Jim Rake

Have you ever been in an uncomfortable position or arrangement that you couldn't get yourself out of? If your answer is no, then lucky you. Most of us have run into these predicaments a time or two. So, what's the solution? What steps can you take to try and improve a difficult situation you might be stuck in. And, no, divorce is NOT an option.

Let's be honest, the "Short Sale" isn't going anywhere. I know what you're thinking, "Of course it isn't going anywhere(in other words, no action by the lender!)", but, what I mean to say is, they'll be here for a while. In other words, we'll be seeing plenty more of them in the the next few years. As long as the economic downturn is with us, there will be homeowners in states of distress who are unable to pay their mortgages. So, how do we turn this lemon into lemonade? (And, believe it or not, it takes more than a lot of sugar!)

Earlier this week, a few local Brokers and Instructors had the opportunity to sit down with Lem Marshall, the Special Counsel to the Virginia Association of Realtors(VAR), to discuss ways the Realtor community can improve the short sale process. By improve, we mean, enhance the chances of a successful short sale. During his presentation, Lem volunteered some helpful hints at how Realtors can maximize their chances of succeeding in dealing with Short Sales.

He began by reminding us that on average, about one in four short sales transactions, nationwide, are successful. While the real estate community doesn't control all the variables involved in the process, there are a couple of items we do influence. It is those items or factors, if handled and executed properly, that can sometimes mean the difference between success and failure. While Lem conceded that lenders are the main short sale players doing most of the transaction decision making, Realtor's decisions and actions, if done incorrectly, doom the transaction.

The starting point for Realtors in any transaction, but especially in Short Sales, is competence, according to Mr. Marshall. Understanding the process involves an appreciation for all the moving parts. To begin with, the agent must know what they are doing, and what they're dealing with. Agents will consider and interact with four main participants in this transaction; the other agent, the property, the client, and, most importantly, the third party, or lender. Let's begin by looking at the importance of understanding the first two.

THE OTHER AGENT

Since a short sale is a special type of real estate transaction, understanding what's required takes more than a license to sell real estate. Being aware of what the agent on the other side (especially the Listing agent) of the transaction knows about short sales is important in considering the likelihood of success. If they know what they're doing (proper valuation of the property, good communication with the lender's representatives, etc), then chances for success - all things being equal - are probably fairly decent. If they don't know what they're doing and are unfamiliar with what's required, then watch out! You'll be doing a lot of hand holding (with the other agent, as well as your client), but may be doomed from the beginning.

It's unfortunate, but until specialized training in short sale procedures is mandatory for all agents handling these transactions, many agents will be unprepared to properly handle what's necessary. The Certified Short Sale Professional (CSP) course provides agents a comprehensive examination of the requirements of the entire process, and what is required for success. Other than actually handling a short sale transaction, it's about as good as it gets in preparing agents for dealing with the short sale of a home.

But, as mentioned earlier, if you're dealing with an inexperienced agent, and that simply means, in this case, one that is inexperienced with short sales, that's not been trained, then the chances of success are minimal. Why? Because, it is imperative that the Realtor is aware of the specific ins and outs of this unique process. To begin with, the listing agent must be able to properly price the property to be sold.

PROPERLY PRICING THE PROPERTY

Absent a proper valuation of the short sale property, the lender has little incentive to consider any proximate offers on the property by prospective buyers. Real property is worth what someone is willing to pay, nothing more...or less. Believe it or not, lenders are aware of this.

Determining what price a home should be marketed for, whether a regular home sale, or a short sale, depends upon the use of accurate comparables. In other words, what are like or similar properties in the area selling for? Successful Short Sale Specialists advise that these properties be priced just below ($10,000-$15,000 below) the lower price range of similar homes on the market. Remember, lenders WILL be appraising these homes, or ordering a Broker Price Opinion (BPO), at the least. Lenders aren't going to give these homes away, they're trying to limit their losses while getting the property out of inventory. So, accurate pricing by the listing agent is a must. Banks, like any normal home reseller, will be asking for market value, or maybe, a little less. That doesn't mean 20-50% below market value, despite what you might hear from uninformed experts.

Improving the success rate of short sales involves an understanding of what's required, and the successful completion of the necessary steps by all the parties involved in the operation. For Realtors, not only must they know what's needed in order to succeed, but it also helps to know what the other side of the transaction knows, as well. With a good idea of what the other agent and their listing have to offer, agents will be better able to communicate effectively and accurately with their client(s) and the third party that's involved. Those are just the initial steps on the path towards completion of a winning short sale.

