I recall that during the campaign my wife and I would hear Barack Obama speak and then look at each other and say “Sounds great. How will we pay for it?”

Now, with an $825 billion dollar stimulus package on the table in the wake of a $700 billion bank bailout I am concerned. The people who were decrying the cost of the Iraq war being passed on to our children are silent about these expenditures. Why? Because it was never about fiscal responsibility, it was about politics. Why is Obama so eager to emulate Roosevelt, who presided over two terms of a depression? Roosevelt didn’t end the depression, World War 2 did. An argument can be made that he lengthened, not ended, the economic issues of that era.

Reagan inherited a terrible economy. Inflation, unemployment, interest rates and national morale were all deplorable. He didn’t make the government the solution, he got the government out of the way. 2 1/2 years later it really was morning in America again. Reagan presided over deficits but nothing like we are about to undertake.

Obama was elected because he ran a better campaign. And if he is successful I’ll be the first to admit it. But if I had my druthers I’d rather have RR in charge. Obama’s rhetoric sounds like the Great Leap Forward, which was a disaster. Let the markets fix the country. If you want to be a trust busting , more regulatory government I’d support it because it was corruption, and not capitalism, that failed us. For that I blame Bush, no doubt. Horrible oversight. But we ought not throw the baby out with the bath water.

We should not be fooled into thinking that the cyclical nature of free markets and recessions that come with them are a failture of capitalism and decide that more socializtion is the way to go. That is fool’s gold.

If deficits are crippling because of a war, how can they not be crippling from wholesale socialization?

I should first disclose that I am not, nor have I been in the past, an REO Broker. I have purchased them myself and I have represented buyers in the transactions many times over the years. It is as different an area of real estate from typical transactions as Podiatry is from Opthamology in medicine.These are things consumers must know before they purchase a bank-owned REO property here in my home state of New York. Most of the principles apply universally.

1. You should absolutely use an attorney who is FAMILIAR and EXPERIENCED with the purchase of bank-owned properties if you buy an REO (Real Estate Owned-by the lender) in the state of New York.  Even if your employer or union is providing you with subsidized or free legal representation, use of the wrong attorney can negate whatever perceived savings you are getting in the purchase, add to your stress level, and still have you poorly represented. This is, of course, to say nothing of the needless time and energy the other attorney and agents will have to expend bringing your attorney up to speed.
2. You are not being rushed-you are being given deadlines for efficiency. This is why you need an experienced attorney who won’t gasp or get the vapors about having to take shorter than a week to do anything. Lawyers typically operate at a casual pace in property transactions, but REO transactions have to go at a far faster pace, not because anyone is trying to bamboozle you, but because this is a NON PERFORMING ASSET and TIME IS OF THE ESSENCE. Not only that, there may be competing offers that they can go to if you or your attorney are going to dilly dally. So, a document that says “please sign and return tomorrow” really does need to be signed and faxed tomorrow.
3. You are buying the house “AS IS.” Nobody will dissuade you from getting an inspection, but unless there is an environmental issue, it is for your volition only. The bank will not make repairs. The bank will not put GFCI outlets near the sinks. The bank will not put new batteries in the smoke detectors. Do your inspection BEFORE you make the offer, because once you make the offer the clock is ticking with deadlines (see #1 and #2). You are already being compensated for the physical issues of the property with a lower sales price, often far more of a discount than market value less repairs.
4. You cannot speak with the bank. If you run into frustration or red tape, no, you cannot speak with the bank. I know it would be great to just have your lawyer and the bank iron the issue out, but “the bank” is not “the bank” as you know it. “The bank” is an overworked, underpaid asset manager in another state who will hang up on you so fast you won’t even know she answered. Why? For the same reason you’d be escorted out of surgery, a radio studio, an underwriter’s office, or court. People in those places are doing their jobs and do them better without your interference. Those are not settings for the public and your interference hurts the other people who, like you, are waiting. 
5. You have to pay the transfer tax the seller usually pays. This raises your closing costs a bit, but the lender is losing a ton of money on this deal and needs to economize where possible. Every lender does it. It is an established practice. It is part of the cost of doing business and worth the overall discount you are getting in your sales price for this property.
6. Exceptions cannot be made.If you are buying an REO in 2009 you are participating in the largest liquidation of property in the history of the planet. It is a huge undertaking that will completely break down if systems, efficiency and deadlines are subordinated to individual exceptions and personal requests. All large organizations have to operate this way or they will cease to be large organizations. Think of it this way: You have a certain cell phone plan. You can’t change it on a temporary basis or get the phone company to make an exception unless you pay for another plan.

