june 2012 real estate edition

Real Estate Reinvented

An interview with Exit Realty's tami Bonnell

8

Online Lead Generation10 tips to grow your real estate business with Pinterest

8 Five Ways Real Estate Agents Can Use QR Codes to Get More Leads

25 3711 The Return of the Agent's Long-Lost FriendAfter all these years, the mortgage originator wants to rekindle the relationship

Alternatives to Foreclosures and Bankruptcies for Distressed Homeowners

Real estate agent & bRokeR edition

For the serious real estate professional Issue 006/June 2012

TheNicheReport.com

w w w . e x i t r e a l t y . c o m

Nick LibertEXIT Strategy Realty, Chicago, IL

Out of the box solutions

Does Nick’s story resonate with you? If you’re tired of going it alone, find out how EXIT Realty can be your track to run on. Call Tami Bonnell, President – US, today! 1.877.253.3948

I purchased an EXIT Realty

Franchise in 2009 and have been

absolutely delighted by the experience.

I previously owned an independent

brokerage and felt that every day I

was "reinventing the wheel" in terms

of TEChNOLOgy, TRaININg,

INNOvaTION and standards for my

agents. I was exhausted daily and knew

that I was not providing the best possible

environment for my agents to build

their business. I knew that I needed

systems and models that I could actually

implement versus trying to build my

own from scratch.

all of those things came "in the

box" with my EXIT Realty franchise.

I have experienced phENOmENaL

gROwTh with my agency and I was

the 3rd fastest growing brokerage in

Chicago in 2011. we have training,

TEChNOLOgy, and transaction

management all from EXIT Realty

Corp. International and my job is to

implement and promote the systems

rather than invent them all together. It's

been fantastic working in a collective

learning and growth environment.

I have been far more SuCCESSFuL

by being part of a system and franchise!

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CONTENTS Issue 06 June 2012

PubliShErS Robert Pegg [email protected]

David Pegg [email protected]

MANAGiNG EDiTOr Rick Roque [email protected]

ASSOCiATE EDiTOr Cathy Johnson [email protected]

ACCOuNTiNG MANAGEr Shawna Ingram [email protected]

ADvErTiSiNG DirECTOr Jessica Grizzle [email protected]

ADvErTiSiNG SAlES Hilary Bateman [email protected]

PrODuCTiON MANAGEr Henry Suchman [email protected]

PrODuCTiON ASSiSTANT Dawn Exner [email protected]

CArTOONiST Martin Bradford

COluMNiSTS & CONTribuTiNG AuThOrS Martin Andelman Daniela Baker Tom Bukacek Karen Deis Rick Grant Bill Hart William Matz Karin Narodny Rene Rodriquez Chaibia Sarhrou

Alternatives to Foreclosures and Bankruptcies for Distressed HomeownersTOM bukACEk

11

Steve Harney Talks about Successbill hArT

31

More on Taxes and Foreclosures and Short SalesWilliAM MATz

35

The Return of the Agent's Long-Lost FriendriCk GrANTAfter all these years, the mortgage originator wants to rekindle the relationship.

37

5 ways Real Estate Agents Can Use QR Codes to Get More Leads DANiElA bAkEr

25

Short Sale TimelineskArEN DEiSWhy you need to know about the new rules for faster "short-sale" turnaround times!

23

Online Lead GenerationChAibiA SArhrOu10 tips to grow your real estate business with Pinterest.

8

Embracing RealityrENE rODriquEz The first step to maximizing strategic relationships.

26

Realtor® CRM: Three Services that Can Make You More Efficient TodaykAriN NArODNy

29

DEPArTMENTS

06 NOTE frOM ThE EDiTOr

40 SErviCE PrOviDEr ClASSifiEDS

14 MArkET CONDiTiONS AND ANAlySiS

42 ADvErTiSEr DirECTOry

46 briNGiNG uP ThE rEAr

18 Real Estate Reinvented

An interview with ExIT Realty's Tami Bonnell

riCk rOquE

TheNicheReport.com 5

The Housing Market Is Back, Plain & Simple. The market will never be what it was, at least in our lifetime, but it has clearly turned a corner. This is music to the ears of hundreds of thousands of agents across the United States. For agents who are relatively new from the last few years, it will be a boom to your business. Property values are expected to appreciate in most markets around the United States for the first time since the crash of September of 2008 – actually since before that, because property values peaked in mid-2007. April and May have been the strongest real estate months in several years, and with stable rates and a more pro-business political climate, the market will undoubtedly become more positive.

