Just about every home sale is stressful on the seller. A short sale, given the higher stakes and financial ramifications, often has even more stress for the seller than a typical transaction. On a few occasions, I have had a short sale client lament that they are “left out” in a way, in that everyone is going to walk away from the closing with money except them. Short sale sellers realize no proceeds at closing. 

I recall the first instance where this occurred; the seller didn’t really want to sell, and was dismayed at what her perceived as a feeding frenzy around him over his loss. The agents were making a fee, the lawyers were getting a check, and he’d lose his house. It didn’t seem right to him. The listing expired unsold 3 years ago, and it remains unsold with the 3rd listing agent. I don’t think the people could let go. 

So what it in it for someone to do a short sale when they don’t get any money? Quite a bit if you ask me. 

You avoid a foreclosure. A good point was made by the Distressed Property Institute in the CDPE course: negative trade lines lose their punch and fall off over time, but the one question on every mortgage application is “have you ever had a foreclosure?” 

You leave your home with dignity. That goes for you and the neighborhood. Anyone who sells their home moves out on their own terms. Nobody evicts them, and nobody knocks on the door informing them he represents the lender and the house is now theirs. Short sale sellers pack their things and move to their next home like anyone else. And the neighborhood avoids the blight of a bank owned REO and all the baggage that comes with it. 

You minimize the impact to your credit. A foreclosure is a nuclear event in credit. I could name nothing worse. While many people who do sell short have late payments, if they manage things correctly they can often be qualified to buy again in 24 months.

You avoid a deficiency judgment. A properly negotiated short sale typically results in the waiver of any deficiency. The slate is wiped clean. As I told my former client, if he just let the house go to foreclosure he wouldn’t get any money either. Worse, a deficiency judgment could haunt him thereafter. 

I suppose there are other reasons, but to those who view a short sale as unpalatable, I would ask what they’d propose as a better option. Sometimes you have to choose your poison. Banks aren’t modifying loans these days- as a matter of fact, many of my clients came to me after they were turned down a 2nd and 3rd attempt to modify. You may not walk away with money in a short sale these days. But in a successfully negotiated short sale, do do get something few people consider: a second chance. 

To add one more point, there are programs coming into prominence that do offer sellers a small stipend in a short sale, some as much as $7,000. I saw a letter from Chase today referencing up to a $20,000 credit for a short sale. I am sure the small print is copious for that, but HAFA is the first place we are going with our clients in short sales so they can get a credit from their lender at closing. Not every short sale broker is alike. You need a good one who knows how to get the debt discharged and the deficiency waived. 

For my colleagues in the real estate industry…”politics makes strange bedfellows”

I’ll preface my thoughts by tipping my cap to the memory of Elizabeth Taylor to make a point: when you think of the late Ms. Taylor, what number do you first think of? 

If the number is her 8 marriages, may I suggest 100,000,000. Because she raised $100 Million for AIDS research, much of it before anyone else jumped on board. Notable people and notable things are more than what they seem. I’ll keep 8 with Yogi Berra. 

There has been much written, often with angst, about the proposal by NAR to essentially charge every member another $40 annually to support what is referred to as the “Realtor Party.” I have given this some serious thought the past few days and the kernel of my conclusion is what I first wrote on Jay Thompson’s article about the matter: I believe that NAR’s hand was forced because the important work done by RPAC, the Realtor Political Action Committee, is not supported by enough members. 

I am as guilty as anyone. I never knew much about RPAC until I attended NYSAR’s mid-winter meeting in Albany last month. There, I saw firsthand the crucial- and I do not use that word lightly- advocacy that RPAC does for our members and industry. I saw a work group of our best and brightest discussing how to address proposed laws in Albany that would impose draconian restrictions on advertisements by brokerages, as if we weren’t already over regulated. 