Many in the public are rightly intrigued by the prospect of buying an inexpensive, bank-owned property at a discount from the norm. That is the Rose. The thorn is that the process is far less touchy feely and far more cold and automated. However, forewarned is forearmed, and knowing these things going in will enable you to be ahead of the process and not at the mercy of new, unwelcome discoveries. You should still enjoy that purchase, but you have to understand the rules going in.

This listing expired unsold a few days ago. This is the actual photo on the MLS posted by the listing agent. There were no marketing remarks, agent to agent remarks, showing instructions, or driving directions posted. I spoke with the seller a few hours ago and was informed it was a short sale. This was not disclosed on the old listing either.

Apparently, the photo was taken at night and never replaced with a photo in daylight.

I know how I feel about this, and you can be the judge of whether this is adequate representation or not.

With the economy in decline and the housing market more so, real estate agents are leaving the industry. This is first and foremost a sad thing for anyone who loses a job or has a business fail; I never like to see anyone suffer or have financial problems. Overall, however, there is a silver lining to that cloud for the consumer and the licensees who remain active in the industry.

Not all, but a disconcertingly high percentage of the ex-agents should never have been agents in the first place. In the market run up from 2002-2005 we saw an unprecedented number of new and reactivated licensees enter the market to share the bounty. However, while the short term profit may have been favorable, we are still paying the price of the inexperience and, often, the negligence of practitioners who were able to outrun their mistakes in the irrational exuberance.

I remember well the calling cards of new agents who could hardly believe their good fortune at their involvement in a high-dollar transaction. Deals got screwed up left and right, but who cared? Another offer was a week away. And if you had a neophyte representing you in a purchase, it was never their fault your offer wasn’t accepted, you just lost a bidding war. We had people who never sold a house in their life collecting commissions on multimillion dollar sales like it was candy land. Just like the stock market spike of the late 90’s, many of people looked far smarter than they really were.

I know this because I am part of the cleanup crew. People listing their homes for sale today are horrified to discover that decks, finished basements or bathrooms they were told were legal at their purchase are, in fact not in compliance. Neither the last listing agent nor their buyer agent bothered to pull the property card, and the title company missed the detail in the rush of the time. I am in the midst of selling a property that last passed title in 2005 which has a submerged oil tank that would have failed a test in 1995, let alone now. It is costing my clients over $20,000. Twice in the past few months I have run across people who have excellent credit inexplicably stuck in high interest loans, most likely because a loan officer decided that profit superseded honesty. Where was their agent? Where was the advocacy? The list goes on, but I wish I had a dime for everyone who tells me that they regret using their newly licensed cousin or part-time aunt for their agent last time.

In each of these instances, an agent was paid handsomely. They did not earn that commission; it was monopoly money they used to buy homes and cars that they can no longer afford. In many cases they meant well, and their broker is responsible for the mistakes. We’ll never know in most cases, but our collective karma has caught up with the industry. Sadly, whatever price we bear is more than being shared by our clients who trusted us with their financial lives and were often hurt. We made our bed and now we are sleeping in it.

This brings us, of course, to today. One agent I know has his real estate website redirect to another endeavor. BMW’s have given way to Hyundai’s. An attorney told me recently that his biggest source of bankruptcy filings and short sales are real estate agents themselves. Enormous brokerage offices have rows of empty desks. And I am bombarded by solicitations for 2nd income opportunities from people who must know that agents are scrambling for income. Attorneys are actually thanking me for referrals.

But those of us who remain plying our trade have discovered a new environment: fresh air. It isn’t so noisy in here anymore. The overwhelming percentage of agents I am dealing with now are returning my phone calls and emails in a professional, timely manner. Oil tank tests, surveys and other due diligence are being handled in the beginning of transactions and not as part of a last minute scramble. Many agents are telling me how they remember the last decline in the late 80’s and how they coped. We are a profession again, not a pit stop for career nomads. We are conducting business, and even though the circumstances are worse, the process is civil and professional because the frosh and junior varsity are no longer clogging the field. And we know how to cope with the PR problems exacerbated by the “exes” because we always have.

Consumers now should have more confidence in the industry because by and large the pickers of low hanging fruit have left the market. Those who remain are survivors, fighters, and overall far more professional and experienced. They don’t pick apples with a broom and bucket; they know how to use a ladder. The drama may come from the outside, but far seldom from the agents themselves. It is for these reasons that I am glad the herd has thinned. I no longer have to sift through newbie’s to find a competent colleague. And these are people that know how to return a phone call, pull a property card, review a good faith estimate, and advocate for their clients. I’m not doing their work for them, or cleaning up their mess.