2012-2013 will see a gradual shift toward the purchase market, and as the distressed inventory continues to dwindle, this will return the market to more a normal buying and selling cycle for agents. The stable mortgage forecast, although still at flat historic levels, reflects strong market

recovery signs in the housing sectors. We are seeing more issuances of new construction permits, mortgage rates continue to be at all-time lows, and most importantly, the health of the U.S. economy rests upon the housing economy. The country will not truly turn out of a recession without a healthy and robust housing economy. This makes us politically and economically very important. Therefore, it is a great time to be in real estate – every time you help a consumer buy or sell a home, you are not only doing a great thing for your client, but you are helping the U.S. economy move forward one home at a time.

The Third Dimension to Real Estate: ExIT Realty. One company doing their part is ExIT Realty. I had the pleasure of interviewing one of the top 100 most influential women in Real Estate, behind the likes of Barbara Corcoran whom I interviewed last month. Tami Bonnell sold her first home at age 13 and has not stopped since. She is the President of ExIT Realty’s U.S. operations, and has led their growth over the last 11 years to the fastest-growing real estate firm in the United States. ExIT Realty established a third dimension to the Real Estate Agent, which is a powerful way to both add residual income and build for your retirement. This strategy has led to low staff attrition, high staff satisfaction and a highly empathetic and contagious culture. What Tami has done at ExIT is both noteworthy and great to see amidst a landscape of real estate firms who foster environments that do just the opposite. You’ll appreciate what you read about Tami, her firm, and their strategies for this next era in the buying and selling of homes.

Ladies & Gentleman, May I Have Your Attention? For many real estate firms, it is the time to plan for the Fall and Spring of 2013 real estate conferences. If you’d like a speaker on housing market dynamics, sales strategies and how to apply innovative marketing to capture market share, please keep us in mind as a featured speaker. There is no better way for us to remain connected to the industry than participating at your state, regional or national conferences or real estate meetings.

My goal for The Niche Report, Real Estate Agent & Broker Edition, is to provide useful insights into the real estate economy and how real estate professionals can grow their business in today’s challenging environment. Remember, if you want to learn more about what we are doing, email or call me (408.914.5895) and I’ll jump on a plane and come visit with your real estate team!

Thank you – I look forward to hearing from you!

Rick RoqueManaging Editor, [email protected]

NOTE frOM ThE EDiTOr

MEMBEROfficial

Real estate agent & bRokeR edition

6 June 2012

SubSCriPTiONS

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An annual subscription is $24.99 (twelve months/twelve issues). For additional copies being mailed to the same address please call 866.964.2695 or email us at [email protected] for multi-copy discount.

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EDiTOriAlS / ArTiClES

To submit an article for consideration in The Niche Report, please send an email to [email protected] or call 866.964.2695. We are interested in original writings relevant to real estate agents and brokers and other real estate professionals.

If you have a comment or question about an article or editorial published in The Niche Report, or if you have a suggestion for a topic you would like to see featured in a future issue, please send an email to [email protected].

ThE NiChE rEPOrT POliCy

The information and opinions expressed by contributing authors and advertisers within The Niche Report do not necessarily reflect those of BODA Publishing, LLC employees and should not be considered as endorsed or recommended by BODA Publishing, LLC.

Published monthly by BODA Publishing, LLC PO Box 494, Bentonville, AR 72712 Phone: 866.964.2695 Fax: 703.991.2362 Email: [email protected] www.TheNicheReport.com

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8 June 2012

I am sure you have all heard of the giant baby, Pinterest. You might already be on its addicted club list (especially if you are a woman) or you may have

just heard about it from family, friends, or read about it online.

So, what is Pinterest and why is it getting all this attention from regular users as well as from a lot of marketers? Why as a Real Estate Professional should you jump on board and become an expert at it? Most importantly how can you utilize it to grow your real estate business? That's what we are looking for at the moment, growing our businesses. Right?

Pinterest is a social image-sharing site that is basically like a virtual bulletin board that allows its users to connect and organize images that are of interest to them.

Despite its young age, Pinterest has grown to be the third-largest Social Media Site on the planet and the fastest-growing site on the web today. It is growing faster than Twitter or Facebook did in their infancy. According to Mashable, Pinterest drives more traffic to blogs and

websites than Google+, YouTube and LinkedIn combined. That statistic alone tells us this site is worth investing some of your time. But I am not done yet . . . here is what is of the most interest to you. Almost 80% of Pinterest users are college-educated females between the ages of 25 and 34, and I am sure you are aware of the fact that this is also one of the fastest-growing segments of homebuyers. Most of these women are using Pinterest to collect ideas about home decor, interior design, dream homes etc…. These users are your potential clients and they are all hanging out on Pinterest, each spending an average of 98 minutes a day.

So how can you get on board and utilize this platform as an Internet marketing tool to grow your real estate business?

