I just fired myself as a Listing Agent for a short sale & I feel wonderful!

Perhaps we've been spoiled by listing vacant REO properties with complete autonomy, but last week a referral came for a Short Sale opportunity and I visited the property on Saturday. Since the property was occupied by Tenants, we made an appointment with the owner to meet us there. After meeting with the tenants, I discovered that there is a lot of un-finished and sticky business between the tenants and the owner where the owner owed them money!

Compounding the problem was that the owner was presenting the tenants as possible BUYERs of this short sale. However, he wanted us to be less than candid when it came to ALL the implication of the Short Sale and the potential for Foreclosure. It become as clear as Montana sky that the owner wanted to avoid paying the bank while collecting rent from un-suspecting tenants for as long as he could.

I started to get that un-easy feeling that one gets after talking to used-car sales reps!! I needed to take a long hot shower and see if we wanted to ANY part of such a client! Luckily, the answer was a resounding NO!

I emailed him Sunday morning and thanked him for the opportunity and reminded him that any "MATERIAL" information has to be disclosed to buyer regardless of their current interest in the property and we can NOT risk our license and reputation to be part of a deceptive campaign to milk his tenants for rent. Most importantly, California now has tenant laws to protect them during foreclosure and we wanted no part of anything illegal and fraudulent.

After I fired myself as his Listing Agent, I felt fantastic!! I felt like a huge weight had been lifted off my shoulders! Granted times are tough and I could have assigned the day to day interaction to another agent in the office; something didn't feel right. So, I fired myself.

Have you fired yourself lately!? Please share what caused your early exit?

Water Boarding or Dealing with HOA managers?! Which would you prefer?!

We are starting to enjoying the Water Boarding treatment we get from our HOA managers who despite cashing our check for documents, refuse to even acknowledge that they have received our order!!

Some of them don't accept online payments or credit cards which creates a lot of delays. I guess setting up an account with PayPal would be too inconvenient. In one case, this HOA manager was claiming she had NEVER received our document request, despite the fact that I had emailed it to her! I forwarded her the original email the 2nd time and she was still denying it. Then came the cashed check and she was STILL denying that she NEVER received our order for documents. Needless to say, we had to print/scan a copy of the canceled check and email her a copy before she agreed to process it!

The challenges is that we anticipate a lot of REOs from this development, so there is no option to go ballistic here. And if we escalate to her management, the next condo listing will be jeopardized since she will find a way to get even.

No offense to our guest at GitMo, but if this is NOT Water Boarding, what is? I know some friends of the former White House were not classifying Water Boarding as Tourture, but this clearly goes well beyond the realm of professional conduct.

However, I am happy to report that after being Water Boarded for 3 times last months, my team is no longer calling it Water Boarding, they affectionately refer to it a "Freedom Tickling" by the HOA!! This experience had made us much more appreciative of SFR listings and thought me a lesson not to EVER invest in a Condo!

What do you guys experience? Any one Water Boarding you these days!?

Wow! Buying REOs is no Day in the Park, is it?!

I recently learned a valuable lesson when dealing with a buyer on one our own REO listings. I learned the hard way that unless you can win the trust of your buyer, the transaction will not close. Here's some details:

One of my agents brought an offer for one of our office REO listings. We managed to get this offer countered; but because of multiple offers on the property, the Asset Manager wanted this buyer to agree to cover ANY difference between the Purchase Price and the appraised value since they suspected the property would not appraise as high as some of the offers.

When we fully explained the implication of this condition to our buyer, he decided to reduce his offer price by $25,000 against our recommendation. His new offer price would be very near an existing cash offer that was submitted to the Asset Manager. The agent called me for help and I spent more than hour over the phone discussing how critical it is for us to avoid a 2nd visit by the Asset Manager to this purchase transaction and that he will likely lose the property to the cash buyer if he reduced his offer price.

Well, he didn't believe us. He was not buying our explanations either. So, like any good negotiator would do, I asked him to send me an email with the exact items he was expecting his buyer agent to perform. After receving the email, the agent asked me to send a note to the Asset Manager.

This reduction caused the Asset Manager to counter the cash offer which and we lost the opportunity to earn a sell side commission! To add insult to injury this buyer was claiming that we mis-understood his request that he really didn't want to offer $25,000 LESS that he just wanted to TRY it!! Good thing we had his email to clearly show him that we didn't come up with the $25k reduction out of thin air and it was his specific instructions that caused him to lose the house.

