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Real estate agent & broker Edition
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Issue 015/March 2013
What to Know About Being #1: Craig Proctor with Eric Mitchell on the Key to a Successful Partnership Page 16
8
The $12.5 Million 'IKEA Effect' of pricing Your Own Home
14
Vacation Homes: The Tax Perspective
23
The Upper East Side's Most Expensive 5th Avenue Apartment Buildings
38
Short Sales: No Confusion or Frustration Necessary
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CONTENTS
Issue 15
March 2013
Publishers Robert Pegg robert@thenichereport.com David Pegg david@thenichereport.com MANAGING EDITOR Rick Roque Rick@thenichereport.com
16
What to Know About Being #1: The Key to a Successful Partnership by Rick Roque
8 12
The $12.5 Million 'IKEA Effect' of Pricing Your Own Home
28
Vacation Homes: The Tax Perspective Eric Wilson
21
Three tales of newbie lessons learned.
26
Delayed Financing Creates Investor Loyalty for Realtors and Lenders
30
Practical Twitter Tips for Real Estate Agents Andy Fulton
The Upper East Side's Most Expensive 5th Avenue Apartment Buildings
38
Short Sales: No Confusion or Frustration Necessary Valerie A. Ellsworth
Advertising sales Hilary Bateman hilary@thenichereport.com
Production Manager Henry Suchman henry@thenichereport.com Dawn Exner dawn@thenichereport.com
DEPARTMENTS
Cartoonist Martin Bradford
note from the Editor
Ariel Dagan
10
Market update & analysis
Are You Socially Selling Real Estate?
33
service provider classifieds
35
Advertiser DIRECTORY
Until you're selling them socially, you're not selling as many as you could.
Jessica@thenichereport.com
Production Assistant
06
David Thompson
Advertising Director Jessica Grizzle
And stop tweeting listings!
School of Hard Knocks in Real Estate Investing Corey Curwick Dutton
23
Shawna Ingram shawna@thenichereport.com
Scott Schang
Corey Curwick Dutton
14
Cathy Johnson info@thenichereport.com
ACCOUNTING MANAGER
Ariel Dagan
Private Money Lenders Have Fueled the Real Estate Recovery
Associate Editor
COLUMNISTS & Contributing Authors Ariel Dagan Corey Curwick Dutton Valerie Ellsworth Andy Fulton Scott Schang David Thompson Eric Wilson TheNicheReport.com
5
note from the Editor
Real estate agent & broker Edition
Real Estate Systems: Scalable, Repeatable and Sustainable. If you are interested in growing your business, you’ll enjoy our feature article this month. It is on Craig Proctor and Eric Mitchell. Craig is a real estate expert, having been the #1 REMAX agent in the world – for 15 years straight. He is a remarkable individual, and is well served by his business partner, Eric Mitchell, a mortgage professional who serves Craig’s real estate agents and supports his seminar series around the country. The two are a remarkable combination, and serve as a strong example of what is right about our industry and how real estate professionals can succeed in today’s market. The market is continuing to heat up, and in this month’s market summary, it is clear the housing market is ‘healing’ – and growing very strongly in many markets. The most recent housing numbers are posted in various markets around the country, and we give some attention to the remaining housing inventory that still weighs on the market, albeit less and less as time goes by. Speak to Your Company or at Your Conference: Remember, if you want to learn more about what we are doing, email or call me (408.914.5895) and I’ll jump on a plane and come visit with your real estate team! Thank you and I look forward to your hearing from you!
Rick Roque Managing Editor
Official
MEMBER
6
March 2013
Published monthly by BODA Publishing, LLC PO Box 494, Bentonville, AR 72712 Phone: 866.964.2695 Fax: 703.991.2362 Email: info@thenichereport.com www.TheNicheReport.com
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The $12.5 million ‘IKEA effect’ of pricing your own home By Ariel Dagan
A
building this townhouse from ground up. During that time, she broke her foot in a construction accident and ended up in a hospital bed for four months. She has an emotional attachment to the house. If I sell it, she might kill me.
Broker: Hi. I’m Jane [fake name] from Big Shot Realty [fake company]. I’m working with a client who wants to purchase your house—would you be interested in showing it to him?
Broker: I understand. I’ve been working with my client for the past five months; he’s a very serious buyer. Your wife was kind enough to show me around the house. I’m positive my client will fall in love with it and put in an offer you cannot refuse. If you still don’t feel comfortable selling the house, just turn it down. We won’t bother you again.
true story. In late 2009, a broker rang the doorbell of a newly developed townhouse on the Upper East Side neighborhood of Manhattan. The owner opened the door and the two women had the following exchange:
Owner: Sorry. It’s not for sale. Broker: My client is a celebrity Top Chef [his name can’t be mentioned, but it rhymes with ‘Bossy’]. He’s qualified and currently lives on the corner of your block. He constantly raves about how beautiful your house is. Why don’t you show it to him? If he makes the right offer, you can agree to it. If he doesn’t, you can turn him away. Owner: Why don’t you call my husband and work it out with him? Broker (calling Husband): Hello, Owner’s Husband. I have a client who’s interested in purchasing your house, etc. Husband: You know, my wife spent eight long years 8
March 2013
Husband: Fine. The broker kept her promise. Later that week, she showed the chef the house, and he fell in love with it even more. The very next day, he put in an offer for $10.5 million. The husband said, “No way. His offer is too low to counter.” The chef came back at $11 million. The husband countered with $15 million! The broker politely explained to the husband that he was crazy. Most houses on the block were selling for between $3 and $7 million (true). But the husband kept saying his house was more special than the rest.
