Resources

How to Purchase REO Properties for FHA Buyers

May 13, 2011 By fsarabia

A few months ago I received a referral from an agent in New Mexico who attended one of my past WyldFyre workshops. Having lost a job there, the family relocated to Arizona to start over. After exhausting their savings on a $1,200 month apartment, the family realized that with help from relatives and an FHA loan, they could buy a Real Estate Owned (REO) home in the Phoenix area for under $80,000, producing a more manageable payment in the range of $600 a month.

Despite having many REO homes in this price range, we discovered that this process wasn’t going to be easy because these homes were selling fast. And FHA buyers are a distant third to cash and conventional buyers in the bank’s eyes. When we finally got a bank to accept our offer on one house, they changed their mind and sent the home to auction! After six weeks we were starting to get discouraged. We needed a new strategy and this is what we did:

Stop Looking at Homes Up Front This was a new paradigm for me. We were wasting our time (and gas) looking at a these REO homes in the traditional way, only to find out they were sold while we were standing in them. Instead, we relied on MLS photos and descriptions to make offers, and we toured the home only after the bank expressed interest in our offer and countered us with their contracts.

Make Multiple Offers Making an offer on one home, waiting for a bank response, then starting over wasn’t working. In the REO world it is common for the bank to collect offers and make multiple counter offers to several buyers at once. So we decided to fight fire with fire by making offers on multiple homes the minute they hit the market. To make these offers we needed a loan pre-qualification letter from the lender with the address and loan amount left blank. With this necessary letter we could fill in the home information over and over and not have to wait for a new letter each time. Our strategy was to keep at least 3 to 5 offers going at all times, including weekends.

Make Good Offers This part of our strategy really paid off! How do you compete with a cash offer? You have to out bid it. In our market, out bidding cash investors was easy; we offered at least the list price! Even though REO homes in Arizona have already been severely discounted, the typical cash investor has a garage sale mentality. The garage sale shopper sees a lamp for .25 cents and says “will you take a dime?” Cash investors are the same. Offer list price or be willing to offer a little more and you beat the low-balling investors. Now the bank is interested in your FHA buyer.

The new strategy worked. We received bank counters on 5 different homes (due to good offers) and had the luxury of picking the one we really wanted. We are currently in escrow for a lovely 3 bedroom home purchased for $75,000. In the future I’ll know what to do with an FHA buyer looking for a home in the most competitive segment of the market.

Brett Woolley, REALTOR®, MBA, ABR, has worked in the real estate and MLS information industry since the early 90’s where he was instrumental in bringing programs such as WyldFyre software to the market. A licensed and practicing REALTOR® with Boulter Properties in Phoenix, AZ, Brett enjoys sharing ‘war stories’ and helping agents and brokers solve real estate problems.

Filed Under: Brett Wooley Tagged With: How to Purchase REO Properties for FHA Buyers, real estate, Regional MLS, RMLSFL

Going the Extra Mile for 1st Time Buyers

May 6, 2011 By fsarabia

The growing significance of meeting or exceeding customer demands for quality service has special implications for Realtors® in today’s market. It can be one of the least expensive ways to stand out from the competition, especially if you utilize all the tools available to you through RMLS. In fact, past studies by the National Federation of Independent Business in Washington, D.C., reveal small businesses (that’s what you are) that put heavy emphasis on customer service are more likely to survive and succeed than competitors who emphasize advantages such as lower prices.

So how do you provide better customer service and win buyer loyalty in today’s marketplace? By using the right tools at the right time to assist your clients. Here’s a recent scenario with a first time home buyer that became a win-win for all concerned.

Like many first time home buyers, these clients were getting an FHA loan and their biggest concern was scraping together enough money for closing costs. Adding to their dilemma was the fact that, over 95% of the Active listings in their price range were either Lender Owned or Short Sales. Some banks are negotiable about paying a percent of closing costs, but some banks cannot. Even though we can try to negotiate on their behalf, buyers need to be prepared to pay the closing costs in order to get into a severely discounted property.

