Ever hear a REALTOR® say that?

When the market gets better …

What they typically mean is when they don’t have short sales anymore, when it’s not so hard to get a loan, when there are more cash buyers, when properties easily appraise, when foreclosures decrease, when people buy land again, when buyers walk in the office again, and when the buyers really come back to the market.

The REALTOR® means when some combination of these things go back to the way they used to be, then their business will come back.

A couple of thoughts on that:

• First of all, look around you. There ARE properties being bought and sold every day in your market. Are you part of that?
• Second, it is ill advised to wait for something else to occur, something outside of your control, for your business to improve.

In the the words of the renowned TV celebrity psychologist Dr. Phil:

“If you need a miracle, be a miracle.”

I will often say that the best thing a REALTOR® can do today is to forget everything they know about how the business used to be and learn the new real estate business.

“In times of rapid change, experience is your worst enemy.” – John Paul Getty

We all know the real estate business has changed. And although we were always used to cyclical real estate markets, it may be that we are experiencing a complete shift in our business that may never be reversed.

So my advice – assume that the way the real estate business is today is the new norm.

And then do what it takes to excel at it.

That applies to what is selling, how it is sold, where buyers are, and what buyers are looking for in their REALTOR®.

“The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn.” – Alvin Toffler

For those waiting for the market to get better, I suggest now is the time to unlearn, and then relearn, the business of real estate.

The Federal Trade Commission (FTC) issued a rule on Mortgage Assistance Relief Services (MARS), which has generated numerous questions.  A plain reading of the rule seems to sweep real estate professionals involved in short sale transactions under the MARS requirements, which include specific disclosures and a prohibition of up-front fees.  However, a footnote in the FTC’s rule commentary states:

126 As a general matter, the Final Rule is not intended to apply to the marketing of services to assist consumers in selling their properties to third parties. The Final Rule, however, does specifically cover the marketing of services involving the sale of properties to third parties if those services are designed or intended to assist consumers in averting foreclosure, e.g., through a short sale or deed-in-lieu of foreclosure. One commenter urged the Commission to exempt licensed real estate professionals from the Final Rule. NAR at 1–2. The commenter argued the Rule would restrict real estate agents in helping consumers with the process of selling their homes through short sales. Id. The Commission concludes that an exemption for real estate agents is not necessary. Real estate agents customarily assist consumers in selling or buying homes and perform functions such as listing homes for sale, showing homes, and finding desirable homes for consumers. The Commission is aware that real estate agents may perform these functions when properties are bought or sold through a short sale transaction, but does not consider these services to be MARS.

AAR sent a request to NAR legal counsel, which was forwarded to the NAR DC regulatory staff, that the issue be further clarified.  Here is a link to the MARS information on NAR’s website.

Have you been thinking about pursuing foreclosures as listings? Well, you’d better think twice!

In the unlikely event that your new foreclosure listing has somebody living in it, you may have to deal with the “Cash for Keys” program. Some companies will overnight you the money…others won’t. This can be the beginning of your cash output.

The next thing to consider is the cost of putting the utilities in your name. Are you prepared to put down the required deposits for electricity, water and gas? Once you get past that financial hurdle, there are the monthly bills you will have to pay…on time. That doesn’t seem too hard, but then you need to input your expenses into the “system” for reimbursement. Now, that can take 30 days to get reimbursed. The bills may not seem like they could be that bad, but consider your market. Hot markets will require the air conditioner to be on, and cooler markets will require heat. Hmmmm… Let’s hope that nobody touches your thermostats to raise your bill!

The next item to take under advisement is repairs. Not every foreclosure home is “market ready.” Depending on the scope of repairs, you may need to get several bids. Once the winning bid is selected, you may or may not be required to pay the contractor directly. Again, expect about a 30-day waiting period to see your money.

Meanwhile, while you are playing ATM for your foreclosure listing, you will spend time performing monthly reports, marketing the property and fielding phone calls from vendors, asset managers, agents and clients. This can go on for a few months unless you have received an offer on the home.

Just when you feel like you have a handle on things and are seeing some of your money coming back to you, 90 days have passed and… Well, it’s time for a different agent to pick up your listing. Was it worth it?

If foreclosures are selling, why not represent buyers instead of  sellers? It seems like less hassle and less financial outlay for the same results.  Not to mention the fact that happy buyers are more likely to send you referrals than asset management companies.

That’s just my two cents–and you didn’t have to wait 30 days to get it back!