I know that some Real Estate Professionals are already taking advantage of Pinterest and using it to grow their businesses. I also know that a lot of Realtors are still complete newbies when it comes to Pinterest marketing, so let's talk about some basics and familiarize you with a few terms before we dig into the more advanced stuff.

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Pin: An image posted on Pinterest.Pin board: A collection of different pins posted under one theme.Repin: Reposting someone else’s Pin or image.

Pinterest is all about pinning images of interest to you that other users can like, comment and repin.

So now let's dig a little bit deeper and talk about how you can use this amazing tool to your benefit. If you look at the definition of a pin in Pinterest you will find:

“A pin is an image added to Pinterest. A pin can be added from a website using the Pin It button, or you can upload images from your computer. Each pin added using the Pin It button links back to the site it came from.”

So basically your goal is to be pinning images that are interesting enough and worth getting repinned by other users. The more people that repin your pins or images, the more back links you get to your site or blog. Also, the more likes, comments and repins you receive, the more visibility your pins will get.

So let's talk about how you can get your Pinterest followers’ attention and engage them with your pins:

1) Share high-quality pictures: That is the first thing I want to talk about. Because Pinterest is a visual site it is all about pictures, so pinning high-quality pictures or images will make sense here.

Try to include quality pictures to all of your blog posts and make sure that you target them with the right keywords that users might be searching for. This will make Pinterest index your pins properly on its site.

Don't forget to always put links back to your blog/website; remember, we want to drive some traffic.

2) Make your Boards interesting: The reason Pinterest is growing this fast is because their users get to share what interests them, pin the places they love visiting, food they enjoy eating and home decor ideas they like! So for your pins to grab that attention, they need to tap into their interests and be worthy for them to repin and engage with.

3) Showcase your listings: Pin high-quality, beautiful pictures of homes you are selling, just like you would do on your website or craigslist, and make sure to include a link back to your website or blog. Make sure that you have the right to share these pictures.

4) Don’t be too much of a self-promoter: Focus more on educating your followers and sharing what they would like to see, like images from a pool design company, interior


10 June 2012

designs, and home decor websites. This will make people more interested in following your pins, and feel that you care about their interests and that you’re not only pinning to promote your listings.

5) Ask your clients to pin pictures of themselves in their new houses and tag you. You can then repin these pictures into a “Happy Clients” Board for example. This is great for social proof and it might drive some interested prospects to your website.

6) Use videos: We talked in a previous article about videos and how powerful they are to your business. Well, Pinterest has a separate section for videos. You can create a video and add a Call to Action in the description or use annotations (check my YouTube article) for the viewers to Pin your videos or follow your Pins on Pinterest.

7) Encourage followers’ engagement: We talked about how likes, comments and repins will help your pins get more authority and visibility. Sometimes even if your pins are super interesting, people still need a little push to engage, and that's fine. Try to include questions in your descriptions like “would you like to have a kitchen like this one?” or “What colors do you like in your bathroom?” Basically something to encourage them to comment. You can also include a call to action for them to “like” or “repin”: “if you like this Pin hit the repin button” for example!

8) Optimize your descriptions: When creating a description, make sure that you add the keywords that people might be looking for when searching Pinterest. Something like “Las Vegas high rise condos” or “Vegas luxury homes.”

You can also use hashtags like #style, #home decoration, #luxury homes…etc, just like you would do with Twitter. You can add as many hashtags as you want – just be careful not to look spammy!

9) Be consistent: Consistency is the key to any online marketing strategy; you want to keep pinning regularly and to plan it in your schedule just like you do with any other social media. Momentum will help you grow your followers and their engagement with your pins, which results in more traffic to your site and ultimately more business.

10) Let people know you are on Pinterest: Add Pinterest “Pin it” and “follow” buttons to your blog and/or website. This will encourage your readers to pin your images and follow your pins on Pinterest.

You can go to Pinterest and choose a button you would like to add to your site. If you are not tech savvy, your developer can install the buttons for you.

After all, Pinterest is a social media site, so be social, try to regularly ‘like’, comment and repin other users’ content. Engage with your followers and use it as a networking tool with businesses from other industries.

A lot of businesses can work side-by-side with real estate agents, so try to use that to promote one another and gain extra visibility and access to more prospects.

Finally, I want to add that the best way to learn is to practice. Get a Pinterest account if you don’t have one yet and start spending few minutes a day browsing around and looking at how other Real Estate Agents are using it for their business.

Chaibia Sarhrou is the founder of CS Social media, an Online & Social media marketing company specializing in direct response marketing techniques in the Real Estate and mortgage Industries. She regularly speaks to sales teams educating them on monetizing their social media and online marketing efforts. She does this by implementing simple, yet sophisticated strategies that are ready for anyone to use, but many seldom do.

If you have any questions or need help with your social media and online marketing please visit www.cssocialmedia.com and send us your questions.