For those of you who either say or nod in agreement that your NAR membership is good for MLS membership and little else (see my remark on the late Ms. Taylor), let me give you a few thumbnails on the important work RPAC has taken on:

• RPAC has successfully kept banks out of the real estate industryy. Chew on that if the short sale or REO process work for you. 
• New York finally passed a Commission Escrow Act which mandates that sellers who dispute and withhold a broker commission deposit the funds in escrow and go to arbitration. This is far better than having to litigate what in two cases of my own were simply dishonorable deadbeats who thought they’d steal services. 
• RPAC is fighting transfer taxes, which are the tax de jour of some municipalities who face the consequences of their bloated budgets. Transfer taxes hurt our industry and really hurt the consumers, especially sellers who need every penny of equity they can get and buyers who are already beset with trepidation in this climate. New York transfer taxes are the highest I know.
• They are working to preserve the mortgage interest deduction, which should need not a syllable of debate in this forum. Not a syllable. 

What Can You Buy for $540,000 in Tuckahoe, NY? 

$540,000 goes alot farther than a few years ago in places like Tuckahoe. Take for example this 4 bedroom, 3 bath 2800 square foot home our buyers recently closed on. They got a big living room and formal dining room, a family room with a fireplace, a beautiful stainless steel and granite kitchen, and a finished basement. The yard is almost a quarter acre, and there is also a rear deck and a 2-car garage. The location is stellar- transportation, shopping, schools and even Concordia College are all within 5 minutes. 

Congratulations to our buyer clients, who made a long journey with us to get their keys, and to Tom Ricapito, buyer agent extraordinaire. 

It all starts out innocently enough. The seller comes in at the tail end of the home inspection and meets the buyer. They press the flesh, exchange some small talk, and the conversation drifts around to the furniture. The seller might be willing to sell some. The buyer likes some of the pieces. Like many social ships that pass in the night, they say they’ll be in touch. My people will call your people. 

If only it ended there. But sometimes it doesn’t, and the outcome is seldom productive relative to the effort required. 

The buyer agent contacts the listing agent to let the seller know that if they want to leave some of the furniture, that’s fine with the buyers. 

The seller says wait, I said they could buy it. I’m not giving it to them. Call their agent and ask when they’d like to come by and pick out what they’d like to make us an offer on. 

A week, 3 emails, and 4 calls later, two real estate agents that were brokering a half a million dollar deal are now arguing over whether there is more value to one guy buying a chaise lounge than the seller saves by not having to load the thing into a moving van and driving it 2 states away.

Now we have a flea market. 

The principals, sensing that the agents might not want to broker furniture (the nerve for what we’re paying them!) decide to cut through all the parliamentary procedure and deal with each other directly. The buyer arrives on a Saturday morning to see if the sofa is worth throwing a few dollars at. Hey, while we’re there, let’s measure some rooms. The seller, recalling that the buyers mentioned they liked macrame, wonders if they’d like the basement workbench. 

3 hours later, after discussing everything from whether or nor George Lazenby would have been a good 007 if he stuck it out to the true ant-oxidant power of dark chocolate, the buyer sees an ant on the kitchen floor. On their drive home, they recall a puddle in the garage that seemed strange. And what was that smell? Did the neighbor look at us funny as we arrived? Did you see that tree in the back yard? THAT will have to come down sooner or later. Was the seller serious when they made that throwaway remark about the Norwegian parliament ? 

That week, the buyer agent faxes a mortgage denial letter to the seller’s attorney. Please send back our money. We got turned down. So sorry. 

Think it hasn’t happened? 

It sure has. Many a deal has died over a stupid sofa. And those that don’t can get unecessarily messy and complicated. My clients want me dealing with bankers, lawyers and appraisers, not getting the blue book value of a gas barbecue for some other guy. 

Take my advice. Put the furniture on Craigslist if it wasn’t part of the original deal. Don’t make the agents run a flea market, because it isn’t our area of expertise and opens us to liability, and don’t be a wheeler dealer with your counterpart over lawn furniture. Keep your eye on the big prize, the sale of the home, and don’t bog down the biggest transaction of your life over an impromptu garage sale. 

For my fellow agents: 

Steve Loynd has written a post I relate to quite a bit- the experience of shelling out big bucks to a service that promises to deliver a pipeline of prospective buyer clients to your inbox, only to pull the plug after thousands of dollars down the drain with no return on the investment.