I salute the survivors, and I look forward to closing transactions with them. Together, we’ll help repair the damage done in the past decade and build the public’s confidence in the profession. 

I don’t know what the full story is, and we’ll perhaps never know, but Caroline Kennedy has withdrawn from consideration to replace Hillary Clinton as a New York Senator.  My money is on the idea that once Caroline Kennedy found out that she wasn’t Gov. Patterson’s choice for NY Senator, she took her ball and went home. Regardless, this ends a media circus that taxed my faith in my fellow NYers who thought she’d be a great choice.

Appointing Caroline Kennedy as Senator would be extremely demoralizing to most New Yorkers. She would not have earned it save for her accident of birth, and it would be contrary to the spirit of upward mobility that the current administration seeks to champion. Simply put, nepotism sucks. Yes You Can unless there is a Kennedy who wants it. Sorry.

Enormous deficit aside, my faith in Albany was on the upswing before this spectacle. The Empire State Hypocrite was out of office in disgrace, replaced by a man who appears to be down to earth, honest, and pragmatic. He is visually impaired and a minority. Yes He Can.

But my favorite thing about Governor Paterson is that he signed the Commission Escrow Act, something George Pataki vetoed in spite of the huge legislative (and popular) support of the bill. This was a long time coming, and I am hoping that it is the first of many things that are positive coming out of Albany instead of the partisan gridlock we all put up with.

Frankly, I am disappointed that Ms. Kennedy wasn’t dismissed earlier. From my vantage point this was ego driven, and she got a rush from all the attention, at least while it was positive. If her name were Caroline Faranda she’s have gotten as much ink as a possible Senator as my dog. Her appointment would have rendered the Commission Escrow Act more of an anomaly than a trend.

Here’s to a trend of progress, and not slipping back into politics as usual. I wish Caroline Kennedy well and appreciate her philanthropy, but the delusion that she was qualified to be a Senator would have undermined us all. I hope the new Senator is the best choice for New York and the country and not the best political choice. I also hope that it continues what appears to be a movement to restore New York as the Empire State and not the Red Tape State.

My last post mentioned the importance of having a Unique Selling Proposition, or a characteristic that sets you apart from the competition. Having a USP that you can explain in under a minute is more effective than a 30 minute listing presentation with all the bells and whistles. One of the comments stated that having a USP is not easy for some of us. Perhaps, but it isn’t as hard as you might think, even if you aren’t a high producer.  

First, in any given listing presentation, your competition is not the thousands of licensees in your market, but the 2 or 3 other agents that the prospects are considering. Your prospective clients aren’t interviewing your whole board. So that narrows it down a bit. Let’s say that you just need to beat out 2 other agents to get the listing. Let us also presume that your middle name is Average. There is nothing exceptional about you. You are vanilla. You carry fewer than 10 listings, you made $45,000 in 2008, and you stutter. You aren’t great at anything. What can you possibly offer that makes you the man or woman for the job ahead of the 2 other agents they interview?

The answer, my friend, may be easier to find than you think. I’ll give you 2 quick ways to be Joe USP Excellence.

1. Call your past clients. Just ask them what it was that made them choose to do business with you.  Whatever their answer is, that is a key component, if not the actual USP itself, right there on a silver platter.
2. When you first sit down at a listing presentation, tell the people before you begin that you appreciate the chance to do business with them and that you are big on market research. Ask what it is about you that made them consider giving you an interview. Again, their answer will contain at a minimum the seeds of your USP.

Let’s suppose that the answer you get is underwhelming. “You seemed like a nice young man.” “You struck us as energetic” “We walked into the office and there you were.”

Those are USPs? They may not seem like it, but they can be. Let’s take them one at a time, and I’ll tell you what I would coach one of my agents to say in response:

• “You seemed like a nice young man/lady.” That is very kind, Mr/Mrs. Prospect. I think I’ve been blessed with an honest face, and I am often told by buyers that they feel at ease when they are with me. Since buying a home is such a huge stressful decision it is important that the people considering your house feel as comfortable as possible. I think that’s the key to my success.
• “You seemed energetic.” I appreciate that you noticed. Real estate is hard work, and does require energy, and enthusiasm is contagious. I only take listings like yours that I genuinely feel I can sell. I think that plays into how people perceive my listings- they hear it in my voice, and if the house is right for them they seem easier to sign on. That’s how I sell houses.
• “We walked into the office and you were the first person we spoke to.” That wasn’t an accident, Mr and Mrs. Prospect. Selling real estate isn’t for people who hide in cubicles, it is for people who know how to work hard, follow up, and hustle. I don’t quit until the job gets done.  People tell me that I seem ubiquitous, but that is only because I hustle to get my listings sold.