Many homeowners are facing painfully unprecedented tough economic times. The

unemployment rate has been at or near double digits since 2009, and those lost jobs aren't projected to come back any time soon. Higher medical, food, and energy costs, along with tax increases,

have created more unwanted expenses for homeowners. Property values have been dropping dramatically, in many cases putting the home value well below the mortgage amount, making selling the house nearly impossible. The combination of less income, greater expenses, and dropping home values has created a perfect storm for many homeowners, leading to record numbers of foreclosures as families are unable to pay their bills. After all, if you are in this situation, what are your options? Sadly, most distressed homeowners think their only options are bankruptcy or foreclosure. Are bankruptcies and foreclosures the best alternative for the homeowner?

Bankruptcy: Bankruptcy, in most cases, is the worst option for the homeowner. A bankruptcy will only delay the foreclosure process, not prevent it. Once the bankruptcy is

AlTErNATivES TO fOrEClOSurES AND bANkruPTCiES fOr

DiSTrESSED hOMEOWNErSby TOM bukACEk

performed, then the bank will continue with the foreclosure process. Thus the homeowner will end up with both a bankruptcy and foreclosure on the credit record for the next decade! Plus, the struggling homeowner may have to pay the bank deficiencies for the difference between the foreclosed price of your home and the mortgage balance.

For example, if you owed $150,000 on the house and the house sold at auction for only $100,000, the bank could sue you for the $50,000 difference between the note and the sale, known as a deficiency. If you have declared prior bankruptcy, then the bank will know that you will have to pay the loan as bankruptcy cannot be performed again, and they are much more likely to sue for deficiencies.

Therefore, due to the credit damage, the eventual foreclosure, and the high probability of a deficiency lawsuit stemming thereafter, declaring bankruptcy to avoid foreclosure is generally a horrible option.

Foreclosure: Do nothing and let the bank take back the property. There are several downsides to having a foreclosure on a credit report. First, the credit score will take a drastic hit and drop as much as 200 points. But to make matters worse, it takes a long time to rebuild a credit score with a foreclosure on its record. This doesn't just affect the homeowner

regarding the house. Credit card rates can increase, as will insurance rates. Also, it will be difficult for homeowners with a foreclosure on their record to finance other items, such as a car. Second, as discussed in the bankruptcy section, the homeowner can be sued by the bank for deficiencies.

Third, any time a bank forgives a loan amount greater than $600, it must report this debt forgiveness to the IRS and send the homeowner a 1098 tax form. This means that the debt forgiveness amount will be considered by the IRS as taxable income. For example, if you owed $150,000 on the house and the house sold at auction for only $100,000, since you would not be paying the $50,000, the IRS would consider this absence of expense as ‘income,’ and you would be taxed accordingly. Imagine losing your house, being unemployed, and having to pay taxes on $50,000. Not only is your credit in bad shape, but now the IRS is going after you for payments.

Therefore, due to the long-term credit damage, the high probability of a deficiency lawsuit, and the tax consequences, doing nothing and allowing the banks to foreclose is a terrible option.

What can a homeowner who owes more than the house is worth, can't afford to fix the property, and is behind on payment do to avoid bank lawsuits, tax problems, and credit damage?

Many distressed sellers in this situation looking to avoid these negative consequences will work with an experienced real estate professional who can perform a short sale. A short sale is when the bank ’shorts' or discounts the original mortgage note for the real estate professional in exchange for a quick, cash sale. By discounting the note, the bank will create equity in an otherwise unattractive property and the investor will then be able to purchase, improve the property, and lease or resell. This short sale process takes a great deal of time and effort from the bank as they have to negotiate with other companies to get the discounted note approved.

A successfully negotiated short sale is a win for all three parties involved. The real estate professional will be able to create a profitable transaction. The bank will be able to write off the bad debt, accept a cash payment in return for the non performing asset, and release its interest in the property. The homeowner is able to relieve themselves of the burden without having to face deficiency judgments or tax consequences. While the credit impact will be just as damaging as a foreclosure initially, the homeowner will be able to improve their credit much quicker. In fact, according to FHA guidelines, a homeowner who has had a short sale

on their credit report is eligible for consideration for an FHA home loan in as little as two years, provided they have steady income and a history of paying their debt since the short sale occurred.

Homeowners who are behind in payments, have a house in need of repairs, and owe more than the house is worth have better alternatives than declaring bankruptcy and having their homes foreclosed. The consequences of these two options can lead to lawsuits and IRS problems. Working with a real estate professional can alleviate a great deal of stress and pressure, eliminate lawsuits, and reduce your tax consequences.