After a while, they came to an agreement at $12.5 million! That’s $6.5 million more than selling price of the most expensive house on the block. The day before signing the contract, the chef sent his bank appraiser to the house. The appraiser immediately stated that the house was not worth more than $10 million. The bank would finance only up to that amount, meaning the chef would have to fork over an additional $2.5 million if he wanted to buy. The chef didn’t feel comfortable with going forward, and the deal was dead. This is an example of the classic phenomenon known as the ‘IKEA effect.’ Most people who buy furniture from IKEA and assemble it themselves think it’s more valuable than it really is, because they built it. In the same way, when owners or FSBOs put a lot of time and energy into designing or building their homes, they create a deep emotional attachment to it. That leads to the feeling that it’s worth more than it is, which leads to overpricing. When confronted with a seller that is looking to overprice their home, ask them a simple question: “If I had a Mercedes Benz that was worth $50,000…and I was advertising it for $75,000...under what conditions would it sell?” There are only two right answers to this question… One, it would make sense to price high only if there were no other inventory – yet there are always other houses selling on the market. Two, if the car’s extras were so unique that the person was willing to pay such a premium for them – to which you can always make the argument that the houses in the neighborhood are priced low enough that a buyer can upgrade them to their own taste for almost the same money. I spoke with the owners of the townhouse in early 2012. They told me that, looking back, they believe they should have taken the original offer of $10.5 million. They probably won’t see that number from a realistic buyer again in a long time. Be realistic. Keep in mind that an appraisal will be conducted prior to closing; you don’t want to lose the deal because the appraisal comes in way below your asking price. To properly price an apartment, you need to convince your seller to price based on state records for which similar properties have actually sold. Ariel Dagan is a Licensed Salesperson at Keller Williams NYC. He specializes in Upper East Side Townhouses, Condos and Coops for sale. He can be reached at adagan@kwnyc.com or 212 836 8700.
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Market Conditions and Analysis
market Conditions and Analysis By rick roque
January Home Sales Are Up, but Inventory Is Still an Issue Sales of previously owned homes rose in nearly every region of the country in January according to an industry report released Thursday. Meanwhile, the supply of homes for sale continued to drop, pushing up property values for the 11th consecutive month of year-over-year gains. Total existing-home sales— completed purchases that include single-family homes, condos, townhomes, and co-ops—increased 0.4 percent in January to an annualized rate of 4.92 million, according to the National Association of Realtors. That's more than 9 percent ahead of the sales pace recorded in January 2012, and the second highest rate of sales since November 2009, when a federal homebuyer tax credit was set to expire. 10
March 2013
Experts credit heightened buyer interest and a tightening supply of homes for sale for the burgeoning seller's market materializing across the country, with the most acute conditions happening the West. Total housing inventory at the end of January 2013 fell almost 5 percent to 1.74 million—a 4.2-month supply at the current sales pace— the lowest supply of homes since December 1999 when there were 1.71 million homes on the market. Many would-be sellers continue to hold off from putting their homes on the market because they have underwater mortgages, experts say. While almost 2 million Americans were freed from negative equity in 2012, according to a recent report from real estate website Zillow, nearly 14 million still remain in trouble on their mortgages. "Negative equity is still very high, and millions of homeowners have a very long way to go to get back above water, even with current robust levels of home value appreciation in most areas," Zillow Chief Economist Stan
Humphries said in a release. "As a result, negative equity will remain a major factor in the market for the foreseeable future." Foreclosures, the glut of which was once a source of great anxiety in the housing market, have consistently made up a smaller portion of sales in recent months, further constraining a once-plentiful source of home supply for the crucial first-time homebuyer set. But even with inventory the tightest it's been in years, experts aren't expecting any relief anytime soon. "We expect a seasonal rise of inventory this spring, but it may be insufficient to avoid more frequent incidences of multiple bidding and faster-than-normal price growth," NAR Chief Economist Lawrence Yun said in a statement, adding that increased buyer traffic has effectively transformed much of the country into a seller's market. "Buyer traffic is continuing to pick up, while seller traffic is holding steady," he said. "Buyer traffic is 40 percent above a year ago, so there is plenty of demand but insufficient
Market Conditions and Analysis inventory to improve sales more strongly."
90 Percent of U.S. Cities Post Home Price Gains A dwindling supply of lowerpriced homes and foreclosures continued to fuel the upward trend in home prices, an industry report showed Monday, with property values posting the strongest year-over-year increase in seven years. Home prices rose in nearly 90 percent of the nation's largest metropolitan areas in the fourth quarter of 2012 according to the National Association of Realtors. The national median existing singlefamily home price rose 10 percent to $178,900, the strongest year-over-year price increase since the fourth quarter of 2005 when the median price jumped 13.6 percent.
Economists credited an improving job market and rock-bottom low interest rates for the home price increases as heightened demand put more pressure on a seemingly evertightening supply of homes. “Home sales are being fueled by a pent-up demand and job creation, along with still favorable affordability conditions and rents rising at faster rates," NAR Chief Economist Lawrence Yun said in a statement. "Our population has been growing faster than overall housing stock, so supply and demand dynamics are very much at play." While "favorable affordability conditions" still exist according to NAR, a shrinking supply of lowerpriced homes and foreclosures continued to account for some of the upward price pressure. Distressed homes—foreclosures and short
sales—generally sell at deep discounts and depress overall home prices. Those types of sales only accounted for 23 percent of fourth quarter sales, down from 30 percent a year ago. The best-performing metro area was Phoenix, where property values increased 34 percent from a year earlier. Close behind were Detroit and San Francisco, where prices rose 31 percent and 28 percent respectively. On the flipside, Kingston, N.Y., saw the biggest price declines, with the median selling price falling almost 8 percent. Kankakee, Ill., and Erie, Penn., followed, posting 7 percent and 6.1 percent drops respectively Any questions or feedback on this article, email Rick Roque, Managing Editor of The NicheReport Real Estate Edition, at rroque@thenichereport.com or call him at 408.914.5895.
How we see it
TheNicheReport.com
11
Private Money Lenders Have Fueled the Real Estate Recovery By Corey Curwick Dutton
W
hen banks all but stopped lending in 2008, cash was king. The FDIC’s bank task forces were shutting down banks daily, and those who were holding cash were the winners. But because so much cash was tied up during that time, private and hard money lenders had to step up to lend on distressed assets coming from the FDIC and other banks. This badly needed liquidity coming from private money loans during those years allowed those bad assets to float down the real estate food chain to smaller real estate investors. And this is how the toxic real estate market in the U.S. began its slow recovery. Since the beginning of 2010, banks were prompted to slowly start to lend again by both TARP and the no-cost loans from the Fed. Although even the most qualified borrowers are still being declined at the bank, banks started to come back on the lending radar again. But even as banks slowly began lending again, private money and hard money lenders have been claiming a larger and larger percentage of the “market share” for loans in today’s real estate marketplace. For serious real estate investors, hard money loans have enabled them to make handsome returns on their investments in recent years. The ability to negotiate a good deal on a piece of real estate is nothing without the ability to put up the cash needed to acquire it. Hard money lenders are willing to lend on vacant properties, or those 12
March 2013
in need of repairs, while banks only lend on stabilized, income-producing properties. Even real estate investors with plenty of cash on hand have been able to do more deals by using hard money loans. Rather than purchasing one property, investors have been able to purchase four or five properties simultaneously by using hard money loans. In fact, without the willingness and ability of private money lenders to make loans during 2008 and 2009, the real estate market would certainly not have recovered as quickly as it did. Private money lenders have injected billions of dollars in private money loans into the economy since 2008. I wonder where our economy as a whole would be today without these non-bank lenders? I don’t believe our economic recovery would be so far along if it weren’t for the availability of private capital. What is your opinion? Corey Curwick Dutton is a private money consultant for Private Money Utah, a real estate lender based in Salt Lake City, Utah. Corey is from Austin, Texas and is an MBA Graduate of the prestigious Thunderbird School of International Management. An authority in the private money lending industry, Corey provides educational resources for investors who use hard money loans in their real estate investing activities. Before she joined Private Money Utah, Corey was the President of an investment education company in Utah called Bray-Conn Investments LLC. In this role, Corey organized classes that taught investors how to invest in five asset classes.