Of course, some people may give you better material, but bear in mind that you don’t have to be the top seller in your marketplace or own a particular farm area to have a USP. You simply have to possess something that the others you are directly competing with do not. For instance, if you sell only 5 homes a year, it could be that you treat each client individually and that you pick only a few clients a year for extremely personal service. That could give you an advantage over a high volume guy who walks in very impressed with himself.

People do business with people they like and feel comfortable with. All you need to do is give them the rationale to justify that. When you ask them why you made the short list, you are then given the facts you need to transform your meeting from an ad hominem bragfest (which listing presentations often are) to something far more powerful. If people choose to at least interview you, them telling you WHY they gave you a chance is revealing a compliment you should leverage to your advantage. People will choose you for their own reasons, not yours, so make them right!

This post is not directed toward my respected colleagues who have posted recently on listings they failed to get, or clients they couldn’t convert. Those people are no strangers to rejection but they are also extremely well -acquainted with success. This is for those of you who have made 10 consecutive listing appointments and come up empty or if you’ve not hit a bulls-eye in a dog’s age. So if you are in a dry spell or slump, this is for you.

You have a great presentation. You make a compelling case. Your facts, figures and data are devastatingly convincing. You can’t figure out why you are losing these listings. I’ll tell you why, and I haven’t even been in the field with you, but 10-1 here’s what I’ll see:

1. You talk far too much.
2. You aren’t in touch with the people across the table from you.  

Let’s get back to basics.

• We sell homes. We sell people on hiring us to sell their homes. In sales, we first identify a need, then fill that need. Are you robotically finding out why people are selling and robotically going into your spiel, or are you creating rapport with them and tailoring your discussion around THEIR SPECIFIC reasons for selling? If they are moving to Florida, bring that up several times in the conversation so they know you are on the case. it’s all about getting them to Florida.
• No presentation is compelling without a USP, or unique selling proposition. What makes you different? What sets you apart? Instead of a compelling 45 minute fact marathon, develop a compelling 45 second answer to the question “why should we choose you over the other agents?” Maybe you grew up in this neighborhood. Perhaps you are the best stager ever. You might work the niche that buys their kind of house. Be brief and confident.
• Ask questions. This is about them, not you. Questions take the canned pitch tone away, and they allow people to discuss their favorite subject: themselves. And the more people talk, the more clues they’ll give you as to what matters to them and how you can make that happen.
• Take 2/3 of your presentation and scrap it. People glaze over after 3 consecutive minutes of blather, let alone 30.
• Take a breath. Stop batting out brilliant answers to questions and pause every so often. Repeat a question occasionally so they know you heard it. People don’t want brilliant answers as much as they want to be understood.

Less is more. When your presentation becomes bloated with pre-emptive solutions to objections you may not even get, you have a problem. Simplicity, not complexity, sells. Slow down, listen more, and simplify your case. 30 seconds on what makes you special always trumps 15 minutes of your firm’s accolades. If you do that, don’t be shocked when 5 out of the next ten meetings turns into a listing.

If I want to read spam, I can read my junk folder. I can blog anywhere; I blog on Active Rain in part because I feel my expertise and presence will be appreciated by my colleagues and that will yield some referrals. Overall this is a very vital and enriching community.

Except for the referral exchange, which, I am sorry to say, is a disaster, at least in New York. People are posting 3-star referrals (personal referrals, that is) which are just requests for referrals in their area. Another 3-star referral is an advert for their out of state listings. And these postings remain up for weeks and months.

I don’t expect the Active Rain staff to be the posting police; we need to maintain the integrity of all the user content ourselves. That isn’t just blogs, it is the referral postings we make. If you are going to post an inaccurate referral, self promoting spam, or any other off topic item on the referral exchange, think twice. You are undermining why you are here, and you are BLOODY ANNOYING as well. It’s like clicking on a personal ad response and instead getting a porn or hooker ad.