When searching for a real estate professional, the key is to find experienced professionals who have handled several transactions of this nature. Short sales are tricky in nature, and you will want to use a real estate professional that has experience. Remember, not every Realtor® understands the short-sale process. More times than not, you will have success working with investors who are going to negotiate and purchase the property directly from the banks rather than Realtors® who will just list the property. Consider the bank’s perspective. Would a bank rather spend three months time researching and negotiating for a price to give to a Realtor® and ‘hope' to sell, or spend this time with an investor who is going to purchase?

Finally, when selecting a real estate professional or company, you should always use the services of a company that is run by licensed professionals on its staff and is an accredited member of the Better Business Bureau. If the company you choose makes a mistake, your home could wind up in foreclosure. So make sure you use the right group.

In conclusion, many distressed homeowners who are behind in payments, suffer from decreased income or increased expenses, and owe more on their properties than they are actually worth file for bankruptcy or allow the bank to foreclose. There are grave consequences to these actions that include lawsuits from the bank, tax consequences with the IRS, and credit damages. Having a short sale performed on your house by an experienced, qualified real estate professional can prevent many of these negative consequences from occurring and allow the homeowner to rebuild their credit quicker and move on with their life.

Tom Bukacek is the marketing Director for the Entrepreneurs-Incubator, a real estate coaching company dedicated to assisting the new investor with education, systems & processes, and marketing techniques for success. For more information, please visit http://www.entrepreneurs-incubator.com.

12 June 2012

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MArkET CONDiTiONS AND ANAlySiS

by riCk rOquE

ThE hOuSiNG MArkET iS bACk

lET’S STArT buyiNG & SElliNG

Okay, it is time to say, unequivocally, that the real

estate markets have stabilized; it is time to tell borrowers, confidently, that this is the time to buy a home (or two). There is a difference between selling and speaking to the facts. For months, many of us in the housing market have talked to a recovery of home sales, but this was based more on hope and optimism than economic data. This has now changed. We have the data, economists are less shy about talking about the ‘bottom of the market’; property values are now projected to improve and, quite honestly, the forecast for the bottom was the 3rd or 4th quarter of 2012. To have these declarations in the 2nd quarter, nearly 3-6 months before economists thought it would happen, is a very

good sign of things to come.It is worth noting, this has been

an ongoing theme in this publication for several months. So the data below is not new to the religious reader of our beloved publication, but the difference month over month as the story continues to unfold – this is important. It is like the news cycle where you need to cover the same story as more information is released to the public. Economic data is like a puzzle where each piece is released one at a time while economists attempt to forecast which pieces come next, and where they will fall in the end picture. This makes economic or industry forecasting difficult. The housing market is truly complex, with many economic, financial and industry-related factors.

Let’s face it, there are thousands of companies that are directly involved in the purchase or sale of a home – mortgage, title, appraisal or real estate firms to name a few. And there are many more who are associated with the preparation for a sale or purchase or that follow

the transaction, such as carpenters, contractors, plumbers, electrical utility companies, NETFLIx, Comcast, landscape companies, Home Goods, Target, COSTCO, Home Depot, and a host of other companies. With so many workers, markets, companies and factors, this leads to the challenges. When you build assumptions and one economic assumption is predicated upon another, it is easy for the economic model to fall apart when one vital assumption proves to be false – understated, overstated or just plainly incorrect.

APril by ThE NuMbErSSales of existing homes rose

4.6% in April to annualized rate of 3.4 million units, following decline in February and March. Purchase of single-family existing homes rose 3.0% to an annual rate of 4 million units. The April sales tally of existing homes represents the strongest reflection of a housing recovery and consumer confidence in light of historic lows in mortgage rates.


14 June 2012



Sales of existing homes rose across all regions across the United States, with the Northeast (5.1%), West (4.4%) and the South (3.5%) recording larger gains as compared to the Midwest (1.0%). Distressed properties made up 28% of existing home sales in April, the lowest since October of 2008 just shortly after the market crash. This reflects a gradual reduction in distressed inventory, and all of us Real Estate Professionals, we say AMEN to that! Let that inventory dwindle!

WhErE iS rEAl ESTATE AND WhAT ShOulD WE ExPECT fOr 2012 AND bEyOND?

Economic and mortgage finance forecasts from The Mortgage Bankers Association (MBA) based in Washington, DC, estimate a projected $1.1 trillion in residential mortgage origination volume in 2012, and roughly the same projection for 2013. This is important because as mortgage lenders anticipate demand and the corresponding volume, the mortgage rates and street costs for a mortgage are constructed to establish a profitable business model. The industry that supports the qualification of borrowers for a mortgage is no different than any other business. You establish a budget to cover your costs, make money, and of course mitigate your risk by avoiding higher-risk investments – in this case, lending money to risky borrowers. If overall demand is soft, then there are fewer ‘quality’ borrowers to compete for, and as a result, lending standards remain tight. If demand is high and production volumes are expanding, then this loosens the pipeline leaving more mortgage deals to go

around. As a result, companies have a greater appetite for risk and can experiment with various mortgage promotions. This is a function of business psychology in any market. Banking and mortgage professionals are people too. In these prejudices of today’s market, it is too easy to overlook a consumer psychology inherent in every business; the last I knew, all companies are owned by a single or collection of consumers.