速
速
Vacation Homes: The Tax Perspective By Eric Wilson
T
he Internal Revenue Code has specific tax laws surrounding vacation homes that a taxpayer rents and also enjoys for personal use. Ultimately, the number of days rented versus days of personal use will impact tax reporting and to what extent expenses relating to the vacation home are deductible. The following highlights some of the most important aspects of these tax laws, but is not intended to be a complete discussion. When a vacation home is rented for less than 15 days, it is considered a personal home, and you are not required to report the rental income; it is “tax-free.” The qualified mortgage interest and real estate taxes are included with a taxpayer's itemized deductions on the taxpayer's personal income tax return (Schedule A), subject to limitation. All other expenses related to the vacation home are considered nondeductible personal expenses. 14
March 2013
For example: Jim owns a vacation home located on a golf course which hosts an annual PGA tournament. Jim rents his vacation home every year for two weeks (14 days) during the tournament for an annual sum of $60,000. As favored by the tax laws, Jim does not have to report any of the money received as income. Assuming Jim rented the home for the past five years, that’s $300,000 in his pocket tax-free! Jim is also able to include the qualified mortgage interest and real estate taxes with his itemized deductions on his personal income tax return. When a vacation home is rented for more than 15 days, a taxpayer has to determine if it’s considered a residence by applying the personal use test from the IRS. The vacation home is considered a residence if the amount of days spent for personal use is more than the greater of: 1. 14 days, or 2. 10% of the total days rented to others For example: Sally has a vacation home she rented for six months (180 days) and vacationed at for 20 days during the year. Sally’s vacation home is considered a "residence"
because her 20 personal use days were more than the greater of 14 days or 10% of the days rented (18 days). In other words, her vacation home passed the personal use test. When a vacation home is considered a residence, all rental income is reported on Schedule E. However, expenses are to be divided between rental use and personal use based on the number of days used for each purpose. In addition, rental related expenses are limited to the extent of rental income (cannot generate a tax loss). Expenses that are limited under this rule may be carried forward to future years but remain subject to the income limitation. When a vacation home fails the personal use test (not considered a residence), the vacation home is considered a rental property, and deductions are not limited to income but are subject to passive activity rules. For example: Using the same fact pattern above, assume Sally collected $12,000 of rental income which is reported on Schedule E. She also incurred $10,000 of property expenses during the tax year, which must be split between personal use and rental expenses. This bifurcation is accomplished by taking the rental days of 180 divided by 200 total days (180/200 = 90%). Thus, $9,000 ($10,000 x 90%) of the property expenses offset the rental income and are deducted on Schedule E. The balances of the expenses are considered nondeductible personal expenses. The classification of a vacation home as a personal home, residence or rental is determined on a year-to-year basis. Therefore, it is important to maintain accurate records on a vacation home to document the number of personal days and days rented. By Eric Wilson, CPA. If you have any questions regarding the rental of a vacation home, please contact Kirk Holderbaum, CPA, of WithumSmith+Brown, PC at 908.526.6363 x3311 or email kholderbaum@withum.com.
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2013 Interview Series
What to know about being #1
The key to a successful partnership with Craig Proctor & Eric Mitchell
by rick roque
C
raig Proctor (pictured left) and Eric Mitchell (right) have forged a synergistic relationship. In fact, their relationship is a mirror reflection of the business philosophy that has made them extremely successful. It is a relationship, partnership, and friendship – however you term it – which is at the heart of every successful sale. The foundation of such a relationship is not simply reciprocity in how they serve each other, but most importantly, how they provide tremendous value to their clients. “Value” is often a bastardized word. Most real estate and housing professionals use it simply as a marketing slogan; they have little understanding of
what it actually means to deliver value to their clients. It is sad, really, when a sales professional speaks such terms as ‘customer for life’ or ‘we deliver maximum value for our clients’, and yet, when it comes down to articulating exactly what that value is, you either get a blank stare or you hear exactly what every real estate agent or housing professionals provides. If you are a consumer, listing agent or builder and are looking for a ‘partner’ to assist you in the most important buying decision of any consumer’s life, but you hear such a vague description regarding how you will be effectively served, I suggest you run; run fast and far, at least until you run into Craig Proctor and Eric Mitchell.
When I spoke to both Craig and Eric, what I found interesting about both professionals was their strong sense of humility and service. Yes, they have both been very successful, but with success often comes the pride of being #1. And quite frankly, the very recipe of hard work, service and hunger to provide value tends to be what is lost when people are at the top of their game. For some reason, sales professionals forget the lessons of hard work. The very actions that got them on top of their respective industry are no longer the very things they do. There is a sense of entitlement for many sales professionals who become #1; it is a seductive attitude that unless otherwise rejected, will become the reason for their downfall. If I had a dollar for every ‘top sales professional’ who was once #1 and then later ran into financial hardship, I think I’d be on top of that game for a very long time. Salespeople are truly a dime a dozen, but sales professionals are very difficult to find. Sales professionals are those who take seriously the profession they are in. Sales professionals are committed to their industry, so they can learn as much as possible for the sake of their clients. Knowledge is power in sales, and effectively leveraging this to strengthen and “add value” to your relationships is what takes a sales professional to the next level in their career. It was refreshing to share and discuss with these top professionals the ‘not-so-secret’ secrets to success, concepts they embody in their real estate and housing profession. Craig and Eric have always been very different, and this is the foundation for their success. The ability to support each other as affiliate partners and provide precisely what it is their client needs is at the heart of both their success and service. Eric supports Craig to ensure each borrower fully understands their respective lending options in the market today. The goal is to provide each borrower with the lowest interest rate, lowest monthly payment feasible, given today’s market conditions. Eric’s partnership in supporting Craig’s real estate clients is truly impressive. Their conversations are more like strategic planning discussions as to how to better serve clients and to gain markesthare. This housing professional is not bringing coffee and doughnuts to Craig’s office, because they have more important things to discuss – like, what is necessary to get a deal done for each consumer who needs their help.