While I don’t expect the AR powers that be to be referral posting cops, I do propose that flagged spam, if indeed wrongly posted, should be a point reduction if it isn’t already, and repeat offenses should have other types of consequences. But really folks we shouldn’t have to discuss punishment. Just don’t post it is it isn’t a bona fide referral. Learn the guidelines and abide by them so Active Rain can continue to be useful. Otherwise, this will slowly deteriorate and we’ll have lost a good thing.

Full disclosure: I did not vote for Barack Obama. However, he won the election, he is my president, and I wish him well; the better he does, the better it is for us all. Even though Mr. Obama did not get my vote last November, he has my respect.

I am 41. I never thought I would see an African American elected president in my lifetime. I am very proud of our country, and I have never heard those words uttered with more frequency than these current days. Some people may say that because their guy won. My guy didn’t, and I am still proud. Barack Obama received more votes in the 2008 election than any president in our nation’s history. In spite of political polarization of recent years, the so-called “Bradley effect” and other stereotypes, we as a nation voted based on the content of the candidate’s character and not the color of his skin.

This to me speaks to the best of American Exceptionalism, and why our best days are ahead of us, even though we are in a crisis. Mr Obama’s election tells us that more than a color barrier has been broken. Consider the following:

• With Obama’s presidency, 2 of the last 3 presidents come from single parent households of very modest means. Since Truman, only 3 of 11 presidents have come from wealth.
• One generation removed from Jim Crow, the descendants of slaves will live in the White House. That is, in a historical context, rather fast progress. Who knows what we can accomplish in the next 40 years? 20? 5?
• When I was 6, Nixon was president and we were in the midst of Vietnam and Watergate. I grew up in a integrated town in suburban New York, but my view of black folks at that time came as much from Sanford and Son as anything else. My 6 year old son’s view of African Americans is beginning with the President of the United States.
• We can argue about the USA’s standing in the international community until we are blue in the face, but we can all agree on this: the USA is the first country to make one of it’s most oppressed minority the leader of the nation. Don’t hold your breath about an ethinic Morrocan Arab being elected president of France, an Aborigine becoming Prime Minister of Australia, or a woman becoming head of state in Saudi Arabia.
• No one seems to even notice that the last time we had a white male confirmed as Secretary of State it was 1993.

Alexis de Tocqueville was fascinated by our culture and he invented the phrase American Exceptionalism. 200 years ago he predicted some of the great debates we have in our society this very day. We are far from perfect, indeed. But in many, many metrics, we still lead the world, and for that we should be proud. We are the iconoclast nation. We are more the beacon of progress and liberty to a watching world than ever.

Sometimes we forget that the light bulb was born here in New Jersey, or that aviation became a reality in North Carolina. I could go on, like the telephone, polio vaccine, Mad Magazine, blue jeans, and the Peace Corps  (I believe the Brits perfected radar, but that only barely exonerates them for Fish & Chips), but I think you get the point. We rock, still. And just as an aside, let me know what other country I can go to, take a 75 hour course, get a license, work my tail off, and no matter what I look like or sound like, in 2 or 3 years enter the top 1% in income.

I will watch the inauguration later today both for the history I’ll witness and out of respect for those who made the day possible; the millions who suffered, the tens of thousands who gave their lives, and also the billions who will watch, wondering just what wall we’ll knock down next.

The reports of our demise seem premature. Even in this horrendous economy, there is no groundswell, grass roots change from traditional brokerage to virtual office, online, discount/FSBO brokerage despite the chatter to the contrary. Contrast that with the almost overnight decimation of stock brokerage and travel. The Internet hammered those professions, yet, as Active Rain and other sites clearly illustrate, the ‘Net has actually helped real estate brokerage. Why?

• You can’t click on a house and buy it. You have to see it, walk through it, smell it, and sit in it. And few do that without a licensee present.
• Few do that without a licensee present because most buyers don’t want the seller around when they look.
• Even when the seller is present, most of the time they are deplorable salespeople. I have an interest in a non-traditional company. Believe me, commission “savings” is more than counterbalanced by ineptitude, lack of objectivity, and absence of professional advice. Many a seller has lost tens of thousands in sales price in order to save a few thousand in fees. Penny wise, pound foolish.
• A trip or a security can be purchased online in 5 minutes. Real estate takes weeks and sometimes months.
• Travel and securities don’t require appraisal, title search, certificates of occupancy or engineer inspections.
• Travel and securities are cash transactions that can be done with a click; real estate is seldom a cash transaction and even when it is, it requires far more due diligence. See prior bullet point.
• At the risk of sounding Darwinist, overall real estate professionals are just tougher and more resourceful. This is a hard business. We embraced the new technology and made it an advantage. We adapted, we survived, we’ll thrive.   