The stable mortgage forecast is a function of lower mortgage rates that have brought higher-than-expected refinance volumes, while new purchase volume has been relatively flat with expected growth across the total percentage of originations in 2013. Previous projections by the MBA in the 4th Quarter 20111 were set at $990B. These are strong recovery signs within the housing sectors as key support services are set to support the sale and purchase of homes, and both legacy and new construction display signs of growth, albeit modest.

Mike Fratantonia, MBA’s senior

vice president of Research and Education, said, “We have lived through a series of unprecedented events over the past month: the debt ceiling crisis in the United States, S&P’s downgrade of the treasury debt, the ongoing sovereign debt crisis in Europe, a commitment by the Fed to keep rates near zero for the next two years, and a stock market volatility that has reached levels not seen since the fall of 2008.”

Favorable to mortgage origination growth and market share adoption for existing firms are a few other key market indicators to both note and keep watch:

• Historic Low Mortgage Rates: Rate Forecasts by the MBA’s chief economists remain unchanged and at historic lows at or below 4.5% through 2013. See chart 1:

• New Home Construction on the Rise: Building permits have stabilized and are gradually on the rise, beginning to reflect a measurable rise in the first two quarters of 2012, which reflected the highest

ChArT 1

16 June 2012


post-housing “bust” increase in permits issued. According to the U.S. Commerce Department, the seasonal adjusted 747,000 new residential housing permits issued in March of 2012 was the highest since September 2008. Coincidentally, reflecting a parallel trend, new apartment community permits issued

were down 20%. These two market trends reflect confidence in the future of the purchase market, a slow but recovering jobs market, improving credit and lending conditions, improving consumer confidence forecasts and the depletion of existing housing inventory that has anchored economic growth since 2008. From

a market supply side, these are the strongest indicators that the market, albeit fragile, has hit bottom, reflecting an opportune moment in the history of the U.S. housing market to invest and grow market share in mortgage origination. See Chart 2.

• Stable and Improving Property Values: Property values are expected to be “modestly’ positive through 2012 and continue appreciating trends through 2013 and beyond; this is a parallel indicator reflecting demand and purchase pressures causing the stabilization and growth in home valuations. According to Zillow’s Home Value Forecast released in the 2nd Quarter of 2012 (chart 3), property values across 19 of the 30 metro areas analyzed by Zillow are to hit bottom in 2012, with anticipated gains across the U.S. of approximately 6.5% in 2013 and forecasted gains of 4% per year thereafter. The gain through the first two quarters in 2012 reflects the largest gains in property values since 2006.

• Leveling Off of U.S. Mortgage Production Volume: Industry origination trends remain heavily refinance focused however. More mature and regionalized firms whose business models are more relationship driven will reflect greater percentages of new purchase transactions. The chart below reflects this composition: nearly 2/3 of the market is refinance and 1/3 (or more) is made up of new purchase transactions. MBA states, “Nothing in the housing market data suggests significant change from previous expectations of a frustratingly slow period with low but steady sales volumes. Purchase

ChArT 2

ChArT 3


application volumes will remain in their present levels and will grow in 2013 and 2014 while the percentage of refinance volume across the total national production makeup will taper off as various government programs (Harp 2.0, Harp 3.0 etc.) legislatively are put into place to assist in keeping the flow of capital in the hands of consumers moving.” The figure below reflects purchase volume increasing in 2012 relative to the 2011 volume of $412 billion, with a total picture of $1.1 trillion in origination volume in 2012 and 2013.

• The Role of Housing in the U.S. Economy: While there is some

uncertainty about how these events will impact consumer and business behavior moving forward, it is clear the housing market is not experiencing the same type of risks as reflected between 2008-2010. Broader economic metrics reflect gradually improving factors for investments in real estate and other industry support services. Housing and support services is a non-partisan market whose national contribution makes up over 17% of the U.S. gross domestic product (GDP). Such a substantial part of the U.S. economy is dependent on the successful origination, closing and funding of mortgage loans through its lending

conduits. This activity supports tens of thousands of businesses in a variety of support industries – landscaping companies, building suppliers, home construction and key home service providers for home utility services and appliances, to name a few,. These facts support an end assumption that regardless of specific policy differences, the careful management of mortgage rates and the movement of mortgage volume for consumers is vital toward economic recovery, stability and growth.