Craig - #1 in the world, for 15 consecutive years. Craig Proctor attained early success in real estate and
was named the #1 real estate agent in the world by RE/ MAX when he was only 29 years old. After leaving college, Craig was living at home (literally on his father’s couch) and looking for direction when he decided to follow in his father's footsteps as a real estate agent. To his father’s dismay Craig pursued this path, but achieved highly remarkable results. As a highly successful RE/MAX real estate agent, Craig Proctor earned nearly $4 million a year in commissions with his innovative, outside-the-box thinking, and he remained a top agent for 15 consecutive years. Currently, Mr. Proctor applies his years of real estate experience as a coach for other agents looking to expand their businesses and earn more money by applying themselves more efficiently. Like a sports coach, Craig Proctor takes the innate talents of his clients and helps them to utilize those talents as effectively as possible through his Quantum Leap System, a formula for generating leads and listings and attracting clients.
Craig’s System & a McDonald’s Franchise: If you own either one, you will make money In describing Craig’s system and approach to the market, Eric compared Craig’s system to owning a McDonald’s franchise. If you follow the system and are disciplined in supporting sustainable and scalable processes, you will be highly successful. “To not embrace this is like buying a McDonald’s franchise and never opening your doors. With Craig’s system you will be successful – I have seen it too many times in my career. What Craig is offering other agents is exactly what is needed in our industry today,” says Eric. Craig Proctor's Quantum Leap System includes a wide range of tools and materials for agents, including online video tutorials, marketing campaigns, customized advertising templates, prospect conversion systems, and TheNicheReport.com
17
What was that?
buyer presentation guides. Clients also gain access to live weekly conference calls. Access to the Quantum Leap System also includes a monthly newsletter, advance notice of Craig Proctor's free half-day seminars, and an extensive online Quantum Leap Marketing Manual. Applying Craig Proctor's Quantum Leap System can help real estate agents to change the way they approach advertising, learn to implement new technologies to attract and retain leads, develop and refine a message about their identities as agents, and delegate their work effectively to carefully chosen assistants. In addition to his Quantum Leap System, Craig Proctor offers an intensive coaching program to teach real estate agents advanced techniques in selling and marketing real estate services. Through this program, clients can receive step-by-step instruction from Craig Proctor on how to implement the Quantum Leap System. The program includes ad clinics, weekly role-play clinics, question-and-answer sessions, and an exclusive coaching workbook. So – who is the man behind the system, and how does it make agents so wildly successful? We discuss this with Craig and Eric for this month’s interview series: So – where did you two grow up? Craig Proctor: We both grew up in Canada – I grew up in Toronto and Eric grew up in Regina. In Canada we don't have title companies close, we have real estate attorneys, but many states here in the U.S. do the same. Our banking systems are very similar, yet different at the same time. Where did you go to college, Craig? Craig Proctor: University of Toronto – didn't finish; I simply dropped 'out'. Didn't know what I was going to do – and took a part time job at a local hospital. My father told me not to do it – go into the real estate industry, that is. I was 25 years old; I did the opposite of what my Dad told me to do. I got into real estate. I did what everyone does, and that is, I simply copied what everyone was doing. 18
March 2013
Craig Proctor: I did what everyone does when they don’t have a plan – I did all four of the following: • Cold calling • Knocking on doors • Calling for sale by owners • I chased prospects I did what people do, and that was my biggest mistake. As a Realtor, you spend 80% of your week hunting down people and 20% of your week helping people. Real Estate courses do well in preparing you once you have a customer, but the one piece they don't teach you is how you get one. So what was the catalyst that grew your business? Craig Proctor: I started studying different industries – it required a more sophisticated approach. What I stumbled upon in 1990, I was sick and tired of doing what everyone else was doing. But, Direct Response Marketing was different and really still is – this changed everything for me. Instead of doing what most Realtors do when you are advertising , such as telling them as how many designations you have, sales and talking about myself, my ads gave Prospects something they wanted. When I removed myself from the ads – that was very different. Mostly it was image or institutional advertisers – Realtors spend a fortune trying to brand themselves, but they don’t do enough to serve their clients. Tell us about your success – what was the evolution? Craig Proctor: In 1991, I was the #1 REMAX agent while living at home. My father was shaking his head because he told me not to go into real estate. I did this for 15 years. I was consistently on top – making millions of dollars, living in a small town with only 50,000 residents. I had to serve each borrower and I had to earn it. My phone didn’t ring off the hook; I had to market myself differently so clients knew that if they were calling me, they were calling an expert and not just someone who had a lot of listings. My system worked: I was beating everyone in commissions. I was selling 400-500 homes per year. So, how did you get into Real Estate Coaching? Craig Proctor: I had no intention of going to into
training – but everyone would come and shadow me. I was flattered that people wanted to ask me questions, but it was a challenge. So in 1995, I did a seminar. I knew I was onto something when agents would spend the day with me or attend a seminar, and then they were going back to their markets and becoming wildly successful. It was not about me; it was about the system. I had never sold anything before; I wasn't a marketer. I didn't even have a college degree. But it simply grew – I wasn’t a success overnight. I had to work hard. For my first seminar I think I had only 25 people who attended, but then I had 40, then 100, then 200. We started creating coaching programs; hundreds of people in these programs were able to achieve a great deal of success as a result. Tell me about Eric Mitchell. Craig Proctor: Yes, let me tell you about him, we've always done great – we do hundreds of these half-day seminars around the country, and Eric is one of my best partners. He is committed to the real estate community as much as I
am, and that is why we make such great partners. It means so much more to work with people like Eric. We are communicating what each Realtor wants; the marketing is so simple. Our secret is fairly simple: Offer prospects something they want – and then make it easy for them to get it. My first lending partner, he thought all I needed was a box of doughnuts each Monday. That is what he thought, and that is why I have Eric. We simply serve our