There are some talented folks working at AAR, and the (latest) result is right here:

How’s Your Short Game?
Interactive Fun from AAR!

Assess your short sale knowledge with this fun, golf-themed game. Prove you’re a pro as you answer true-false questions on the nine-hole short course. (Answer incorrectly and poor “Shorty” will pay the price.)

Test your short (sale) game now!

The brainchild of AAR President Holly Eslinger, this interactive gem features the legal smarts of AAR General Counsel Michelle Lind, the impressive imagery of AAR Art Director J Thurston and the coding wizardry of AAR Webmaster Brad Feuerstein.

Are you up to par? (Come on, who could resist that pun?) Share your score in the comments below!

The following information comes from the California Association of REALTORS® (CAR) legal e-newsletter, Realegal. CAR has given AAR permission to share the information with our members here in Arizona:

Undisclosed payments in short sale transactions, especially those paid outside of escrow, may violate the law, including RESPA, laws against loan fraud, and licensing laws. Short sale agents have increasingly reported to C.A.R. about requests for agents and their clients to pay junior lienholders and others, oftentimes outside of escrow.

One common scenario is when a short sale seller’s senior lender authorizes a payment of $3,000, for example, to extinguish a junior lien, but the junior lender demands that the buyer pays an additional $9,000 outside of escrow. Not only would it be risky for a buyer to pay outside of escrow, but concealing this additional payment from a federally-insured senior lender may constitute loan fraud, which is a crime punishable by 30 years imprisonment plus a $1 million fine (18 U.S.C. section 1014). Furthermore, omitting from the HUD-1 Statement any charges paid at settlement by either a buyer or seller may violate the Real Estate Settlement Procedures Act (RESPA) (Appendix A to 24 C.F.R. Part 3500). Depending on the specific circumstances, carrying out these payment requests may also violate other laws and regulations, and an agent’s participation in the scheme may be subject to license revocation by the Department of Real Estate or other disciplinary action.

Agents and their clients are encouraged to file any complaints regarding fraudulent activities to the proper authorities, including the following agencies:

*Arizona Attorney General’s Office
Maricopa Co. 602-542-5025 | Pima Co. 520-628-6504 | Other Areas 800-352-8431 http://www.azag.gov/consumer/MailInInstructionsEng.html

Department of Housing and Urban Development (HUD)
HUD Office of Inspector General Hotline (GFI)
800-347-3735

http://www.hud.gov/offices/oig/hotline

Federal Bureau of Investigation (FBI)
202-324-3000
https://tips.fbi.gov

This information was reprinted with permission from CAR. (* The California Attorney General’s contact information was replaced with Arizona’s.) It was originally published in CAR’s Realegal email on March 16, 2010. All rights reserved.

Photo from Flickr - Oregon State University Archives

The Home Affordable Foreclosure Alternatives program (aka HAFA) is supposed to help homeowners who are unable to retain their home under the Home Affordable Modification Program (aka HAMP) by providing short sale incentives  and guidelines.

Here are a few highlights from the program, which begins this Monday, April 5:

• Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
• Requires borrowers to be fully released from future liability for the first mortgage debt and, if the subordinate lien holder receives an incentive under HAFA, that debt as well (no cash contribution, promissory note or deficiency judgment is allowed).
• Uses a standard process, uniform documents and timeframes/deadlines.
• Provides financial incentives: $1,500 for borrower relocation assistance; $1,000 for servicers to cover administrative and processing costs; and up to a $1,000 match for investors for allowing a total of up to $3,000 in short sale proceeds to be distributed to subordinate lien holders.

This 14-minute video from NAR Government Affairs digs into more details with answers to questions such as, “Are servicers required to participate in HAFA?” (2:57)

If you just can’t get enough of this stuff, you can also view the 49-minute webinar, “Understanding HAFA: The Home Affordable Foreclosure Alternatives Program,” and read through NAR’s HAFA Information Packet.

Have you reviewed AAR and the Arizona Department of Real Estate’s Short Sale Seller Advisory yet? This valuable resource for homeowners considering a short sale has received a good deal of attention since it was introduced in February. 

In the video below, AAR General Counsel Michelle Lind discusses the advisory on Horizon, KAET Channel 8′s local public affairs program, on March 25, 2010:

Launch in external player

The advisory was also mentioned in a recent Arizona Republic article, “New Short-Sale Advisory Can Help Homeowners.”

Be sure to share the Short Sale Seller Advisory with your clients who are considering a short sale!