To best serve your clients, staying on top of these trends will make you the educational leader to your clients and referral partners. Study these, learn these and absorb these positive signs for growth. The housing market has recovered and it is time to buy a home (or two). With rates as low as they are and home values at bottom, this equates to a solid investment opportunity in the housing market.

Any questions or feedback on this article, email Rick Roque, managing Editor of The NicheReport Real Estate Edition, at [email protected] or call him at 408.914.5895.

ChArT 4

The Real Estate business is tough. Sadly, there are no loyalties. Each agent is largely out for themselves, while the broker and/or the franchise corporation reap the rewards. This dynamic

between the real estate company and the agent has largely persisted over the last 15 years.

If you are an owner of a real estate franchise or business, how do you build a community within your company amidst a commune of cannibals? In a market that boasts over 1.2 million real estate companies (yes companies), it can be difficult to build loyalty, stand out and genuinely build a legacy. The industry is a mix of people who work in real estate on a very part-time basis, along with those who spend their waking hours understanding their respective market, meeting with prospective clients, brainstorming marketing strategies, meeting with referral partners and, of course, building relationships with other key transaction stakeholders, such as mortgage, appraisal, title and legal partners.

If you have the capital, leadership, and most importantly the vision, how do you grow a regional or national real estate firm? You focus on what others don’t do, and you seek to address the weaknesses in the business model of your competitors.

As the market begins to breathe again, this is what ExIT Realty does effectively and is their reason for growth and success.

ExIT Realty has created a unique opportunity for agents. They have attempted to address the ‘peak and valley’ syndrome of agents where their life (and business) is only as good as the last property they sold.

The two dimensions of a real estate professional is taking listings and making sales; these are the two sides of the buyer-seller ‘coin’. ExIT Realty established a third way for real estate professionals to generate income that can tie together the business life of an agent between closings. This is a sponsorship/mentoring type program that allows existing ExIT Realty professionals to refer and/or bring in additional agents.

Beyond their already aggressive commission splits – which can reach as high as 90/10 (with no desk fees) – the ExIT agent who

Real estate Reinvented

tnR sits down with tami Bonnell of exit Realty

by riCk rOquE

2012 interview series

referred this new agent to the company will receive a residual income stream paid to the agent by ExIT corporate every time the new agent closes a deal.

And the best part? It doesn’t come as a split in the way the new agent makes money, so there is no pyramid scheme or multi-layered marketing system. It is a thank you from the corporation, paid out as a residual bonus for being a positive evangelist for the company culminating in attracting the best sales professionals in the business. Existing agents can sponsor as many new agents as they want into the business; the residual income into the business is uncapped, reflecting an opportunity for agents to make money on the closings performed by all of the agents recruited.

There are two strengths to this model. First, it makes existing agents ‘raving fans’ and aggressive in promoting the strengths of their company; but secondly and most importantly, it builds a relationship focused on the success of the people you’ve recruited. It invests everyone into the long-term success of new agents. This model helps to systemically build a culture that enables agents across an office to help and support one another to close deals. This has been the missing ingredient in many top franchises, and the reason for their lack of loyalty and attrition. This is well presented both as residual income while the real estate professional is working, but also in a retirement program (retire-what?) where the residual income from the sponsored agents continues after years of professional service to the company and the industry. The Sponsorship benefit even converts to a beneficiary benefit. From an industry perspective, something this smart that can build community could only come from Canada with its founding roots stemming from its first office in Toronto, Canada in 1996.

ExIT’s commitment to cloud-based technologies makes recruiting, training, and of course, keeping track of your residual income easy. As a result of this, ExIT’s success has been measureable and growth has been aggressive. Since the growth and character of an organization tend to be a reflection of the leadership, I had the opportunity to speak with the U.S. President of ExIT, Tami Bonnell, while she was attending a CEO leadership conference in Dallas, Texas. She is a 25-year veteran in real estate, a sought-after international speaker on real estate and business development growth strategies, and is considered by many to be one of the top-100 most influential women in Real Estate leadership in the United States.

Hi Tami – I’m just getting my head wrapped around talking to one of the most powerful women in the United States when it comes to real estate (Barbara Corcoran); tell me your story.

Tami Bonnell: I joined ExIT and bought the rights to New England in the late 90’s. In 2001, I became President of the U.S. organization focusing on regional owner and agent growth. I was made to do this job. I sold my first house when I was 13 years old. I love this business. I like the growth aspect of it; it is competitive, strategic, and smart and if you are effective, you can be very successful. I rely upon great people; they make me want to be better, and I, in turn, do the same for them.

I operate very much how ExIT operates: team oriented, building a culture, making sure everyone around me is successful. This is our company, and it translates into every office and every role from around North America. The founder/CEO sincerely focuses on the entire person. He started the company in Canada and in 1998, he moved into the market here in the United States. I understood his vision and how he wanted to grow a company that provided both agents and consumers with a different experience.