Using the eNeighborhoods Buyer Tour program to customize, brand, and email a really good estimate of the buyer’s costs makes it easy. Of course most agents use the default estimate: “plan on about 3% of the sales price as your closing costs.” However, that doesn’t show what all the costs are and which ones might be negotiable.

Use a recent closing statement, and go to the Buyer Cost sheet found in Step 5 in the eNeighborhoods Buyer Tour program. Costs like recording fees, appraisals, underwriting fees, and processing fees are either fixed, or a percentage of the loan or sales price. Some costs, like Title and Escrow fees, are trickier because they use rate sheets with $1,000 dollar increments.

How to set up the Title Insurance Fee First, get a rate sheet from a local title representative, then open the Edit box for Title Insurance and click on the Advanced Settings link. Choose broad ranges; in this case $50,000 to $350,000. Choose the middle rate out of each range since this is just an estimate (see illustration). To finish, go to the Publish tab, chose the Quick Buyer Tour Report, and then use the Edit button to print just the page with the Buyer Cost estimate to PDF. You can then email the estimate to your clients.

Clients appreciate the Buyer Cost estimate and the fact that your figures are more exact. They have a much better idea of what to expect, and recognize the wealth of information others don’t provide. Once again having the eNeighborhoods software, and taking the time to use it, will prove to be a secret weapon to help you go the extra mile and better serve your clients.

Brett Woolley, REALTOR®, MBA, ABR, National Trainer, eNeighborhoods has worked in the MLS information industry since the early 90’s where he was instrumental in bringing programs such as WyldFyre software to the market. He currently conducts software workshops for approximately 5,000 real estate professionals a year. A licensed and practicing REALTOR® himself, Brett enjoys sharing ‘war stories’ with groups and helping agents and brokers actually solve their real estate problems using eNeighborhoods software products.

Filed Under: Brett Wooley Tagged With: brett wolley, Going the Extra Mile for 1st Time Buyers, real estate, Regional MLS, RMLSFL

eNeighborhoods Buyer Tour Advantage

April 29, 2011 By fsarabia

Over the years I’ve had the privilege of giving workshops to thousands of real estate professionals. Recently there’s been a common theme throughout the country that buyer’s often get overwhelmed by the sheer number of homes available on the market today. The eNeighborhoods software suite can make a significant difference to help buyers get to the offer quickly.

Recently I showed properties to a couple buying their first home. They had already decided on the specific area that they wanted to live. But notwithstanding the decision on locale, they were still faced with a tremendous amount of inventory. The best they could do before we went out was to narrow the list down to six properties.

When we met at the first property I handed them a Buyer Tour report that was prepared using the eNeighborhoods Buyer Tour software. The first thing they said was “Wow, this is a lot of information.” They were expecting a simple client listing sheet for each property like they had seen from most agents. But this report included:

An Attractive Cover page
Standard Buying Process page
Map of all the Identified Homes
Loan Analysis sheet
Property Page for each listing that included space for the buyer to make notes and determine a ranking scale

I told my clients that they would find something they liked in each home they saw. The trick is to consider the things that cannot be changed, like the floor plan or location, and then to rank the home overall. Once one home knocked another out of first place, simply cross it off! That way you’ll know your top pick by the end of the tour.

I watched my clients with satisfaction as the tour progressed. The former favorite home was knocked off more than once, and I saw them drawing an X with their pen several times, and writing many notes in the note section.

By the end of the tour, the winning home was easily identified – there was no confusion, no second guessing. Instead, the buyers were absolutely confident as we wrote the offer, and thrilled that we got it done in just one day. Although it was a relatively simple report to create, the Buyer Tour with a ranking scale and note page was a true advantage in this situation. Using the Buyer Tour places you as a Real Estate Professional ahead of the pack, which is bound to generate multiple referrals from those satisfied buyers.