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clients in a knowledgeable fashion. We want to make sure consumers and, of course, their Realtors, are the best, most knowledgeable in the business. Eric helps provide these options in ways I haven’t seen. Generally, Realtors are well prepared to deal with the buyer who wants to buy today. But, I could beat my competitors based on my follow-up system. So, my lenders – I had a newsletter, the costs would be split, and the information would be provided to them in the most effective way convenient for the borrower: • How to get the best financing • Time to buy • Marketing information Eric wanted to be the information provider or the expert. And so, we make good partners in this way. Even lenders do this – Realtors market themselves as salespeople. We worked with the same lender for years and years. But we don’t do this. Eric and I make a conscious effort to market ourselves as information providers, people who consumers and agents can’t live without. The lender-Realtor relationship is generally adversarial – how do you break that? Craig Proctor: Well, Realtors say – my lender is lazy; you only need one lender – and the fact is, you don't need a bunch; you need someone like Eric who values the relationship. Realtors are lazy too. Realtors need to set up a team – a lot has to go right from that point forward. The reality is, for every lazy lender there are five lazy real estate agents. So, a little tough talk is important. So, how do you secure the best lending partnerships? Craig Proctor: The conversation I had with my lender went like this: What is my business worth to you? I would like to double my business. If I do this, you will benefit from this. So, let’s determine the best way to educate our borrower prospects – let’s lead them together. What is the worst thing about Real Estate Agents? Craig Proctor: Real estate agent ads – are terrible. Every market has someone who golfs; the hat lady; someone with a dog; the condo guy, etc. They are terrible marketers, and yet they think they are best at it. I don’t blame them because there isn’t any real training system out there to help them. It is not that these don't
work; they just don't work very well. If you want to be a top producer, this isn't the way. Cold calling is not the way. I didn't have any money in a marketing budget. So, what is the system? Craig Proctor: Free over-the-phone prequalification – part of what I would do is a quick prequal; get the lender on the phone immediately to do this. First-time home-buying seminars; we do these over the phone – we post this on the phone and provide people with information they can benefit from. Should they want to learn more, they can call us for more information. We did this many times. We recorded it, and then we would play the seminars two times weekly and people would call in. Quite honestly, this part of the system was quite easy and repeatable – and borrowers loved it because there wasn’t any sales pressure; it was information that could best serve them. What is the best way for Realtors to succeed today? Craig Proctor: Honestly, hang out with those who do more than you, production-wise. Get a strong mentor – success leaves clues, and you can pick up on these. You have to be hungry, and unfortunately, too many Realtors try to figure this out on their own. You can target demographically where the sales are going to be – in Canada, we use the old Wayne Gretsky saying, You don’t want to skate where the puck is, you want to skate where the puck is going to be. The reality is, real estate is the same way, and in my system we help agents figure out where the sales are going to be. What drives you and Eric? Craig Proctor: Quite honestly, we love seeing people become successful. They will follow my system, but quite honestly the system doesn’t run itself. You need to be committed and disciplined to the business in order to serve clients. As Eric says, if you buy a McDonald’s, it will not open its own doors. The system isn’t about me, insomuch as it is about being successful at your industry – an industry that both Eric and I love to help people discover how they can be successful. Rick Roque, Managing Editor. For comments email Rick at: rroque@thenichereport.com or call 408.914.5895.
School of Hard Knocks in Real Estate Investing Three Tales of Newbie Lessons Learned by Corey Curwick Dutton
T
he best real estate investing schools just can’t prepare you for the school of hard knocks in real estate investing. The following stories come from three newbie real estate investors who all have formal educations in real estate investing. They all took courses, and some had mentors who helped them learn the game of real estate investing. But sometimes the tuition is paid on the street, outside of the school. Here are three tales of newbie lessons learned in real estate investing: • James and Miranda: After months of painstaking work and number crunching, making offers, and doing due diligence, this couple finally got a real deal under contract. A good friend referred a contractor who would do the repairs to the property. The contractor turned out to be flaky and kept making excuses. The couple was afraid to fire him, since the contractor was referred by a close friend, and they wanted to save face.
After nearly three weeks of delays and excuses, no work had been done to the house. The couple finally fired the contractor, but their holding costs for the three weeks in limbo ate up a ton of their profit in the deal. The Lesson Learned: If your contractor delays in the beginning, fire him and find another. A contractor who makes excuses is waving a red flag, so pay attention. • Tamera: This newbie was taught to do more than one “flip” at a time, so she could really make money and quit her day job. She came to us for a rehab loan on a good deal in a nice area. We were concerned that she only had one flip under her belt, and it wasn’t even completed and sold yet. She purchased the second property using our real estate loan for rehabs, and promised that the first property would be finished and sold in a matter of weeks. Two months later, she called us with an update. The first property had a few falsestart buyers, but was under contract again. The second property was about halfway through the rehab, but was on hold until she had money from the sale of the first TheNicheReport.com
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property to finish it. The Lesson Learned: Do only one deal at a time when you’re first starting out. Don’t try to quit your day job until you have a couple successful deals under your belt. • Connie and Luke: The house seemed perfect and was listed at the right price. With only $9,000 in repairs, the house would easily fetch a much higher afterrepaired price. The couple quickly fixed up the home and listed it at the target selling price. The house was identical to sold listings at the target selling price that were a quarter mile from their house. After nearly 90 days on the market at the target selling price, the couple lowered the price. But why was the house not selling at the target price? The house was located on a busy street near an intersection. Getting in and out of the driveway was a chore with the traffic. The other sold comparables were on quiet streets with no traffic. The couple did not know to look at this fact before buying the home, and of course the Realtor didn’t mention it. The Lesson Learned: How is your property different than the comparables? This couple did not know
what to look for, and in this case it cost them. The school of real estate investing is a lifelong education. You may get a Diploma from a formal school that teaches real estate investing, but you’ll have to earn your Doctorate Degree through experiences on the street. Corey Curwick Dutton is a private money consultant for Private Money Utah, a real estate lender based in Salt Lake City, Utah. Corey is from Austin, Texas and is an MBA Graduate of the prestigious Thunderbird School of International Management. An authority in the private money lending industry, Corey provides educational resources for investors who use hard money loans in their real estate investing activities. Before she joined Private Money Utah, Corey was the President of an investment education company in Utah called Bray-Conn Investments LLC. In this role, Corey organized classes that taught investors how to invest in five asset classes. In her free time, Corey enjoys skiing, snowboarding, and mountain biking in the beautiful Utah outdoors.