Lesson learned was that we need to spend much more time with our buyers to earn their trust. We need to spend more time explaining to them how our Asset Managers are working these purchases. These buyers have been disappointed with the previous attempts at purchasing REO properties and they distrust any new information they receive! These buyers are in a difficult position to judge fact from fiction and they tend to mis-judge their negotiation position even when they are given 1st hand intelligence of the competitive landscape.

We will be more prepared next time.

Is the recession over, or is there something else at play here!?

Just in case you were wondering how hot the real estate market is in San Jose, we just received a Cash offer for $320,000 on a Bank-Owned (REO) property we just listed 3 hours ago for $275,500!! I know Goldman Sachs made tons of money, but is the recession over!? Why would someone write a cash offer for a property in Alum Rock area of San Jose and offer more than what the bank is asking!? The only conclusion I can draw is that it's PRICE!!

There has been plenty of theoretical justification for buyer's use of "psychological Reference Point" in Merchandising Research. And it points to this Reference Price as a internal standard against an "Observed Price" in marketing to consumers. Bottom line is that Retailers use the SALEs gimmicks to move out inventory where the consumers spend a lot more money without regard to "Quality" when the merchandise is priced well below our internal standard!

Have you ever taken home a shirt from the Clearance Rack, knowing full well that you will never wear it because it has a SALE sign on it!? Have you ever paid too much for something only because it was on Sale!? And believe me, pricing properties lower than everyone expectations really works! It generates tons of interest. And precisely because people are seeing prices well below their "reference point", we believe they over spend!

Could it be that my bankers are taking a page from Retailers and are marketing properties the same way Retailers conduct Sales!? We are seeing quite an interesting trend where our valuations are cut when we price REO properties for sale! One industry observer was stating that the FED has asked the banks to keep the property prices low, to avoid the creation of another Real Estate bubble!! We think it's having an opposite affect.

What do you think!?

Help Wanted: Pre-Qual vs Pre-Approval!? Our struggle to communicate.

I am desperately looking for suggestion to better communicate our Asset Manager’s requirements for a true Pre-Approval vs the canned Pre-Quals we are still getting! Despite the fact that we state in the Private section if the MLS listing that the Pre-Approval should include a “Loan Number, Rate, Term, ....etc”, we are still getting the same Pre-Qual letter from the loan officer in their office!

Is it the similarity in the names!? Is it because most realtors don’t know what to ask for from their loan officers!? Is it the culture gap between the lending side and the real estate side of the house!? What is it?!

The problem becomes a tactical nightmare when we are getting more than 10 offers per listing and we have to unite the original Purchase contract with the 2^nd attempt at getting the pre-approval right! We are convinced that the buyers are put in a difficult position if their agent neglects the financing side of the transaction.

Have you figured out how to communicate this requirement!? Please help if you have!

Please, please help ………………………………!

Don't sell your REO twice!! Pre-Marketing is the answer!

Our Monterey County listing in South Salinas was posted on MLS yesterday (see attached) and it's already generated 4 offers. Part of the reason is that we aggressively marketed the property even while we were waiting for the Listing Agreement and price. We hosted an Open House and posted the property on Craig's List while we were waiting for the Listing Agreement and price!

Our own website which is syndicated to Yahoo, Google, Vast, HotPod, Trulia and Homescape also generated a lot of info requests for the property.
The results are more qualified, pre-screened buyers with less probability of cancellations! We got more than 12 buyers who had called and got on the waiting list for us to notify them and their agents when the price becomes available

After all who has time to sell the same property twice!? Do you!? Share your ideas on what works has worked for you as well.

Is this TERMITE guy your realtor!? I hope not!

Our recent REO listing in San Jose generated more than 27 offers and we had to stop accepting offers in 3 days when the Asset Manager wanted to focus on top 4 offers. That was when one agent called and insisted that he will be making a strong CASH offer. His offer came from an email address that had "TERMITE" in the domain name, but I was not going to hold it against him.

Since his offer was selected by the Asset Manager and it was a cash offer over the asking price; I contacted him by email that I needed him to update his client's proof of funds which were 3 months out of date!

He called back that he can NOT get a hold of his clients! This is me pausing on the phone now, which I was hoping would negate the possibilty of me telling him, "why is that my problem now"!! Well, it turns out there was more to the TERMITE domain name than meets the eye. Guess what the Asset Manager's reaction was when I told him that our TERMITE guy who is working as a realtor part time and can't get a hold of his client!? You guessed it, his clients didn't get the offer.