Live Webinars are available weekly on the eneighborhoods website at http://www.eneighborhoods.com/training.html,

Filed Under: Brett Wooley Tagged With: brett wolley, eNeighborhoods Buyer Tour Advantage, real estate, Regional MLS, RMLSFL

DocuSign.com: Useful New Technology

April 22, 2011 By fsarabia

For the first time since 1993, I attended this year’s NAR Expo in San Diego as a full time Realtor® rather than working a vendor booth. As I roamed the entire hall looking at all the booths, I was struck by how many products and services which didn’t appear to be helpful to my practice. In particular, I held a dim view of the dozen or so new booths hawking some solution or designation for short sales and foreclosures.

There was one booth however that caught my eye because it’s an emerging technology that I already use. The company is called Docusign® and I have found their service extraordinarily helpful in my practice.

In a nutshell Docusign® is a monthly subscription Web service that allows you to upload all of your contracts in PDF form, enter your clients’ names and email addresses, and then “tag” every place everyone has to sign, date, and initial. When ready, the user hits the send button and all parties receive an email with instructions of how to log in. After choosing a font style, the signing parties click to electronically sign and initial all of the documents. The system will not allow your clients to miss anything as it guides them through the process. The agent is notified when all parties have signed. From there you can print to PDF and then email crisp, clearly signed documents to the listing agent.

Currently, I am working with a family trying to purchase a Lender Owned home here in Phoenix. The home was listed for $70,900 and would lower their monthly housing expenses from $1,200 in rent to a $586 mortgage payment on a FHA loan. The problem is that in our market, homes in this price range usually sell to investors for cash and almost never to a FHA buyer. Luckily we found a home somewhat under the radar due to unusual paint colors. Our offer was submitted to the bank along with two others. That very day the bank sent its Counter Offer to all three buyers with numerous demands and only 2 days to respond. This was a serious challenge, as one buyer was here in Arizona and the co-buyers were in New Mexico!

That is where Docusign® came to the rescue. That evening I had the bank’s Counter Offer uploaded to Docusign® and sent to all buyers by email. By the next morning we had all docs signed and submitted to the listing agent. As of this writing we still don’t know if we are going to be awarded the contract. What we do know is that we were the first buyers to submit the signed Counter Offer to a bank who takes its deadlines very seriously.

Thanks to Docusign® I was able to at least put my buyers in the best position possible without having them run around trying to find a FAX machine. It was all done electronically through email. In an age where banks are demanding that agents and buyers jump through so many hoops in a short period of time, Docusign® offers a competitive advantage for Realtors® and a great help for customers. You can view their service at www.DocuSign.com.

Filed Under: Brett Wooley Tagged With: brett wolley, DocuSign.com: Useful New Technology, real estate, Regional MLS, RMLSFL

Distressed Properties in CMA’s

April 15, 2011 By fsarabia

Most people have heard a lot of rumors and stories about short sales and foreclosures, but actually know very little about them. This is particularly true of people who are current on their mortgages and worried about selling their home in a market full of distressed properties.

Instead of avoiding the topic, it is essential to discuss distressed properties as a key part of your listing presentation. The question is, how to do it and at what part of the presentation? Many agents talk about distressed properties when going over the Comps. Here’s another approach—what about discussing distressed properties in the Marketing Plan part of your CMA/Listing presentation? One of the favorite features of the eNeighborhoods CMA is the ability to make your own Marketing Task List.