Brokerage is more than bird-dogging for a house. Who saw the house first is immaterial, and handling the shifting landscape of the transaction requires representation. People know that a few percentage points is a bargain for what they get in return, anecdotal horror stories aside.

The market is efficient. If the Internet were going to kill real estate brokerage, it would have years ago. Until people can buy real estate for $500 immediately without seeing it, consumers will need our services. And that is a good thing.

Brokers- take 30 seconds and acknowledge yourself, and then let’s all get back to work.

Buying any foreclosure is tricky, and a short sale is probably the longest process. Is purchasing a short sale right for you? Perhaps you rent in Westchester, Rockland, Putnam or Dutchess and are considering a short sale purchase in one of those areas. Here are some things you ought to know:

• You can’t be in a hurry. Negotiating a short sale might only take a month but in most cases it can go 90 days or longer. So don’t hire a mover, end your lease or lock your rate until you have confirmation that your offer is approved by the bank. If the seller accepts your offer that isn’t an approved short sale; any offer the seller accepts still requires approval from their lender.
• You are buying the house “as is.” In rare cases, such as in an environmental problem, the lender will pay for repairs but most if the time you are getting the house as is, as found. The seller is in hardship, so they won’t be able to help either. So make sure you do your inspections and know what you are getting into before going forward.
• You can’t “flip” the house. Short sales are very good deals in most cases but not so very low that you’ll be able to turn a short term profit. They usually are retail value, less repairs and maintenance, and perhaps less a bit for speed.
• Status updates take longer. Unlike regular transactions where updates are a phone call away, all parties are forced to wait on the lender, who is not, shall we say, committed to keeping everyone happy. This doesn’t mean that the purchase is lost in the ether; but it does mean that more patience is required than normal.
• If the listing agent is not a short sale specialist, it may turn into a nightmare. You wouldn’t want a podiatrist giving you root canal, nor do you need a rookie cutting his or her teeth on the biggest purchase of your life. Short sales are hard for experienced experts like myself; an agent who is doing their first or 2nd short sale is in for a long ordeal. The best way to handle that transaction is to not enter into it. If the house looks right for you and a short sale is disclosed, ask how many short sales the listing agent has successfully closed. If the agent hasn’t done many, the best thing to do might be to pass the house by. Otherwise, you might be in for 6 months of frustration.
• Subordinate financing takes longer. If the seller has a second mortgage, then two lenders have to render their approval, and coordinating the two complicates matters. Some specialists won’t even list those homes (I do.).  Ask if there is another lender, and even if they are the same institution, it will add a measure of difficulty (the same lender but two different loans means two different divisions or departments). Do a lien search on the home before going forward. If there is a 2nd lien the listing agent hasn’t disclosed you might consider walking- they may not be in command of how to close this workout.
• Ironically, you have to be ready to close rather quickly. This is the “hurry up and wait” irony of the short sale process. The lender will make you wait far longer than a normal purchase for a decision, but when that decision is issued there will typically be a 15 or 30-day deadline to close or the sale approval has to go back to review. By this point you should have done your inspections and other due diligence completed. Once the lender approves the sale it is then time to lock the rate, call the mover and give notice on your apartment.

This is a broad overview, but it boils down to knowing when to hold and when to fold.  No two short sale transactions are the same, even with the same lender. If you are in a state where attorneys are used it helps to have an attorney represent you in the purchase with short sale experience, but at the very least make sure they are experienced at real estate.

The long process aside, buying a short sale does put you ahead of the market, as the prices are more aligned with where the market is heading. This is significant, because the places where the bulk of my short sales are done (Westchester, Rockland, Putnam and Dutchess counties, and ther same goes for NYC and Long Island), prices are so high that even a 5% reduction can mean tens of thousands of dollars to you.

J. Philip Faranda is Westchester’s Premier Short Sale REALTOR. Find out more at www.NYShortSaleTeam.com

Chesley Sullenberger is the pilot who saved all aboard yesterday’s Flight 1549, which you have no doubt seen and read about by now. The local news calls it the “Miracle on the Hudson” and I agree. The man  faced a freak occurrence, made a life or death decision, warned the people, exercised heroic skill, and then walked the sinking plane TWICE to make sure all were out.

And everyone was saved. This man is a hero.

