industry Trend

 

By Short Sale Specialist Will Weaver Short Sale Specialist

 

On any given day, I receive three to four calls from people who are in foreclosure and find themselves in a frightening whirlwind of red tape, debt and decisions most feel too overwhelmed to absorb.  Many I meet have been met with brick walls, intimidation and apathy and are truly desperately in need of an ally.  Those are the days when you know that having a job that helps people can be extraordinarily rewarding and that providing solutions can and does make a difference.

 

I listed a property with a woman who had lost her job, her family and was just about to lose her home.  With a debt of $410,000 in a deflated market, we managed to sell the home for $305,000.  While that might not sound like a joyous ending to most people, in this situation, the lender was happy to accept the offer and not seek a deficiency and the homeowner happy to have the weight of the world off her shoulders and the capacity to move on with her life.  Across the closing table you could actually see the light come on in her eyes again, she cried and the experience once again solidified how important and incredible it is to be a resource for today’s consumers.

 

There are so many questions to be answered for agents and sellers alike across the nation.  I hear them in my workshops, see them on blogs and message boards and certainly they are reflected in media publications far and wide. The top three from my experience and my best answer for each are as follows:

 

1. How do you justify the list and sale price for a short sale?  You don’t.  It is not up to you as the REALTOR^® to justify either.  The lender just needs an offer.  It is then their job to look at everything, analyze the numbers, determine how much has been paid, interest earned, etc.  It is your job to present the offer.  It is when agents try to be all things to all people in this situation that they begin to muddy the waters.  So, it is vitally important that you are the REALTOR^® and nothing else.   
2. What advice do you have for someone who wants to file bankruptcy because of a foreclosure?  I would recommend that they talk to their tax advisor first.  The reason being that they may not have much by way of additional debt such as credit cards, etc. and sometimes filing bankruptcy can create more damage to their credit than a short sale.  Each situation is different and carries its own set of entanglements.  We are not bankruptcy attorneys or tax advisors but always caution consumers to get the best professional advice possible before making a decision of that nature. 
3. Can a real estate agent do a short sale on their own property?  I would strongly advise against it.  I would tell that agent to refer their property to another associate.  Why?  Because it avoids conflict of interest, lenders prefer to work with a third party negotiator and finally – it is just too personal.  The ability to look at these cases objectively is critical for everyone involved.

 

The decision to become a short sale specialist for some agents is a very personal one.  For others it seems like a viable business opportunity.  For me, it was a couple of reasons.  One, the market in the Detroit area was declining at a rapid rate and I needed to make an income.  I also began to see the effect that decline had on honest, hard-working people.  The economy shifted, corporations began laying people off in record numbers and good people were losing their homes.  I felt it was my duty as a real estate professional to do what was within my power to help them save their credit. 

 

From a speaking standpoint, I saw an industry trend of seminar after seminar pop up teaching agents and investors how to take advantage or essentially steal people’s homes.  There was also an influx of companies out there claiming to be “Loss Mitigation Services,” stating that they had relationships with all the banks.  As a REALTOR^®, I knew that just wasn’t true.  As a speaker, I wanted to teach agents what is true, and a step-by-step process for helping their customers in their market area out of a tough circumstance.  In my experience, lenders prefer to work with REALTORS^® rather than investors or Loss Mitigators for four reasons:

1. We are licensed by the state.
2. We adhere to a code of ethics.
3. We carry E & O (errors and omissions) insurance.
4. We have too much to lose.  As licensed professionals we are less likely to commit fraud for fear of losing our ability to practice real estate. 

 

As an organization, Floyd Wickman and our entire team have always made it our mission to bring the best possible tools to the table for real estate professionals.  We saw good agent after good agent having to leave the industry they loved for lack of business in a shifting economy.  Sharing with them ways that they could stay in real estate, earn a living and help the customers they had dedicated their careers to is something we are passionate about.

 

There is a very real connection made when you work with families in crisis like this.  I helped a gentleman who, because of an auto accident, had extensive liens on his property and no viable source for work and was facing foreclosure.  We sold his home, the lender accepted the offer, removed the liens and now that nice man is restarting his life in another area.

 

Matt Hodges from Exit Realty shared this recent experience with me. “I went to Will’s seminar about 2 months ago and it sparked interest with me.  Obviously in this market “traditional” real estate was getting harder and harder.  As a brand new agent, I knew I needed an edge in order to compete and survive. Will showed me a way to get listings that were almost guaranteed to sell if you price them right, and that is the great thing about it, you have more control to price it to sell quickly even in a down market.

 

In the two months since the seminar I have created five new listings and helped two of my existing clients go thought the process. I have closed three of these so far and predict many more on the horizon.  In fact just this week I have had three homeowners call me and asked me for help.” 