How we see it
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March 2013
The Upper East Side’s Most Expensive 5th Avenue Apartment Buildings by ariel dagan
F
ifth Avenue is one of the most prestigious boulevards in the world. World-famous residents ranging from actors to politicians to billionaires have resided in the very few apartments this avenue has to offer. The allure is a mix of large apartments that were built almost a century ago, blended with park views, exclusivity and decadence. Forbes recently named the 10065 neighborhood the most expensive zip code in America and we can see why. Three out of the five most expensive 5th Avenue buildings on the Upper East Side are located in this zip code. In our search for the most expensive buildings of them all, I visited streeteasy. com and manually searched for the ‘average recorded sales price’ of 76 residential buildings stretching from 110th street to 57th street. I chose ‘average recorded sales price’ instead of ‘price per square foot’ because most of the buildings in the area are coops that do not publish their apartments’ square footage. Here’s what I found…
950 5th Avenue $23,564,000/average recorded price Located between 76th and 77th Street, 950 5th Avenue has had its roster of Bachelors and Tycoons. Publisher Mort Zuckerman lives here alone, as does Robert Hurst. Lowes Hotel CEO Jonathan Tisch and former Tyco head Dennis Kozlowski were also single when they owned here. The building is 14 stories high and only has 9 units, some of which may have been combined over the years. Many of the apartments are duplexes and have pre-war characteristics that include high ceilings and multiple fireplaces.
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820 5th Avenue $36,500,000/average recorded price 820 5th Ave is supposedly one of the toughest buildings on 5th Avenue to get approved by. Rumor has it that some of the most prominent names in the city from Perlman to Valentino were turned down by the building’s board. Considering there are 13 floors with only 12 apartments, its exclusivity extends beyond the typical 5th Ave building. Apartments here take up entire floors, are five bedrooms +, feature foyers spanning over 40 feet in length and have jaw-dropping views of Central Park and the Zoo. 834 5th Avenue $26,504,000/average recorded price Apartments in 820 5th Ave might cost $10,000,000 more on average, but the roster of residents in this building probably tops any other in Manhattan. Past and current residents include Casey Johnson of the Johnson & Johnson fortune, Frank Jay Gould, Charles Schwab, Rupert Murdoch and Laurence Rockefeller. This building stands 16 stories high and has 24 apartments, many of which are duplexes. Apartments are characterized by large spaces for entertaining, ceilings heights of eleven feet or greater, and apartment sizes that range from 4,000 square feet to 12,000 square feet.
927 5th Avenue $22,040,000/average recorded price Built in 1917, this private limestone-covered building has only 12 apartments across 12 floors. Apartments are characterized by private elevator landings that lead to large foyers spanning as much as 50 feet in length. The building used to be home to a couple of red-tailed hawks who took residence at the building until the coop’s board president, Real Estate mogul Richard Cohen, evicted them. Other past and current residents include Mary Tyler Moore, Paula Zahn, and several Wall Street big shots.
810 5th avenue $25,290,000/average recorded price Located on the northeast corner of 62nd Street, this building was once the residence of Nelson A. Rockefeller, Richard M. Nixon, and Charles Bronfman. Apartments are characterized by ceilings that stand 11-foot high, enormous dining and living spaces, many of which overlook Central Park, and wood-burning fireplaces throughout the units. 810 5th Ave stands 13 stories high and contains 12 apartments, 10 of which are full-floor or multi-floor residences.
Written by Ariel Dagan, an agent with Keller Williams NYC, who specializes in Upper East Side apartments. Throughout his tenure as a real estate agent, Dagan has sold numerous high-end luxury apartments in New York City. As a native Upper East Side resident, he has become very familiar with 5th Avenue apartment buildings.
Are You Socially Selling Real Estate? Until you're selling them socially, you're not selling as many as you could
By David Thompson
W
orking in real estate? Looking for the best possible way to advertise your business and the real estate you're selling – without coming across as an insurance salesperson turning up at someone's door unannounced? Perhaps you should be looking into social media more than you have previously, because when it's used correctly, you'll find properties fly off your hands and your reputation begins to grow. The problem with a lot of real estate companies is that when venturing into social media, they don't always do as much reading up on the subject as they should. It's frustrating to watch, as often rookie mistakes will mean hardly anyone will see all their social media work, or it may be misinterpreted by audiences. Worse still, your company could end up looking like a spam-bot, endlessly posting but never responding or engaging – social media, without the "social." Reaching out to those who need real estate services
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March 2013
via social media is an aggressive tactic, but one that can actually work really well. Start by monitoring services such as Twitter for posts about people needing a home in your territory via hashtags or manual/saved searches. If someone tweets "anyone know of a good two-bedroom in NYC?" and that's your area, then get in touch. Be friendly, helpful, and quick to respond. People will notice your efforts. Yes, you can tweet from your computer in the office, but don't be restricted to that. If you're a real estate agent you'll spend much of your time out of the office, so put your new iPhone 5 to good use. Download a good Twitter client. Tweetdeck is a good one that will give you a lot of extra functionality for tweeting, such as being able to tweet from multiple accounts. It's also worth tying into your local trends. If you're based in Chicago and people are currently helping #chicagorules to trend, then it might be worth jumping
in on that hashtag with some comments of your own. However, balance your real estate talk with relevant contributions – constantly promoting your own brand makes it look like you're barging your way into the conversation. Be subtle, be human – there's no harm in talking about the food in #chicagorules before mentioning that you're the one-stop-shop for new real estate investments in the area. Also, being able to embed other media in your social posts is vital to ensuring that your feed is varied and informative. Being able to tweet, or posting Facebook photos of new real estate, infographics about rental statistics, or even videos walking through a home on the market, is a good way to give people more than just the odd bit of text. Not only does it show a proficiency in social media, but it also enables people to actually make decisions on whether they want to arrange a viewing. You also need to keep an eye on what's working for you and what isn't. Try using different phone numbers on different platforms, and see which one receives the most calls. Do the same with tracking which links and ads people use to find your site. It's not difficult to quickly
build up a comprehensive set of statistics that will enable you to better distribute your marketing efforts in the future, and learn what you're good at and what you need to improve on. Many people are using giant databases of real estate and little else, so it's not hard to start outstripping the competition by being socially active. No one's asking a letting agent to join Instagram, but it's not a bad idea, either – bringing in new customers isn't about waiting for them to come to you. It's about seeking them out, and talking to them about the things they care about, via a medium that they're familiar with. So you might be selling houses – but until you're selling them socially, you're not selling as many as you could.