It is also worth noting that once he did his job, hundreds of others were able to do theirs well also. The NY Times called the rescue effort “an ad hoc flotilla of boats.” I get chills. So I extend my gratitude to NY Waterways, the Coast Guard, the NYPD, FDNY and the rest. But this is about Sully, who made the event possible. Without his clear thinking, excellent decision making, and perfect execution, it would have been just another unfortunate event.

I therefore am calling on President-Elect Obama to appoint Chesley Sullenberger to a new position of US Economy Czar, overseeing the Federal Reserve, the SEC, Fannie Mae, Freddie Mac, and to answer directly to the President. Here are my reasons, and they are sound:

• Mr. Sullenberger knows how to handle a crash better than the clowns we’ve had the past few recessions.
• Mr Sullenberger told the passengers to brace themselves for a hard landing. How I wish Bush, Greenspan, Dodd and the other politicians would have had the guts to do the same. We would have been more prepared.
• Mr. Sullenberger knows how to make a decision devoid of political consequences, with simply the best interests of all in mind.
• He was the last man out of the plane. He made sure nobody was left behind.  That is the antithesis of all the corporate scoundrels who got tens of millions in golden parachute money after they ran their companies into the drink, leaving them to sink.  
• “Sully” is all about safety. He is the founder of Safety Reliability Methods, Inc.

The USA is a meritocracy. We succeed when we put proven winners in charge and we fail where nepotism occurs. Chesley Sullenberger is clearly underutilized. I would love to see how this guy would handle some jerky loss mitigator who won’t approve a short sale, Bernard Madoff, and the rest of the crew who contribute to the mess. How would things have been different if he were in charge when Katrina occurred or when the sub-prime crisis hit? I say we’d all be better off. Move over Lenn Harley, you were my first choice until yesterday.

Thank you, Captain Sullenberger, for reminding us that there are heroes in our midst.

I overheard an agent recently lamenting the difficulty of a short sale they had listed. They couldn’t reach anyone at the lender, they were unsure of how to handle a somewhat tricky issue with the file, and they wished it were easier. Nobody in their office was helping them, and they doubted a competitor would either. 

Think about that for a second. Imagine you are undergoing a medical procedure and you emerge from your fog to a litany of complaints from your surgeon that she can’t make this go right, no one will help her, and that she wishes it were easier. Pretty scary? You bet it is. Bill Cosby had a funny bit years ago when a patient heard the surgeon say “oops.” Do you want your clients to hear you say “oops” when they are depending on you desperately to help them avoid foreclosure?

Plumbers, electricians, surgeons, surveyors, architects, appraisers and specialists of all kinds do not become specialists cutting their teeth alone. They all do some form of apprenticeship or internship. The first 20 short sales I was exposed to and worked on were under the guidance of my broker, who was an expert. I never flew solo until I earned my wings. Just because you attended a short sale seminar or read in Inman news that short sales are the next big thing doesn’t mean you’ll start making money in that niche right away. And it hurts clients who may not know you are in your first or 2nd short sale and are learning the ropes on the backs of their financial future.

If you want to make money in short sales immediately, REFER IT OUT to someone who can close it and pay you a referral fee. It is in the best interest of the client to have a bona fide specialist and it makes you money without any more headaches. Don’t worry about saving face, just do it. You’ll be a hero. It is in the client’s best interest. The cost of erring could be catastrophic.

Alternatively, if you really want to dedicate yourself to becoming an expert, go dock your license with a specialist and learn under their watch and guidance. But don’t fly solo. Obviously, if you are in my neck of the woods, we’ll happily pay you a referral for a short sale listing. But even if you are in California, the point remains the same: refer the client to a specialist or go work for one.

In some markets, people who only borrowed 80% of their home’s value are waking up to the fact that they actually have no equity. It is happening in all communities- Yonkers, Yorktown, Scarsdale, Somers, White Plains, Wappinger Falls, you name it. No demographic, neighborhood or school district is immune from the ripple effect of the declining economy. And if your mortgage adjusts, you lose your job, or any one of a dozen other unfortunate things, you may feel that you are in a dire situation. When the market was hot, people who had problems sold or refinanced rather easily. Problem solved. Not so easy in this climate.