The proposal typically goes like this: Pay us $XXX and our super duper Magic Internet machine will send hot, eager, ready to bust out their checkbook buyers right to your inbox. Sure, the fee seems hefty, but if you sell JUST ONE it pays for the whole year! After that it is all gravy! Then, you can build a team of happy, busy buyer agents and by this time next year you’ll be loaded and prosperous. You’ll be acne free, lose weight, and that foot corn will go away. 

Only, it never works that way. After three or six months and a few grand sucked out of your account you pull the plug because the quality of the contacts is awful. Half the phone numbers are (123) 456-7890 and many of the emails addresses are no@nev.er. What’s wrong with this picture? What happened to the super duper Magic Internet machine?  

Allow me to explain something, and I’ll preface my words with the caveat that my numbers may be modest in some areas of the country, but they put me in the top 10 of my 7500 member MLS for transactions every year since 2007: I have over 250 closings to my credit since June 2006. Not one of the people who bought with me or bought one of my listings ever said they wanted an agent. 

They wanted a home. 

A guy sitting in front of his computer looking for something with a 2-car garage and a flat back yard isn’t going to jump for joy because you have integrity and are the assistant commissioner of the town little league. Not enough people will care that you have your cocker spaniel in your picture and teach Sunday school if they don’t know you know where they’ll get that 2-car garage and back yard. They get online, log onto a home search or google a neighborhood, address or town, and start looking. That’s when they get to us. A few may call an agent first, someone in their sphere perhaps, but you can’t build your career on such a thin slice of the pie. They seek a home. If you don’t have inventory on the shelf, you get no traffic. It is as simple as that. Get more listings. Inventory, or at least the access to it, gets buyers. 

Think I’m wrong? Fine. Consider this: even Redfin, which touts commission rebates, transparently rated agents, and overall seeks to offer a better mousetrap, has a killer home search. That’s how they get their people. And I know. What about EBAs? Exclusive buyer agents have no listings! So what? They still have a home search on their site if they have half a brain! That is the key to the kingdom- homes. 

How useful is your home search? Do you highlight it? Do you know how to work the back end of registered users? Do you incorporate it into your blog? Or are you tapping away, letting everyone know where the fireworks are this weekend & where to drop off their recyclables, only to have people use someone else to buy a home? Do you like it when you go to a restaurant and the server is overcharming and all you want is a menu? How do you think buyers feel? 

They do not care about your flair. 

My point, and it really is the keys to the kingdom if you want a bigger slice of the pie, is that in 2011 you either have to get listings, have a superior IDX home search on your site, or both if you want to grow. Get more listings. Get a good IDX and don’t keep it a secret. Link to it. Use it. Pimp it. If you are blogging, make your home search the call to action in all your posts. 

There it is, folks. Disagree if you want, but what I just told you works for every business model I know, and my firm has been my laboratory on the matter since 2005. 

What Does $825,000 Buy in Pelham, NY? 

Here’s what you can get for $825,00: A 2300+ square foot 4 bedroom 3 bath 1920’s Lewis Bowman designed New England colonial on over a third of an acre in Pelham Manor. It has a rocking chair porch, patio, plenty of parking, and a manicured lawn.

Inside is exquisite, charming, and updated: Stainless steel kitchen appliances, butler pantry, huge living room with fireplace, formal dining room, all while retaining the 1920’s character.

We just closed on it this past week after listing it this past August and going under contract shortly thereafter in November. 

If you’d like to search homes like this one in Pelham or the surrounding area, get yourself a FREE Listingbook account and search the MLS like an agent. 

I’m going to indulge on a completely non-real estate topic because I am a proud dad. On Saturday, my son Luke won first place at his pack’s Pinewood Derby event. He is on cloud 9 and so am I. Luke is in 3rd grade and in his thid year of Cub Scouts. Our first two Pinewoods didn’t go so well. He was in the middle of the group in 1st grade but last year he brought up the rear. He was very disappointed. I felt guilty about it, because I work so much and couldn’t devote much time to help. 

His mother is as busy as I am as my partner in the company, but in January she started researching how to do well in this thing. This past month she took over the advisory position in Luke’s car asembly, and just the other day he put the finishing touches on the paint job- a red lady bug. Luke’s favorite color is red, and his car stood out from the field. It wasn’t the fanciest design, but it was easy to see. 