David Thompson is a fresh and upcoming technology and entertainment blogger who enjoys the challenges of creativity and attention to detail. His specific areas of interest include film, real estate and the mobile industry.
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Delayed Financing Creates Investor Loyalty for Realtors and Lenders By Scott Schang
M
aking the most of what opportunities the market bares can be the differentiator between making a living and just scraping by. For those of us that invest a large part of our efforts to the purchase market, we are challenged by low inventory, multiple offers, and all cash investors making it all but impossible to compete if our client is a low down, first time buyer.
If you can’t beat ‘em, join ‘em Delayed financing offers a unique opportunity for Realtors and Lenders to attract all cash investors by offering them immediate access to their equity while waiting out flip rule timelines to turn their inventory. Delayed financing is a special exception Fannie Mae program that allows investors to cash out refinance a property that is owned less than 6 months up to 65% of the purchase price. Simply put, a qualified, all cash investor can take 65% of their equity out of an investment home one day after close of the sale! 28
March 2013
Requirements for a Delayed Financing Exception Borrowers are eligible for cash out refinance if all of the following requirements are met: • The original purchase transaction must have been an arms-length transaction. An arms-length transaction means there is no relation between the seller and the buyer of the home. • The original purchase transaction must be documented by a HUD-1, which confirms that no mortgage financing was used to obtain the subject property. The preliminary title report must confirm that there are no existing liens on the subject property. • The source of funds for the purchase transaction must be documented (bank statements, personal loan documents, or a HELOC on another property). • The new loan amount cannot be more than the actual documented amount of the borrower’s initial investment in purchasing the property. Gift funds used to purchase the property may not be reimbursed with proceeds of the new mortgage loan. • All other cash-out refinance eligibility requirement must be met.
Realtors and Lenders that partner up to offer allinclusive services to all cash investors have multiple opportunities and generating consistent income streams by allowing investors to leverage the bank’s money to turn inventory quicker. Get creative when offering this product to your all cash investors. Packaging these services will encourage investors to look forward to the next investment while closing subject property. Package and market your Investor Concierge Services to include: • Realtor’s can forward closing documents to lender upon closing of purchase. • Lenders offering multiple delayed financing transactions to investor will need only update expired documentation such as credit, income and asset documentation. All other information can be simply verified verbally leaving a streamlined transaction for your investor. • Agent can immediately begin seeking out new investment opportunities upon close of subject
property knowing that equity will be available in 30 days or less. This is a niche program for savvy marketers and capable lenders. This is only a high level overview of the potential of this program. Put the time and effort into understanding the qualifying guidelines and boundaries of delayed financing. Sit down with your Lender or Realtor partner and craft a strategy to attract these repeat transaction investors and you will create a winning proposition for all parties involved. Scott Schang is a branch manager at Broadview Mortgage’s Katella team in Orange, Calif. His approach to marketing has been to develop niche opportunities within specific demographics of online homebuyers. Scott’s expertise includes WordPress, content marketing and online lead generation and conversion. Reach him at Scotts@ BroadviewMortgage.com, or by texting or calling (714) 3368286. Visit FindMyWayHome.com for more information.
Practical Twitter Tips for Real Estate Agents And stop tweeting listings! By Andy Fulton
Tweet Often By far one of the most egregious Twitter crimes real estate agents commit is the neglect of their accounts. Tweet at least once a day, and ideally four or more times a day, to actually get anything out of your Twitter account. Most social media experts say that businesses should limit the number of times they post to their Facebook and Google Plus accounts each day. This is not the case for Twitter; there is no downside to tweeting as much as you want! It is not enough to simply tweet anything that pops into your head, however. Adhere to the tweeting guidelines listed below, or you may sabotage your own Twitter efforts. Engage Others in the Real Estate Field Think of the community of people who have accounts on Twitter as a giant party. The people who socialize with others by sharing fun and interesting stories will develop 30
March 2013
rapport amongst the partygoers. The people who stand in a corner and mutter to themselves will, if anything, drive people away. Likewise, the Twitter users who actively engage their peers by contributing to the conversation tend to excel. Those who keep to themselves will fail to attract any interest, even if they tweet interesting things.
Focus on Real Estate Unless you are a celebrity, renowned politician, or athlete, the time you put into Twitter will be most effective if you pick a topic and tweet only about that topic. As a real estate agent, this means that you must tweet about real estate and real estate related topics – and those topics only. As a real estate professional, you must treat your social media platforms – especially Twitter – with the same air of professionalism you display in person with your clients. While your children, spouse, and weekend plans may be interesting to you, tweeting about them will do nothing but dilute the rapport you have established in Twitter’s real
estate community. The one caveat to this rule is that it is acceptable to occasionally take breaks from tweeting about real estate topics in favor of things like inspirational quotes and appropriate humorous articles, videos, and pictures. Examples of good tweets by real estate agents: • “Wall Street Journal reports that US housing market up 7% in December. [link to article] #realestate” • “US News and World Report finds that Kirkland schools are best in Washington. @usnews #washington #realestate [link to article]” • “‘If you would thoroughly know anything, teach it to others.’ – Tryon Edwards” Examples of bad tweets by real estate agents: • “Going to dinner at the Olive Garden with my hubby tonight! #breadsticks” • “Picking Daniel up from baseball practice” • “OMG Snookie is ridiculous” There are some real estate topics you should avoid, however. Abstain from putting down competitors or constantly touting how good an agent you are; these tweets
will make you look unprofessional and thereby decrease others’ interest in what you have to say.
Share Interesting Content Posting a boring article on Twitter does not make it exciting. Only share things you know people in the real estate community or your physical community (i.e., the people you will most likely sell homes to) will want to read. Avoid tweeting about an article, picture, report, business opportunity, etc. if it is: • Boring. • Hard to “sell” in the allowed 140 characters. • Only interesting to a small proportion of the population. • Hard to understand in less than 10 to 15 seconds.
Do Not Tweet Listings From houses to clothing, few people turn to social media when they shop online. This is a fact that is lost on a shockingly large proportion of real estate agents who use Twitter. Your primary takeaway from this article should be the following simple rule: Stop tweeting listings! At its core, tweeting listings amounts to the tweeter trying to make a sale. Twitter users are not interested in having sales pitches clogging up their feeds, so sales-oriented tweets will not be responded to – if they are even read at all. Worse still, your followers will look down on you and your business, thus damaging your reputation amongst people who might have otherwise become your customers. Andy Fulton is a community manager for RealEstate. com. He has more than three years of experience with blogging, outreach, and managing social media accounts for a handful of companies and non-profit organizations in the Seattle area.