 

There are literally hundreds of stories just like these that I could share about the magic of seeing that light come on for people when they realize that they have options to survive the storms they are facing.  So, if you, like me, want to learn first hand how short sales really do make a difference, I am happy to help, and I wish you every success. 

 

 

WILL WEAVER  Will has over 12 years of real estate experience and is a three time graduate of Floyd’s results getting training systems.  He is also a Floyd Wickman Certified Trainer and Speaker.  Will brings an enormous amount of expertise in the field of Short Sales and truly teaches from experience—not theory.  His work with lenders and sellers in this arena brings him great pride as he has had the ability to bring hope to clients in tough situations.  It is an incredible joy to now bring those processes, tools and strategies to real estate professionals across the nations who look to offer that same kind of hope to their customers.  Will can be reached at www.willshortsale.com

 

Short Sales The 5 Top Ingredients for a Successful Short Sale Appointment

The 5 Top Ingredients for a Successful Short Sale Appointment

 

 

Q&A with industry leader Floyd Wickman and Short Sale Specialist Will Weaver 

 

 

 

By Julie Escobar, Floyd Wickman and Will Weaver

 

Short sales are certainly a timely topic in markets across the nation.  As a follow up to our last Q&A article on the subject, I once again had an opportunity to touch base with Floyd Wickman and Will Weaver to find out just what they believe makes for a successful short sale appointment. 

 

Q:  First off Floyd, we’ve talked about the topic of intent before, in other words, being in this business for the right reasons.  Can you share with me your thoughts on that?

 

A:  First thing that comes to my mind is it’s because it’s what we do.  When we look back at when and why we got in this business we challenged ourselves to become who we wanted to be.  We looked around and saw this business called real estate, which had a high degree of risk, but also of opportunity–so we jumped in with both feet.  Here we are now and those same two components are still in place, it’s just that the opportunities in some markets have changed.  Real estate still gives you the ability to be flexible with your time which is especially important for parents.  It’s still a commission business – so no one has ever fired or laid off a full-time, serious, hard-working, caring commissioned salesperson, so there is security.  Then, of course, there is still the opportunity to help people find the home of their dreams, sell their homes for the best price and terms and, in the case of a short sale, you now have another opportunity to assist a seller out of a tough situation.  Handling all of those opportunities with integrity and character is key.

 

Q:  Will, you and I spoke about the 5 top ingredients for a Short Sale Appointment.  Where does an agent begin?   

 

WW:  I believe that the first ingredient would be to make them FEEL SAFE.  When you consider that most homeowners who find themselves in this situation have been inundated by investors – many of which make it their business to ‘steal’ homes in this market as well as a few unscrupulous bill collectors, less than reputable loss mitigators and just a barrage of people at their door, feeling safe is definitely something they are longing for. 

 

FW:  We teach a version of one of my most timeless techniques that I refer to as POCA (or Previously Safe Island) which shows the seller in advance what you are going to accomplish with them: 

1. Let them know you understand their concerns.
2. Explain to them the process you’d like to cover.
3. Ask questions that are both personal and financial.
4. Establish that you will work together to accomplish their goals.

 

Q:  It sounds like people skills are very much a top priority when working with these distressed sellers.  What comes after the ‘Safe Island?’

 

WW:  You’re right; building trust is a critical part of the process. Knowing that you are there to help – not harm is vital.  You’ll then need to analyze their situation thoroughly.  Where are they in the process?  How far behind are they if at all?  Do they have the financial means to change their situation? 

 

Q:  You hear a lot of buzz about which is better for the consumer, the short sale or the foreclosure – so would I be right to assume that’s the next step in the appointment? 

 

WW:  Yes, and really this is the part of the appointment where you are really responsible for teaching the homeowner.  Most don’t have any idea what their rights or even options are.  They are looking to you to spell it all out, and again there is that trust that your intention is to help them make an educated decision regarding the benefits of a short sale vs. the drawbacks of a foreclosure. 

 

Q:  I believe that it is always our job to be a resource for our clients and customers, as I know you both do as well.  Being well organized and informed is key – especially in this situation, right?  There is a lot to know.  How do you tell agents to effectively cover everything a homeowner has to know to make sure their short sale is successful?   

 

FW:  We teach agents to put everything together in what we call a ‘Hardship Package’ which covers the most important components necessary for a smooth transaction.  This helps the consumer, the agent and the lender ensure that all the bases are covered.  Our Hardship Package includes:

 

1. A signed authorization letter from the seller that gives the agent permission to speak to the lender on their behalf.
2. A fully completed financial disclosure form.
3. A one-page letter explaining how the seller got into their position.  Keep it to one page and under no circumstance place blame on the lender!
4. A copy of the last two months’ pay stubs.  (Unemployment checks or self-employed tax records work as well.)
5. A copy of the last two months’ personal checking and savings account statements.  (The lender wants to make sure seller does not have a lot of assets.)
6. Signed copies of the last two years’ tax returns. 

