Author: mayna

Expired listings are often overlooked as potential sources of new business, but they can present the creative agent with excellent new clients.

By connecting with sellers who have already tried unsuccessfully to sell their homes using the services of other real estate agents, you have an opportunity for new business. But these potential clients may require some wooing.

There are many reasons why these properties didn’t sell the first time. At the top of the list is communication between the seller and the former agent. For example, if the property was priced too high for the market, either the first listing agent was overly optimistic or the seller refused to accept the agent’s advice and insisted on a higher price.

In either case, here’s an opportunity for you to put your communication skills to work, explaining to your potential client what may have happened previously and describing how you would approach the sale this time around. But be prepared to support your proposal.

Many life events affect the ability of your buyers to purchase a property. The most common of these are bankruptcies, short sales and foreclosures.

While it is the mortgage professional’s job to determine who is qualified for a mortgage and who isn’t, at the same time, you, as an informed real estate agent, should be able to determine how likely your potential clients are to be able to continue with the process.

For clients who are coming out of any of these situations and seeking a mortgage program, you may want to suggest they look first at the Federal Housing Administration (FHA) home loans and then at conventional mortgages.

The FHA guidelines are much more lenient, although FHA loans are also more costly to obtain than Fannie Mae or conventional mortgages after bankruptcies, short sales and foreclosures. In this article we’ll focus on FHA loans.

Regardless of which program your buyers choose, the emphasis will be on what they are doing now to ensure that events don’t repeat themselves. A strong recent payment history and proof they are not overextended are paramount in proving to a lender that they are once again creditworthy enough to take on a home mortgage.

Bankruptcies

There are two basic types of bankruptcies: one where debt is wiped clean (Chapter 7) and another where there is a payment plan or a restructuring takes place (Chapter 13).

In general, people will need to wait two years to apply for a loan after the discharge date of a Chapter 7 bankruptcy and one year after Chapter 13, providing they have documentation from the court or some type of court appointee proving they’ve met all scheduled payments on time.

Short Sales

Despite the fact that your client sold his or her home through a short sale, the lender still took a loss on the property. While lenders generally don’t view a short sale as being as serious as a foreclosure, they do want to give potential buyers a cooling-off period before buying another home.

Currently, waiting time for FHA loans is three years. In most cases, and depending on their credit scores, borrowers will need a minimum down payment of 10%.

Foreclosures

In the hierarchy of things that will impact a person’s ability to purchase a home, a foreclosure is at the top of the list. In this case, the mortgage was basically a write-off for the previous lender, and unlike with a short sale, the lender is stuck with the property and all the expenses involved in holding on to it.

Your client can apply for an FHA loan three years after the foreclosure is complete. This is actually mild compared to Fannie Mae’s guidelines, which include a waiting period that may be as long as seven years. Fannie Mae may allow a shorter waiting time for extenuating circumstances such as an event that was beyond your client’s control and adversely affected his or her ability to pay the mortgage.

As these rules do change, ensure you are up to date by regularly consulting your mortgage partner.

In the current real estate environment, with often drastically reduced listing prices, both buyers and buyers’ agents might forget that property taxes are based on the assessed value of a property, not the sale price.

Before you start to show homes to eager buyers, ensure that you know the correct property taxes for each of your listings. And make sure your buyers realize the importance of ensuring that this information is correct. And what the implications are if it isn’t.

Explain that, if they fail to factor in the correct property tax information, they may suddenly realize that their mortgage payments are several hundred dollars higher than they were anticipating, and in fact might bring them over the amount they originally qualified for. This is especially true in the case of foreclosures and short sales.

It is as much your job as it is the job of the mortgage professional to ensure that the buyer realizes that the prequalification letter shows both a purchase price and the dollar amount for which the buyer is qualified.

Another thing to pay attention to, especially in the case of an elderly seller, is whether the home is subject to some type of tax exemption or freeze. These may be in place and, again, will skew the actual tax bill and ultimately the monthly payment.

A good source for property tax information is the county assessor’s website, as it will have current information about the property. If you have questions or concerns, discuss it with your mortgage partner.

In the current real estate market it is important that your buyer knows exactly what he or she is buying. To help this process, your buyer needs a home inspection.

Here we discuss the home inspection process and why it is important to you that your buyer gets one.

Home inspections, as opposed to appraisals, are almost never required by lenders.