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Cruise4Two - Cruise Incentives Provides 5-Day/4-Night ‘Cruise Vacation for Two’ certificates to brokers/realtors for incentivizing homeowners to buy or sell thru you! $159-$189. www.Cruise4Two.com Shawn@Cruise4Two.com 866-541-8077
Entitle Direct Savings up to 35% or more on title insurance in 30 states. www.EntitleDirect.com/mortgage 877-936-8485 or 877-9ENTITLE SpecialistCenter@EntitleDirect.com
EXIT Realty Corp. International EXIT Realty is Real Estate Re-Invented! www.exitrealty.com Tami Bonnell 877-253-3948 tbonnell@exitrealty.com
Kennedy Funding Nationwide. Fast creative short-term bridge loans. $1 million-$50 million +. Commitments in 24 hrs. www.kennedyfunding.com Edwin Urrego 800-342-8500 edwin@kennedyfunding.com TheNicheReport.com
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LENDER AND RESOURCE DIRECTORY
Pillar To Post Professional Home Inspection Leading home inspection company, whose professional inspectors work with both the real estate community and the buyer or seller of a home to provide on-the-spot inspection reports. www.pillartopost.com Jay Gregg, Director of Marketing 416-620-3567 jay.gregg@pillartopost.com
PrimeSource Mortgage Publically Traded Retail Mortgage Lender. www.WeWalkYouHome.Com Jeff Smith 888-505-2274 jsmith@wewalkyouhome.com
Primary Residential Mortgage We offer strength, trust, and integrity you can rely on. www.primaryresidentialmortgage.com 800-255-2792 36
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Marsh U.S. Consumer, a service of Seabury & Smith, Inc. The nation’s leading broker and administrator of insurance programs. www.realproeando.com 866-795-9613 realproeando@marshpm.com
Right Side Marketing Marketing Materials for Real Estate and Mortgage Professionals. www.rightsidemarketing.com Jill Fleischman 800-456-4395 x10 jill@rightsidemarketing.com
Smarter Agent, LLC Smarter Agent Mobile Real Estate Application Platform. www.smarteragent.com 888-486-7319 gomobile@smarteragent.com
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The following are a few key pointers to be mindful of when working with a short sale client: 1. The most important area where agents fall short is helping clients understand the process. They need to know that just because they want to do a short sale does not mean it’s a sure thing. You should always strongly recommend your client get legal advice before starting the short sale process. Your brokerage should have an attorney that is experienced in short sales and is willing to speak to your clients. It is best to know up front if your client is a good candidate for a short sale. They need to know there is required paperwork and that they need to make processing this paperwork a priority. Do this before you or your client spend months getting an offer just to have it refused by the lender. 2. Price the property correctly! Do not price the property at such a low level that it’s not close to market value. When the lender has the property appraised, they will present a counter offer that is higher than what you have it listed for, and more than likely the buyer will not be able to get an approval letter for that much. You will have wasted a lot of time and you are back to square one. 3. If you have a property that needs repairs that will significantly affect the market value of the property, be prepared. Take pictures and have your client get estimates for the repairs. This will allow you to justify your listing price when the appraiser comes to the house. A lender is not just going to take your word or the homeowner’s word on the cost of the repairs. You need to show the damage and an estimate from a licensed professional for the repairs. 4. Always ask your client to do an MLC prior to listing the property. You can ask if there are any liens, but most homeowners might not know. This is important information to have up front. and any additional pertinent information must be given to the attorney. Working on these issues ahead of time will save you weeks or months of delays later. 5. Speak with the lender’s short sale department and ask what expenses they will cover, such as smoke certificate inspections and Title V inspection. Some lenders may be willing to cover some fees traditionally needed prior to closing. They may also be willing to pay for some small repairs if the damage could create unsafe conditions when showing the property. 6. Communicate, communicate and communicate some more with your client. Make sure they get the short
sale package completed and submitted in a timely manner. 7. Do not advise your client to sign just any offer. Any accepted offer should be a reasonable purchase price compared to the property’s actually worth. Require the buyer to complete a home inspection within a reasonable time frame once your client has accepted the offer, not after the short sale bank has approved it. This way you know if there are any issues with the home that will cause the buyer to back out of the deal. It also gives the buyer some vested interest that this deal goes through. These recommendations will allow you to help your client avoid unnecessary delays, show your expertise in short sales and build credibility. Homeowners need to know that agents are working with them and have a team mentality. With complete buy-in from the homeowner, a motivated, experienced agent can help make the short sale process less of a nightmare.
By Valerie A. Ellsworth, US REO Partners. A seasoned Real Estate professional with experience in customer service, banking elements, managing and computer applications. http://www.newneighborrealty.com.
How we see it
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Short Sales: No Confusion or Frustration Necessary By valerie A. Ellsworth
M
y first short sale was back in 2004, before the phrase short sale became a household term. Back then, it took me three weeks from beginning to end to complete a short sale on a home with two mortgages. That’s unheard of nowadays. Instead, when you hear the words “short sale,” instant frustration sets in whether you’re an agent, homeowner or a buyer looking to purchase a short sale property. You start thinking of all the horror stories you have heard, like “it took a year before we closed,” or “I gave them the paperwork and they lost it.” I am sure that everyone has heard the old joke, there’s nothing short about a short sale. Everyone will be glad to know that things are starting to change. Some of the larger institutions have realized that the average homeowners that are looking to sell and need to go the short-sale route, need help. Mortgage companies are streamlining the short sale process. They are revamping forms so homeowners are not required to answer the same question over and over again. Companies are also using technology to help shorten the process and
allow them to contact a buyer regarding their offer; thus the time required for processing has become much shorter, and closing times have been reduced. In addition, many asset management companies will train agents on their short sale process and refer consumers to them. In fact, some of these companies are proactively contacting real estate agents in order to partner with them to complete these deals more easily and in a timely manner. Despite these improvements, the short sale process is not perfect and consumers need an education on short sales before starting the process. Agents need to make sure homeowners are committed to a short sale and that they understand they will need to provide information in order to get the ball rolling, such as tax returns and pay stubs. Lenders may ask for an explanation of why a short sale is needed. This is confidential information that will not be shared with any potential buyers. This is the time to open communications with a lender. Homeowners may ask many questions in order to understand the process. - continued on page 37
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