 

Q:  That sounds extensive, but also necessary.  What is the final step Will?

 

WW:  You’ll need to go over all the forms, details and of course, timing with the seller.  Take your time and make sure you have covered all the bases and answered any questions they might have.  If you have done your job correctly and with the right intent you will have effectively:

1.      Established trust.

2.      Helped them to feel confident that you are their ally and are there to solve their problem.

3.      Created an environment where they can open up and give you the information you need to help.

 

With all of these ingredients in place, both you and the consumer can determine together if you are in a position to help them.  If the answer is to that is “yes” then sign the listing agreement.  Be sure to put the property in the MLS with this disclaimer in the remarks section:

Short Sale Subject to Lender’s Approval.  

 

In the agent remarks section include:

Short Sale and Commission Subject to Lender’s Approval. 

 

Q:  Great!  Thank you, gentlemen for your candor and insight.  Is there anything else you would like to add? 

 

FW:  You know, I’ve talked in the past about forming a ‘Positive Club.’  In other words, helping people to see the opportunities in front of them and really find those positive ways they can make a difference in their lives, their offices and their communities.  So, I believe whether you are a Short Sale Specialist, working with a buyer to find the right home, or assisting a seller in the listing and sale of their home, having the right intent, or willingness to really help consumers in a time and economy where they could truly use not just a resource but a real ally and even friend is a good step in the right direction. 

 

 

Q:  So do I, Floyd.  Our ProspectsPLUS! team and I’m sure your entire staff are happy to be charter members of your club! 

 

Short Sales are just one important segment of niche markets that can help agents who have a desire to not just succeed but really thrive in today’s industry.  Savvy associates nationwide are taking a longer, smarter look at how they do business and who they do business with.  Choosing to be laser-focused and extremely specific in their target market gives them an edge over those agents taking the shotgun approach to their marketing or attempting to be all things to all people. 

 

I thank both Floyd and Will for shedding some light on the secrets to success in Short Sales and invite you all to learn more about their training and tools as well as ours here at ProspectsPLUS!  Let us wish you every success!

 

 

 

 

 Will Weaver:  Learn more about Will’s role in bringing Floyd Wickman’s Short Sale tools to the real estate. You can contact Will at www.willshortsale.com

Julie Escobar:  As the Director of Corporate and Convention Marketing for industry leader, ProspectsPLUS! you’ll find Julie committed to consistently bringing the latest in timely tools and topics to clients and real estate professionals.  ProspectsPLUS! offers a suite of complete end-to-end products for ensuring that agents are always empowered with the right tools for the right people at the right time.  Call her directly at 866.405.3641 or visit www.prospectsplus.com today to find out more about what solutions her organization can offer in today’s changing market. 

 

 

Short Sales. Are You Short Sale Savvy?

By Julie Escobar, Floyd Wickman and Will Weaver

RISMEDIA, Nov. 20, 2007-In this time of constant economic change, understanding how to service your clients and your market area to the best of your ability with expansive knowledge, real solutions and true compassion for homeowners facing overwhelming decisions can make you the ‘go-to’ agent in your marketplace – and more importantly – give you the quiet peace of mind of knowing that you have helped customers help themselves. I had the opportunity to expound on this topic with both Floyd Wickman and his protégé, Will Weaver.

Q: First off Floyd, what made you decide to get into the business of Short Sale Seminars?

FW: Well, I’ve been hearing about Short Sales for several years and never really learned much about them until now. When I saw a real need in the industry, I put together a team of gentlemen: Sham Reddy, Bob Daniels and Will Weaver who collectively have experienced more than 600 Short Sales in the last five years. In my opinion, that makes them industry experts on the do’s and don’ts of Short Sales. With them, I fine-tuned a seminar to teach some fundamental principals and skill sets to the real estate industry. Unlike some Short Sale seminars you’ll find out there in today’s market, ours is designed to be both Seller and Lender-friendly. What I mean by that is that it is designed to help sellers possibly save their credit and perhaps even stay in their homes and helps the lender settle for a fair sum. Most of the other seminars on this topic that we have experienced are basically designed to show investors how to “steal” houses and that’s not what we are about. We’ve always been in the business of helping people.

Q: All right guys, I guess we need to start at the beginning, what exactly IS a Short Sale?