To Continue Reading this Article, Click Here: Cleaning Up the Short Sale

Most of us that have served time in the military have been the beneficiary of training that develops skills that serve us well for the remainder of our lives. One of those skills is punctuality.

Recently, I attended a local Real Estate Expo. Arriving early provided me the opportunity to spend a few minutes discussing the state of real estate practice with the event's featured speaker, who is recognized as one of the nation's premier coaches in real estate. During our short exchange, I mentioned the need for better training, and much more demanding pre-licensing requirements for Realtors. The speaker agreed, but indicated that real estate leadership, national and local, would never let that happen for one simple reason - MONEY. Extending the time, and the difficulty of obtaining a license means more money required to get into the profession by applicants, and a longer training time. In simple terms, that means fewer Realtors. Why? Some just won't have the dollars, and others, the time and proficiency.

But, the speaker's words spoke volumes. And, while he willingly voiced them, doubtless there are many others who share his feelings.

Fundamentally altering how real estate is practiced must begin with a change in what's valued in the business. And, as any organizational change expert will tell you, that change has got to begin at the top. Without "buy in" from those in leadership positions, changing the standards in an organization or profession is virtually impossible.

But, one may ask, what's in it for them? Why should those in leadership positions in the real estate business change anything? Do leaders have an ethical and professional responsibility to improve the way their business operates?

Have your ever wondered what the difference between leaders and managers is? The short answer is, managers manage things, and leaders lead people. Another simple distinction is that leaders point out the right things to do while managers ensure things are done correctly. In simple terms, the responsibility and charge of leadership is not simply to make sure things get done, it is to make sure you and those you are "leading" are doing the right thing. As Stephen Covey emphasizes in his book, The Speed of Trust, this develops trust among a profession's members, but just as importantly, the clients that use it as well.

For Realtors, the importance of trust, and faith in their practices, is the basis for their referral business. For many, it's the lifeblood of their practice. For real estate leadership, trust is the bedrock of the business. Without faith in the profession and professionals they're using, why should buyers and sellers of real estate rely on Realtors and their profession to do business? Simply put, they shouldn't. Instead, they'd be better off depending on an alternate source to place their faith in. So, what might leadership do to fundamentally and radically transform real estate practices and procedures to enhance the public's trust?

It must begin by realizing that the overhaul must be "transformational", not piecemeal. That means a new level of change featuring innovation and daring by leadership and practitioners alike. The characterization or term, "Transformational Leadership", was coined by Presidential historian James MacGregor Burns in 1978, to describe a model relationship between the leader and their followers. Burns focused on a more moral and virtuous example featuring new attitudes and perspectives - in other words, a new way of thinking, and new approaches to old problems. In many cases, this new approach requires a new "breed" of leadership. Because, as we all know, it is certainly hard (but not necessarily impossible) to teach an old dog new tricks.

This new level of might begin by including a tougher standard for owners and brokers, the key players in our profession. The old standard of "what they knew or should have known" is just the beginning of what this group of leaders should be held accountable for. How about greater responsibility for the practices of their agents that are a party to a transaction? For example, how many mistakes are made today by agents (how many of these errors result in a failure of the agent to act in the best interest of their client?) involved in short sale or foreclosure transactions due to the agent's ignorance because they've had little or no training in the specifics of either type of those special circumstances? More than a few. In each of those transactions, specialized training is one of the keys to success. Yet, there is no requirement for the necessary specialized training by leadership at the local, state or national level. You have to wonder why?

Secondly, better communication standards or practices would greatly enhance the way business is carried out. The time wasted by trying to track down agents and information due to unanswered and unreturned inquiries is enormous. Now, are those missed or unreturned calls the fault of the managing broker or owner? Well, not directly. But, if their firm's culture (not to mention, this profession's) is one that tolerates unprofessional practices, then the blame is certainly partly theirs. As many Realtors would admit, many firms willingly look the other way rather than confront those that are routinely guilty of these faults.

Most owners would rather not upset the money cart. One too many admonishments might scare off the money maker. But, what if managing brokers demanded the same higher standard of practice from all the agents they oversee, and none was "above the law"? How easy would it be for an agent to find another enabler to practice under?

Do better practices mean a better product? By all measures, yes. So, why aren't they required? When will leadership begin to set higher standards for those practicing real estate? Perhaps these are questions, we who practice real estate, need to be asking more and more of those who sit in the seats of real estate leadership.