Tab six of the eNeighborhoods CMA is the Marketing tab. Just click the “Add Task” button from the left side panel, and type things like “Explain Short Sales and Foreclosures.” Now it is part of both your listing presentation and your CMA report. This is your opportunity to explain to your client that all is not lost when competing with distressed properties. Some buyers may be willing to pay a little more for a clean listing, as you will emphasize in the Public Remarks, Flyers, Ads and other marketing materials. Examples may include:

· Distressed properties are usually sold “As-Is” and can be far riskier than a Clean Listing

· Short sales list prices found in the MLS may not be approved by the lender

· Short sale offers typically take longer to receive a response, exposing buyers to further market declines over time

· Lender owned transactions typically counter with a very one-sided bank contract that overrides approved Florida real estate contracts

· Clean listings, on average, are in better condition than distressed properties

The most important thing to remember about discussing distressed properties is that you may turn a potential negative into a positive for your client. In addition, you will be demonstrating your knowledge of the market when you help your clients understand the differences between clean listings and distressed properties.

eNeighborhoods offers Live Webinars every week on the eneighborhoods website at http://www.eneighborhoods.com/training.html, Be sure to take advantage of these information packed sessions!

Filed Under: Brett Wooley Tagged With: brett wolley, Distressed Properties in CMA, real estate, Regional MLS, RMLSFL

Custom MLS Reports: It’s about Solving Problems

April 8, 2011 By fsarabia

As I travel across the country conducting WyldFyre7 workshops, familiar faces of real estate agents often ask “Are you going to show us some new reports”. The answer is always “yes” because I continually design custom MLS reports in WF7 based on problems that I encounter as a real estate professional. That’s the beauty of WF7, it is much more than an MLS search engine, it is a tool for solving real estate problems using listing information.

Recently some clients closed on a property and moved into their new home which was a foreclosure. It was during this transaction that I recognized the need to do a better job of pre-screening foreclosed properties for buyers. There were so many questions to ask up front that could have saved time and hassles later. For example, is the foreclosed property owned by Fannie Mae? If so, you better add several business days to your projected closing, as Fannie Mae takes 48 hours after all of the papers are signed to review the HUD1 statement, which could cause your closing date to slip.

Based on a desire to be more thorough in pre-screening foreclosures, I looked to WF7 to solve the problem. As a result, there will be a special report available that includes only the property information needed: a photo, the listing agent contact information, and a series of questions to ask about the property. Now you can call the listing agent and just go down the list of questions from this new report, and not worry about forgetting to ask something important. The new report is called the “Foreclosure Checklist.” We are currently working on getting it added to a general upgrade so that all RMLS agents using WF7 can use it. But don’t forget, any agent with WF7 has the best tool in the industry for creating custom MLS reports. Learn to use that tool to solve your real estate problems and you’ll find it indispensable to your practice!

Filed Under: Brett Wooley Tagged With: brett wolley, Custom MLS Reports: It’s about Solving Problems, real estate, Regional MLS, RMLSFL

Buyer Consultations: More Relevant than Ever

April 1, 2011 By fsarabia

Just the other day I walked by a Starbucks and overheard two gentlemen discussing the local real estate market here in Arizona. The focus of their conversation was centered on the ‘unbelievable’ prices on short sales and foreclosed properties. Similar conversations are heard regularly these days, and chances are that many of you have heard the same.

The amazing thing is that rarely do you hear talk about the buyer who got burned in a Lender Owned transaction, or about someone who waited forever to hear back on a Short Sale offer, only to find out the property was foreclosed on anyway. It is human nature to spread fantastic success stories of people buying distressed properties. The fact is that most people are simply unaware of the risks involved in buying them. That’s why the Buyer Consultation is even more relevant than ever in today’s market.

Buyers can get pretty excited over housing prices they find on Public Websites. But do they know of the possible risks involved with many of these properties? A Buyer Consultation meeting, held before you get in the car to tour properties, is the best time to really educate your buyers and thereby win their loyalty. Here is a quick sampling of the risks of Foreclosures that most buyers are not aware of:

· Banks cannot provide adequate disclosures, if any.