Financial problems cause terrible stress. People that feel that they are trapped in a house they can’t sell because of a high mortgage balance can feel helpless and defeated. My observation is that the stress and worry are actually worse than the shortage of money. The worst thing to do is retreat, withdraw or give up. This doesn’t mean you have scream “Geronimo” and beat your chest. If you take small steps to help yourself you’ll be OK.  There are solutions if you are “upside down” or have negative equity. Help yourself- my most successful short sale clients were always proactive. Here are some things you can do:

• First, communicate with your lender. You’ll feel better that you are being proactive, and the lender will know that you aren’t going off the grid.
• Get help from a professional. List the home with a real estate agent who specializes in short sales. I’ll opine on how to find that agent later.
• Get educated. Google short sales. Go to the library. Understand the process. Taking the mystery away will settle your mind.
• Your hardship package should be treated like an extra credit project that you have to pass in order to not flunk out of school. Get the documents they request, fill out the forms and write that hardship letter. The better the package, the better  the chance for a fast approval on the short sale. Don’t put anything off, and ask your agent for help if you need it.

Now- on choosing an agent for your short sale:

• The agent has to be full-time, with a documented track record,  and references.
• Ask the agent directly how many homes they have sold in the past year, and how many short sales they’ve closed.
• Make sure they document their claims and if they can provide references.
• DON’T EVER let the agent obfuscate your questions by deflecting them and blathering about their company, office or sales team. You want to know how many sales/short sales THEY’VE done.
• Have the agent explain their plan to sell the house. The plan has to make sense. Do they negotiate directly with the lender, or do they have a 3rd party do it? Where will they advertise? What is their opinion of a starting price, and how do they justify that price?
• If you are not comfortable with the broker or agent, do not list with them.

Once you’ve listed the house on the market with an agent who is a good, full- time short sale specialist, pay attention to how many showings get scheduled. If you aren’t getting 1-2 showings a week, it may be time to lower the price. Bear in mind, too, that the house will have to be marketed as a short sale. There are two reasons: first, short sales have to be disclosed in most locales. Second, pre-foreclosures attract more buyers because people are looking for bargains. Since your bottom line is the same no matter what the final price, you should not be reluctant  to lower the price if so advised.

Making the house easy to show is crucial. Be as accommodating as you can be, and only reject showing requests in rare cases of emergency.  In many markets, there are 10 or 20 houses just like yours. If you are in Mahopac and the buyers are coming up from New Rochelle and you don’t allow a showing on a given day, they may not try to reschedule because of all the other options out there. People can’t buy what they don’t see. So, if there is a legitimate contagious illness or emergency, don’t do the showing. Friends visiting, a child’s birthday party, dinner, or a furnace being repaired are no reason to deny a showing. The stakes are too high.

Once an offer does come in make sure that your package for the lender has everything they ask for- bank statements, letters of explanation, disclosures filled out neatly, everything completed. Once your package in in review, the lender will send someone out to do either an appraisal or BPO(broker price opinion) to verify that the home’s value is indeed lower than the loan and in line with the offer.

At that point, you are off to the races. Typically, lenders give the buyer 30 days to close or the file has to be approved again. Make sure that the short sale terms, upon acceptance, are in writing and that you have, in writing, a release from the loan once the deal is closed. At that point you can, thankfully, start packing. That day is the first day of the rest of your life.

I relate to people that bought a house in the boom, spent thousands improving it, and then are told that it is worth the same or less than the price they paid, even with the improvements. Very discouraging stuff. What sellers need to realize, however, is that home buyers today are not buying roofs, windows, bathrooms or kitchens. They are buying the land under those things. And that land is, in a large sense, a stock certificate in the economy. It relates to supply and demand. When the economy goes down, demand goes down, & inventory goes up.

Lower supply =higher prices. See 2005. High supply= lower prices. Look out the window.

Right now, supply is enormous and growing, because more and more people are losing their jobs and being forced to sell. Unemployment was below 5% prior to 2008. 2009 forecasts are for close to 8%. That will flood the already swollen supply with even more distress sales, short sales, and bank foreclosures. If you have a nice home to sell and want what you feel is a reasonable price, you need to understand that you are competing with unreasonably lower prices all around town. Buyers know this, are concerned for their own jobs and security, and therefore want to buy for as low a price as possible.

This is no different from the seller -driven spikes up in price when the market was higher. The current market would turn around in 180 days if everyone lowered their price to reflect the /crash/correction, but that is unpalatable for some and impossible for others with no equity. Short sales would help those people, but that would require the cooperation of the lenders whose deplorable judgment got us into this mess. And until banks can streamline the short sale process to something that doesn’t seem like a 4 month root canal, we will have ridiculously high inventory.

Make no mistakes about it. Your kitchen hasn’t lost value, nor has your roof, granite countertops or hottub. But the dirt beneath has lost value, and until adjustments are made to address the preferences of the cautious, nervous buying public, the value of that dirt will remain suppressed.