In the first heat, Luke’s car came in a close second. I was relieved he did well; on the way in from the parking lot I was coaching him on how to deal with disappointment if he had a poor result. Little did we know, the first place car in that heat was the entry that eventually came in second overall. In his next race, Luke ‘s red lady bug won Secetariat style, and if the day ended right there I would have been happy. So would Luke. Little did we know, Luke’s little red lady bug was actually greased lightning! He would win 8 consecutive heats, including a rematch over his first loss, and won the whole derby! There were close to 40 entries. 

All he did was talk about how much he wanted to tell his mom and how proud she’d be. When we got home, Ann was absolutely blown away at the good news. 

We work very hard, and we have a tad bit of guilt that I especially can’t always be home to put the kids to bed or make the time for some things more dads do. I was really hoping that the day would be special, and my perfect scenario would be my son taking disappointment like a good sport. We never dreamed that we’d instead see what a gracious winner he really is. I love it when magic happens, and I’ll never make the mistake of not being open to it when Luke is in the mix.

Congratulations to the Champ, who shares the honor with his late Uncle Paul, who won the thing in 1966. I know he’s proud too.

Earlier this week, I called a For Sale by Owner to show their home to a buyer I am working with. We just put their home under contract and need to find that next move up home for their family. They are nice people, and while I do not work with buyers as often as I once did, I was jazzed to help them. 

The FSBO agreed to the showing and prior to the appointment one of my clients shared that she walked through the house earlier that week after I made them hip to it. No worries there, as we were going to look together with everyone. 

However, when the owner saw her, he pulled the plug on working with me involved. He felt they were “his” buyers and that I wasn’t entitled to a commission since “he” walked one of them through once already. I told the guy we could work things out to everyone’s satisfaction and that we should walk through- you never squander a possible sale in this market. He remained difficult. 

And then, my clients did something that made my jaw drop. They told the guy that if he wasn’t willing to do business with their agent, they wouldn’t be doing business. And they turned around, and walked out. 

Now, even I know that it isn’t about my fee; it is about getting a home for your family. And I encouraged them to pacify the guy and check the place out, but they said “no.” I was amazed. 

Any agent that has been thrown under the bus by a buyer client over a FSBO or an unscrupulous agent who manipulated them into working with them directly knows what I mean here: these people are honorable. 

I am humbled. I hope the degree of results I get for them is half as high as their integrity. 

Craig Daniels has challenged us to name 3 bloggers we love– the sort of folks that if a glitch in Active Rain were to erase our subscription list that we’d immediately seek them out again. I have more than three, but the limit is three, so I’ll refrain from mentioning bloggers I know are on other lists already to my knowledge. I hate to leave some out. 

There are great ones I am happy to name to my triumverate. 

Scott Hayes. 

Scott is one of the reasons why people wonder aloud if there is something in the water in Austin because there are some great bloggers there. 

Scott’s stuff appeals to me because he’s erudite, insightful, and writes moth watering local stuff about a town where I spent one of my happiest summers with my older brother, who lived in Austin for many years. 

Check out What makes for a bad closing? As a great example of a thought provoking post. 

Tni LeBlanc

Tni is also a lawyer, so I should be inclined to dislike her. Yet she’s a real estate broker, so I embrace her coming back to the light.

I love straight, in your face communication and Tni delivers like a New Yorker, and that is a compliment. She speaks her mind, her writing style is clear as a bell with great economy of words, and very enjoyable. And blunt! I love that. 

Check out Dear Seller: Your House Stinks as a great example of straight talk from the gut. 

Stephen Fells

Full disclosure: I know Stephen in real life. But we met via social networking, not the other way around.

His blog is great because it is a mix of really fun stuff and cogent, useful material from a briliant mind that did code for Fortune 100 companies. Stephen isn’t an agent or loan officer, he makes our tools, like Follr.com and custom facebook pages.

The man is brain food (and underrated at that) when he isn’t making you laugh, and he blogs in a British Accent. I can’t do that.

Those are my three, I love to see them at the top of my dashboard, and I read everything they write.