WW: The best answer I can give you Julie is that by definition, the “short” in the title of Short Sale refers to the fact that the payoff amount agreed to in the transaction is indeed, shorter than the mortgage balances on the property. In other words, there is more owed on the home than what it will sell for.

Q: Why should a seller do a Short Sale?

WW: Well the reason a distressed seller would consider a short sale is that they are really faced with a big decision and only a few real options:

- They could let the lender foreclose, ruining their credit.
- They can use an agent to help them negotiate a Short Sale, which would be a charge off on their credit — so a “bruise” if you will– rather than a foreclosure, which gives them the option to buy again within two years.
- They can choose a Deed in Lieu of Foreclosure, which means they sign the house back to the bank. This is only an option however, if the bank wants the house back. In a declining market, lenders are more apt to suggest sellers find an agent and consider a short sale.
- They can reinstate their mortgage by coming up with all of the past due monies, interests, penalties and fines. Obviously, that is not an option for most consumers in this position.
- They can try what is called a Forbearance Agreement. In other words, they then take what is owed and move it to the back of the loan and start all over. This would depend largely on their credit, their payment history, how long the lender has carried the loan and if they feel comfortable enough with that particular homeowner to take the risk.

Clearly, if a homeowner is truly in tough financial turmoil, a Short Sale can be a viable option to get themselves out from under a bad situation and back to rebuilding their lives and credit.

Q: Why is it a win for a seller to choose a Short Sale?

WW: Well, it’s a win for them because it is a “negotiated settlement” with the lender versus a “court settlement” with the lender. So, again, it is a “bruising” of their credit as opposed to a “ruining.” There are also no attorney fees in a short sale situation to the seller, versus big attorney fees normally in a foreclosure situation. Then, of course there is the peace of mind that comes from knowing that their situation is being handled by a professional who has their best interests at heart. The family can stay together, find a place to rent easier and begin to rebuild. Often consumers with a foreclosure on record have a tough time finding a home to rent which can lead to split families, strain on relatives and friends and just too few options.

Q: What makes a Short Sale attractive to a lender or what makes it a win for them as well?

WW: Quite frankly, because they can get the same or more net as they would in a Sherriff’s Sale, Auction or Clerk Sale, but in much less time. The key words here are more and less time. Short sales reduce the non performing asset inventory carried by the banks. According to CNN Money, Reuter’s, CNBC and the Washington Post on August 17, 2007, Countrywide Home Loans used $11.5 million of their line of credit because of their non performing asset inventory. That, in turn, caused their stock to plummet in just one day. So, as you can see, lenders need this option as well to stay solvent.

Q: Why should Real Estate Professionals work with Short Sales?

WW: First and foremost, agents should put working with Short Sales in their repertoire because it allows them to really help people out of an emotionally stressed situation. They are providing a much-needed service while at the same time helping their own economy and the economy at large. The more properties sell, the more people work–it’s that simple. Revenue and business is generated. The real estate agent works, the mortgage lender, the title rep, the processing agent, the administrators, home improvement and inspection professionals, etc.

Secondly, it is a good way to pick up a few extra salable listings each year, build an investor pipeline and avoid R.E.O. babysitting hassles. Truly, though-there is nothing quite like helping a client who feels overwhelmed and distraught find their way out of a bad position. After all – isn’t helping people what we are all here to do?

Q: There is much talk in the industry about how to handle Short Sales from a tax perspective in regards to working with the IRS and the Form 1099C. Can you shed some light on that?

WW: Sure. Those questions always come up in our many workshops across the country. The truth is that there may be a lender who writes off a loss and may send a 1099C to the seller for forgiveness of the debt. However, the key here is that according to the IRS, if you are insolvent, meaning you have no assets, then a 1099C is going to be a wash. How do I know? I currently have a property listed with a gentleman who works for the IRS. His suggestion is to do your homework. Take the time to research www.IRS.gov and pull the documentation that resides there which supports this position. Search key words: short sale, 1099C and insolvency.

Also, know that the IRS recently put a Bill in the house that states anyone going through a Short Sale will not be penalized. The Bill has passed the house and now awaits Senate and Presidential approval. We teach all of our Short Sale Seminar students to always recommend that their clients consult with a tax advisor with the IRS.

Q: This question is for both of you. Why do you believe Short Sales are so important in today’s market?

WW: Our current economy and the real estate market is going through a tough time right now and this is one of the only ways most distressed homeowners can rebuild their lives and move beyond their mortgage troubles without the devastation of foreclosure.

FW: The bottom line is it is our job as professional trainers to provide our customers, namely brokers and agents, solutions that help them solve the problems that face them in a way that is client-friendly. Sometimes that requires us to step outside the box and find new ways to help them reinvent what they do for a living so that they can best assist the people that look to them for answers.

For more information www.willshortsale.com