· Banks often ‘counter’ with non state-approved contracts that are so one-sided they void any seller warranties, and can even include monetary penalties to the buyer if the closing date is missed for any reason

· FHA loans are very difficult to get unless the buyer is willing and able to pay for all needed repairs found during the inspection period. If the buyers cannot make the repairs, they are out the non-refundable cost of the inspection

Although I cannot give details at this time, stay tuned for some exciting new features in the eNeighborhoods Buyer Tour program. Brokers and agents will learn how to conduct a thorough Buyer Consultation with their clients. Meanwhile, take advantage of the fact that so many people are talking about distressed real estate. I just bought magnetic signs for my car that says:

Short Sales & Foreclosures…..

Do You Know the Risks?

In Today’s Market you need

Professional Buyer Representation!

Filed Under: Brett Wooley Tagged With: brett wolley, Buyer Consultations: More Relevant than Ever, real estate, Regional MLS, RMLSFL

Are Rental Customers Worth It?

March 25, 2011 By fsarabia

I recently met a young couple in my area who are planning to buy a new construction home. They were very polite when informing me that they had already talked to another agent, and even though they found the new home subdivision, they registered the other agent with the builder. I wished them well which was all that I could do at that point.

A week later the couple called me and asked for my help. They were living in corporate apartment housing, and their time was up in just ten days. They needed a house to rent for the next six months while their new home was being built. When they called the “other agent” for help, she informed them, “Sorry, I don’t do rentals.” This was astonishing. The very help they needed most was not going to come from the original agent.

I immediately went to work helping this couple. We looked at several rental homes and most importantly, I pointed them to my Web site where they could search the MLS for themselves using IDX. This teamwork of both agent and client looking for a rental online was highly efficient, a great experience for the client, and sure enough we found a very nice rental home. Because we were prepared, we got our application in first and the couple moved in with their family soon after. But this is not where the story ends.

I have no problem helping renters even though there is not very much money in it. Almost all renters eventually become buyers, and there is the referral aspect as well. It’s sound marketing. But what happened here was telling. The couple noticed that a new phase of the subdivision was opening with a new builder. They decided to look there because they could have first pick of the lots. Of course, they asked me to represent them on the new home purchase. And to make it more interesting, another family member of this couple is also looking at the same new subdivision and they registered my name there as well.

For me, working rentals is planting seeds for the future. Of course you cannot spend an inordinate amount of time with rental clients. But there is technology to help make it more efficient. This is why I believe that every real estate agent needs to have their own place on the Internet where their clients and contacts can search for homes. I’m a big believer in Web sites and IDX. I’ve done three rental transactions this year all with the help of IDX, enabling the renter to search for what they want. My preparation and strategy was still needed to secure the rental home. That creates an excited and loyal client who may not only work with you later on a home purchase, but they may also refer you to friends and family for many years to come. Are rental clients worth it? To me they most definitely are.

Filed Under: Brett Wooley Tagged With: brett wolley, real estate, Regional MLS, RMLSFL

Are Agent Web Sites Downsizing?

March 18, 2011 By fsarabia

In last month’s article I talked about using a domain name to get ranked on Google and other search engines. Part two of that discussion will focus on those who just want a simple Website for your existing clients and prospects.

For many years real estate professionals have been purchasing or subscribing to “agent Websites” that have been increasing in both complexity, pages, and the sheer number of links found on the site. Lately I have noticed a trend—a lot of agents are looking for something much simpler.

Recently I have been teaching Phoenix, AZ agents about a powerful IDX solution found within our own MLS system. To show the IDX in action I use my own basic “WordPress” Web site as an example. What has really struck me is the sheer number of agents who have been contacting me saying “I want a simple Web site like yours!”