Moral of the story is that make certain that the package your realtors are sending to REO Listing agents is complete and comes across as professional and leaves a strong 1st impression. Specially when there are 27 offers and we have plenty to choose from.

Would you let this part time realtor write an offer for you on your REOs? I welcome your comments!!

Bad Manners or what?! Don't let this guy write REO offers for you!

Our recent REO listing in San Jose generated more than 27 offers and we had to stop accepting offers in 3 days when the Asset Manager wanted to focus on top 4 offers. That was when one agent called and insisted that he will be making a strong offer. I informed him that there are 27 offers with ALL of their pricing above the asking. What he told me next is the inspiration for this blog.

He asked me: "will you sign and Non-Disclosure Agreement that you will not share my offer with anyone else"!? At first, I wasn't sure what he was asking, so he repeated that he will require an NDA before he sends me an offer! I replied that I have 27 offers and I don't think I will have time to publish his offer to anyone! He then said, "I will take you word on it and won't send you an NDA"! The next day his office called and wanted to see if they can deliver the offer manually since their fax and scanners were NOT working!! A day after we had stopped taking offers they emailed us a document which was a scanned copy of an MS Word document which was NOT readable!!

Bottom line is that it takes alot more that filling out Real Estate forms for an agent to successfully represent a client when they are writing offers.

Would you let this guy write an offer!? I welcome your comments!!

Time to use Public funds on Startups, Not Bail-Outs!

Dear Senator,

As a startup owner, I am writing to express our extreme distaste about the FREE handout of money to failing business such as AIG, GM and Chrysler while companies like ours are starving for capital. If we were offered such convenient access to capital, we would be hiring staff to grow our business and the economy!

We are currently working with banks with liquidation of their non-performing mortgages and foreclosed properties. We need capital to open 3 offices in Orange County, Sacramento and Modesto. However, the tight restrictions on credit are preventing us from obtaining financing. As a member of the Santa Clara County's Affordable Housing, we can use the financing to purchase these foreclosed properties for use by our non-profit housing institutions who offer much needed affordable housing solutions in Silicon Valley.

It's time to focus precious public dollars on startups and not bailouts !! There is no reason why US can NOT have a thriving Auto Industry with ONE healthy, re-organized auto maker vs 3 crippled one's on life support! We urge you to decline ANY further request for additional funding from the BIG 3 since they were the guys who fought the innovation and fuel economy standards. As tax-payers we are appalled that you are risking our kids future; so Auto Executive and Wall Street t THUGS can give themselves bounces!

The findings of the Congressional Oversight Committee chaired by Elizabeth Warren, offers damming evidence of how irresponsible Congress was in allocating our tax dollars. Without attaching ANY condition to the TARP money given to big corporate tycoon; you have put our kids and grand kids future into monumental risk. Unlike US Congress, UK government has attached very strong conditions to their bail-out funds. UK banks and companies who received bail-out funds, will be audited after a year to make certain that the funds were used to fund small companies as opposed to TRAP dollars who are being used to purchase corporate jets!

We will remember your conduct and your vote when it comes time to elections if Congress continue to waste tax payer dollars un-checked. We are looking forward to seeing much tougher stance from Congress on ANY future spending of public's money.

*********************************************

What do you think!? If you agree, please write to your representatives as well.

Tricks to get AWESOME pricing on REOs! Post Contract Price Reductions!!

We have been noticing an interesting strategy which some buyers are using is to contract our REO property at huge discounts to the list price once they have it under contract!! These buyers are ordering inspections which in 95% of cases reveals more repair requirements. These buyer then request additional dollars towards these repairs and we are seeing complete compliance from our Asset Manager since they don't want to lose the buyer!! This results in huge deals.

Here's an an example that we saw work this past month!

1) Write an offer at $310,000 for a property listed for $359,900.
2) Get it coutner and contract at $325,000.
3) Order inspection and come up with $30,000 of repairs (not that hard to do with REO properties).
4) Amend offer price to $295,000 or request credit for repairs.
5) Close.

That more than $64,900 discount to the list price and goes a long way to cover debt service. With rents on the rise, this is a good strategy to acquire rental properties using REOs.

Do you think you can use such a stragey? Let us konw what you think!?