As mentioned recently by Lem Marshall, the Special Counsel to the Virginia Association of Realtors(VAR), in discussing what's needed to dramatically improve the Short Sale process, he said that improved competence by agents would go along way in making a dysfunctional process much better. His audience was a group of brokers and owners. Lem was making it clear to those who hold the reins of power that they are responsible for having their agents prepared to practice properly. Demanding competency is simply good leadership. And, after all, accountability is a strong motivator. Let's hope those in the audience we listening.

While Lem's Road Show was sorely needed, in an attempt to improve a Short Sale process badly in need of repair, let's hope it is just the beginning of a larger effort to move this profession's leadership in the right direction.

To Continue Reading this Article, Click Here:First Things First in Real Estate Practice

Many real estate agents have a tendency to voice their complaints. What do they complain about? Mostly, other agents.

It isn't the lack of training, or the contract documents, or the difficulties with foreclosures or short sales (don't get me wrong, everyone is frustrated with the lack of standardization and regulation of short sales), but by a wide margin the complaints are centered on the lack of professionalism in the business. I know, the phrase "lack of professionalism" can mean any number of things. But, for our purposes, let's break it down into four areas, 1) Honesty; 2) Answering inquiries; 3) Lack of knowledge; 4) Poor customer service.

While each of these areas can examined a bit more closely, for the purposes of this short article, assuming these are true, why is this tolerated? What is it about the real estate profession or culture that encourages these? A good place to start might be with the barebones and inexpensive prerequisites required to get a license as an agent.

According to the Virginia Code, 60 hours of classroom (distance learning works as well) in the principles of real estate, and passing the state and national portions of the salesperson examination is what's required for licensing as an agent. Do those 60 hours include any training in Ethics? Are prospective agents required to memorize the national Association of Realtors Code of Ethics? What about their Standards of Practice that practicing Realtors are bound by? Do aspiring Realtors have to be familiar with the Standards they are obligated to follow as practitioners? Or, are the Standards simply picked up piecemeal along the way? Apparently that's the status quo. And, if that's the case, what's needed to change the way we do business?

Transformational Leader

The real estate profession needs leadership that will change the culture and the marginal "accepted" practices of its members. Changing the culture or accepted norms of any organization requires leadership that has vision, demands excellence, and is willing to make tough decisions. These hard choices demand more than the usual "care taker" type leaders we've come to accept. What's necessary, is a new breed of leadership that models the professional disciplines of competence, quality performance, and moral courage. The new leadership needs to be nothing short of transformational, establishing a vision for a higher standard of performance, and demanding accountability.

Real estate has witnessed a number of changes over the past few years, many of those due to technological innovation, and the new business models that benefitted from them. And, in many ways, we've enhanced the product we provide our clients. But we've only touched the surface of what's needed to improve our profession. It's now time to work on skill sets and the character of the practitioners. And, to make that a reality, we need leadership that is more concerned with the quality of our business than the quantity.

Are our leaders ready to meet that challenge?

To Continue Reading this Article, Click Here: Are We Being Led, Or Led On? (Part II)

Leadership has been examined, discussed, practiced, criticized, admired, and mischaracterized for almost as long as humans have been around.

But, for real estate professionals, where does "leadership" come into practice? Do we lead anything? Are we led by anyone? The obvious answer is, of course leadership is practiced. And, yes, there are indivduals leading us in our profession. But, if that's the case, what kinds of leadership do we see? Are they leading us in the right direction? And, who is leading who, to do what?

What Does Leadership Look Like In the Practice of Real Estate?

As real estate agents, our job is advise, counsel, and, among other things, educate our clients. At the end of the day, we are paid to influence or persuade. Is that leading? Of course it is. As most of us would agree, leadership is the practice or art of persuasion. The ability to lead is based upon the faith or thrust that those being led have in their leader. Aren't our clients trusting us when we advise them on market conditions or price? How about when we make recommendations to sellers on staging their home or preparation needed before placing it on the market?

What is their faith in our capabilities based upon? A positive history with us as a previous client? In the case of a new client, what leads them to place their trust in you as an agent? Was it your amazing marketing presentation? And, what about buyers with their new agent, what is the basis for the selection of agent? A recommendation from a friend? The agent's track record? Good interpersonal skills? Does it really matter? When all is said and done, isn't it the result that's most important? While the result is certainly very important to the buyer or seller, how the agent leads is sometimes more important than what the result is.