The first thing to realize that there is only one purpose for an agent Web site—to have a place for your clients and prospects to search for homes on the Internet. That is it! Everything else is just fluff and clutter. With over 95% of all home buyers searching the Internet themselves before they talk to an agent, this should come as no surprise. So consider first things first! It all begins with subscribing to some form of IDX, and then considering a Web site later. When choosing an IDX product be sure that there is some form of lead capture built in. In many cases an IDX product is simply a link, or a Web address. So with that in mind, here are a few suggestions:

The “No Website” Website

If your IDX solution can stand alone as a link, you may just skip the Website for now. You can email the link to your clients so that they can search for homes while using your account. Or, how about putting the link in your email signature?

The Domain Name Only Website

Do you have a domain name but no Web site? You can just “point” the domain directly to your IDX link. For example “AgentJaneDoe.com” may take a client directly into an MLS search, right where they want to be anyway!

Blogging Websites: Simple & Often Free

This is a huge trend among real estate agents. Blogging sites like WordPress and Blogspot are designed for simple blogging, but they can also be setup as “static” Web pages or Web sites. For an example, you can check out my personal WordPress site at www.GilbertHomesAZ.net. These sites come with an Administrator’s tool so you control the theme, design, and content without the cost of a programmer or expensive subscription. And once again, don’t forget to put that IDX link prominently on your Home page.

Every agent should have a personal website for clients and prospects to search the Internet. But you don’t need something fancy and costly; the minimalist approach will work just fine.

Filed Under: Brett Wooley Tagged With: brett wolley, real estate, Regional MLS, RMLSFL

Stand Your Ground with Bank Bullies

March 15, 2011 By fsarabia

With all the foreclosures, short sales and REOs, on the market today, sooner or later you will have to interact with a bank as the seller to close a deal. Unlike dealing with a private homeowner, banks have a lot of ‘rules’ about how to complete a transaction with them and some can be quite intimidating.

I recently closed on a bank-owned foreclosure where my buyers purchased a lovely country home in the mountains of Prescott, AZ. Because the home was in a rural area, it required additional inspections and paperwork for the domestic well and septic system.

After securing the winning offer, we looked forward to a fast and painless closing. As with all bank owned properties, there were counter offer addendums and the bank demanded that we use their vendors in the transaction, i.e. their title company and septic inspector. We did not feel comfortable with the bank’s title company and asked to use our own instead. The bank’s answer was yes, but only if we paid their title fees. These tactics are very common with bank owned transactions. It seems as if the spirit of RESPA has died and that the banks are demanding buyers to use not only their title company but in many cases their financing office as well!

Title Company: Knowing it would cost my buyers more, I counseled them on the risks of using the bank’s national title company. Mostly we were concerned about true neutrality. My buyers agreed to pay a little more to have our own choice. As it turned out, our title company did a spectacular job with the transaction, closed 10 days early, and even filed the buyer’s new ownership papers with the county for the domestic well and septic system at no charge. None of these benefits were possible with the bank’s vendors. The buyers were pleased with the results and felt it was worth it.

Septic Inspection: In Arizona the seller pays for the septic inspection. As expected, the listing agent and the bank had a preferred vendor with a maximum price they would pay for the inspection. Instead of giving in to their suggested vendor, I located a very reputable inspection company and insisted that we use them. The listing agent called to schedule the inspection but felt the price was too high, and the agent wanted the inspection done by their preferred vendor instead.

When the listing agent called me to explain, I stood my ground and said “No, we will use our inspector and we’ll pay the difference in price if it goes over your amount.” We later learned the bank’s septic inspector was a local company with a bad reputation, known for drive-by inspections and was currently fighting litigation. Again my clients were grateful that I was “looking out for them and standing up to the bank.”

These acts may appear small, but my clients knew that I was doing many things on their behalf, and said this was the easiest real estate transaction they had ever had. For a closing gift I got them a large fruit basket and put one of those “Easy” buttons from Staples in it. I hope they’ll remember me when talking to friends about how nice it was to have an agent truly represent them in a real estate transaction, especially with a bank-owned home.

Filed Under: Brett Wooley Tagged With: real estate, Regional MLS, RMLSFL, Stand Your Ground with Bank Bullies