The appraisal provides the underwriter with sufficient information on the property to be able to make an informed decision. This information focuses on the overall condition of the property, but will also note obvious problems such as mold, missing paint and missing stair rails.

To really get into the nuts and bolts of the property, a home inspection is needed.

Inspections cover all major systems of the home, including plumbing, electrical, heating and air conditioning. A good one will take several hours to complete.

Many buyers may hesitate to invest in a home inspection because of the price, but at the same time, a home inspection is there to protect the interests of your buyer.

A home inspection might cost $300 or more, depending on the size of the property, but this is insignificant compared to the price of major unplanned repairs that arise long after closing and that your buyer hadn’t anticipated.

Most standard real estate contracts allow a certain number of days – typically five – to complete a home inspection and raise items that need to be addressed.

Part of the job of the real estate attorney – and, of course, your buyer has one – is to help the buyer raise with the seller any problems discovered in a home inspection.

A seller has the right to refuse to fix anything, but at the same time your buyer has the right to walk away from the property if no agreement is reached with regard to these problems.

If the contract has no provisions for a home inspection, and they are unwilling to put one in, the seller may be hiding something. Encourage your buyer to walk, or rather run, from the transaction, no matter how appealing the property appears to be.

As a real estate professional, you likely have a relationship with a good home inspector; if not, there are several excellent sources for locating one.

With the financing end of real estate transactions getting more involved as time passes, your relationship with your lending professional is more important than ever. Here’s what you as a real estate professional need to know about the care and feeding of your lender partner.

Communicate, Communicate, Communicate

The highest-regarded lending professionals in the world are of little use to you if you are unable to reach them or if they don’t give you timely and accurate information on your client’s file. If you are working with a new lender for the first time, be sure to set your expectations of the level of communication you need right at the very beginning of the process.

Note that few lenders send out regular updates to clients unless something new comes up, such as a problem that the client needs to be aware of and perhaps handle.

Help Them Help You

The flip side of the lender who is too busy to help is the lender who is truly doing the job but the client is unresponsive. Most home buyers, especially first-time buyers, are unable to grasp the enormous level of detail that must go into each file to get it to the closing table. Do your lender a favor and explain that to clients.

Seemingly small things can hold up or stop the mortgage process. You need to work with the lenders to keep it moving, as they want to get to the closing table as much as you do.

With the summer buying season winding down as students return to school and cooler weather starts creeping up on us, it’s more important than ever to get (and stay) in front of new and existing clients. A home buyer seminar is a great way to do this.

Real Estate Is a Contact Sport

As in other businesses, much of the success you have in real estate depends on the amount of time you spend face-to-face with people.

Postcards and emails are excellent ways of maintaining relationships, but there is no substitute for a captive audience.

A home buyer seminar gives you a chance to tell them why they need a good real estate agent and why you’re the one they should be working with.

Assembling Your Team

Having a team of professionals you can present as part of your services will go a long way in adding to your credibility.

And having a mortgage professional, a real estate attorney, a home inspector and possibly a credit repair specialist rounds out the list of services you can provide to potential clients.

Even if your clients wind up using professionals other than the ones on your team, the message you’re sending out by having them available speaks volumes about how far you are willing to go to help your clients.

Another benefit to having a team is that all will share in the marketing expenses.

The larger the budget, the larger prospective audience you can reach out to.

Where to Have It

Using a neutral location to hold your seminar is a good idea.

Holding it at a real estate office sounds great in theory, but potential attendees may perceive this as some type of hard-sell presentation and may opt to pass on it.

Good ideas for reasonably priced or even free locations include community centers and large conference rooms in libraries.

Unless you have a large budget to spend, keep it simple at first; you may have a low turnout the first time around.

Once you get an idea of what turnouts you can expect, you can do the seminar on a larger scale.

When to Have It

Because most people work in the daytime hours and during the week, the times you can expect a large audience will be limited to nights and weekends.

Friday nights are probably out, as most people want to wind down from the week and may be less inclined to spend the evening at a home buyer seminar.

Monday through Thursday nights are best, and the period from 6:30 p.m. to 8:00 p.m. works for most. Any later than that and attendees may pass you up in favor of bedtime – theirs or the kids’.

Who Do You Invite?

For a maximum turnout, you want your invitees to live as close as possible to your seminar location.

People living in apartment complexes and rental properties are an obvious target audience.

Your MLS likely provides rental listing information, and you can target renters whose leases will expire in coming months.