Agents are considered to be "independent contractors". One of the benefits that comes with that capacity is freedom. Since independent contractors aren't "employed" per se, but instead, work for themsleves, they are free to operate under their own set of rules. Within limits, of course. They are bound by the professional code or operating guidelines of their profession. For Realtors, these guidelines are the Realtor Code of Ethics and Standards of Practice. And while Realtors are well aware of what they should or shouldn't do, most of their clients aren't. In other words, in most cases, they wouldn't be aware of misconduct by their agents unless it hit them in the face. And to be honest, while Realtors take pride in what the Code stands for, sometimes their practice of it leaves something to be desired.

How are Realtors held accountable for the practice of their profession? Do owner/brokers hold their agents accountable for their lack of professionalism or malpractice? If so, how? Do these brokers consider it more important for those new agents to get out and sell houses as quickly as they can, or to be well grounded in their Code of Ethics?

More importantly, if the Code is the cornerstone or building block of the practice real estate, how familiar does an agent have to be with their Code of Ethics before they are given a license to practice? In other words, what are those in leadership positions in the real estate profession requiring of their community of agents? What example are they setting and what standard are they accepting from those they are leading?

In real estate, like other professions, there are those sitting in leadership roles that are simply placeholders. Normally they're in the position for affirmation and little else. Certainly not to seek change, and God forbid, to make waves! I'm reminded of a former classmate of mine from a recent leadership program, who, when asked why he was there, responded, "To check the block"!

There are those who believe that our leadership challenges aren't much different than those of other professions. But, instead of minimizing the difficulties we face, perhaps we need to be asking instead, how we can transform our profession to one that is second to none when it comes to the public's trust, instead of one that's on par with Used Car Salesmen, according to Donald Trump.

But, let's not get the cart before the horse. Before we take a look at some sugggested avenues of improvement, let's take a look at some anecdotal evidence on where the real estate ethical compass rests today. We'll begin that examination in our next blog entry.

To Continue Reading this Article, Click Here: Are We Being Led, or Led On?

What's the best way to market a home? While making sure your visuals (pictures, virtual tours/videos) are exhaustive and don't leave anything to the imagination, the details of the listing are just as important in attracting prospective buyers.

PROPERTY DETAILS

Properly listing a home requires much more than good visuals. While they are important, providing the specifics of the home is a valuable aspect of marketing as well. How many times has a client wondered about room sizes, while sorting through the homes they actually want to drop by to see, only to find that data is missing from the listing? Is it in the best interest of the seller to include those room sizes in the listing? Yes, it is. What about a description that highlights the home's best features?

PAINTING A PICTURE

Providing a brief "highlight reel" of what the property has to offer is what the "REMARKS" narrative section of the Multiple Listing Service (MLS) is all about. But, how well is it being used? Is the agent painting a picture of the property's best features? Given the limited amount of available characters the MLS allows to describe the property, is the narrative accurate as well as compelling in describing the home? Or, is the listing agent's property description more fiction than fact? When searching for prospective properties, since buyer's agents do their best to match what their clients are looking for in a home with what's indicated on the MLS, providing an accurate and complete depiction of the property, benefits the seller as well as the buyer.

Yard Signs & Lockboxes

Yard signs and lock boxes are tools of the trade that have long been staples of listing hardware. While yard signs "mark the spot" of the home for sale, they also provide a visual alert to those who drive or walk by that the property is on the market. Traditional signage emphasizes the name and number of the listing agency, and, oftentimes, the listing agent.

But, some have taken advantage of the sign to provide more information of what the house has to offer through pictures. This simple yet effective method of providing a glimpse inside the home may be the beginning of a more effective use of an old marketing method. Jim Duncan, an agent from Charlottsville's Nest Realty, uses signs to provide the property's address, price, a website address for more property information, as well as the listing company's contact information. Oh, and there are property pictures as well. A more effective way of making the most of the yard sign, don't you agree?

A lock box is a lockbox is a lock box, right? Well, not in Northern Virginia, right now. Our ongoing controversy over which lock box is the best one is to use is currently very heated, often with more misinformation involved in the discussion, than accuracy. The bottom line for a property listing is this; make sure, whatever lock box is being used on a property, that fact is accurately included in the listing. There are few things as frustrating for a Realtor, or a prospective buyer, than arriving at a property only to find it secured by a different lock box than that indicated on the MLS.

Getting the most out of the marketing avenues available when listing a home depends on knowing what tools are available, but more importantly, using those resources properly. Every seller wants the widest exposure for their product. As the Realtor's Code of Ethics instructs them, it is a listing agent's duty to act in the best interests of a client in fulfilling their marketing responsibilities. Is your agent using the marketing tools available to properly showcase your home? Let's hope so.

To Continue Reading this Article, Click Here: The Details of Home Marketing