As a woman, I started working very young, early on – it was a different picture; it was male dominated. ExIT gave me an opportunity to lead the American market and it has grown ever since. It is a relationship that has invested in everyone’s success. It mirrors our company philosophy and what every agent can do in their respective markets.

What is the business focus of EXIT Realty?

Tami: We are a real estate franchise firm, selling franchises across Canada and the U.S. – with new regional opportunities. Since the markets across the United States and Canada are improving, we are looking for high-caliber people.

I love what you are doing with EXIT. We wish more real estate firms were as committed as you are to building agent loyalty and, of course, looking at all of the relationships involved in the Real Estate transaction.

Tami: Well, for starters, we are getting an excellent response from your publication – there is an exclusive feel – and with many of the real estate publications, it has been the same old, same old thing: vanilla. You have established something fresh and important. You


have bridged that gap between mortgage and real estate so they work more closely together. Mortgages are central to the transaction, everybody on the transaction – appraisal, home inspector, etc. It is a team effort, really. This is our approach at ExIT. We don’t just say ‘team’, we try to build systems so we can measure the big question: how do we get along? How do our agents get along with one another, let alone with the loan officer? All this impacts the experience of the consumer. This is at the heart of everything we do.

Very smart and true, Tami. Yes, we agree. The Niche Report has successfully bridged two disparate industries and bound them together in a publication. I am glad you get what we have accomplished and that the net result can be a benefit to your agents. What is the real estate industry about today?

Tami: Real Estate is about relationships. Some people say it is about technology, but it isn’t. Technology can make things happen – bigger, faster, more transparent and visible – but it isn’t a substitute for the relationship. Our approach is to leverage a cutting-edge commitment to technology, but to serve the purposes of a relationship – both with the consumer and all the partners that make the consumer experience what it is. The consumer wants transparency and service. We leverage technology and our e-platform to educate our agents on the most up-to-date and accurate market information.

We are the smartest in our approach to relationships, and with this, we become the best. As the best, we will become the biggest. That is our formula.

What makes EXIT different?

Tami: What is our differentiator? What builds trust and the relationships we have is our ability to provide information, how it comes together and how it is applied.

It is important to support and nourish with information the ‘dirty dozen’. I’ll explain the dirty dozen further, but it is important to remember that agents are shifting companies. Agents are shifting companies because they are unhappy, but there is a desire for people to stay. They want to stay.

Here is a short list of ways we separate ourselves. There are three different types of companies – conventional, agent-centric and interdependent companies. We are more interdependent because we build teams and a culture that invests in the mutual success of one another. Additionally, there are a number of things they look for in a company, or reasons they stay with the one they are with:

• The#1thingtopproducerswantisvisionfromtheirleadership

• Agentswanteducationandsalestraining–thisisthekey part in investing in people

• Agentswantsmarttechnologyandasounddigitalmarketing strategy

• Wehaveamarketingprogramthatcantrackcallsandclient touch points, and manage lead generation

• Agentswantastrongandtrustedbrand• Themostimportantthingis,agentswantskininthe

game for all parties – and not just their own; they want to see that their company is invested in them as much as they are invested in their real estate firm.

We recognize that our assets are good agents, and everything else exists simply to support them.

The Dirty Dozen – What is that?

Tami: It is important to establish your ‘dirty dozen’ (see The Niche Report – May issue). As a real estate professional, It is important to broaden your network to a core ‘dirty dozen’ so you can both listen to the market and grow within it. This dirty dozen keep you plugged in and up to date as to what is going on in the marketplace, while

20 June 2012

you contribute similarly. It puts you in both teaching and learning mode and it helps you keep in touch with what you should be focusing on, and stay on top of the market.

Ok – I get it. A core group of people who are both contingent upon you, and you upon them, throughout the buying or selling of a home. I am assuming some members of this team may even be non-housing related but can add some economic value or some out-of-the-box type ideas that may be applicable to your business.

Tami: Yes, these are people who work on a larger scale; they can act as a good forecaster or barometer of the market. It is a way for people to add value to one another, and keeps you ‘out there’ and not behind a desk. As real estate agents, our jobs are always to look at the big picture and, of course, understand the details of each market. The goal is to connect, educate and use the tools around us so we can excel.

For them in their own market, agents need to focus on where they are. The composition of the “dirty dozen” varies, but here are a few of my favorites to have in that list:

1. Mortgage company – a mortgage representative2. Appraisal3. Home Inspector4. Attorney 5. Title representative 6. Insurance company7. Depository bank – commercial8. Credit union9. Planning board / zoning10. A nonprofit representative 11. Technology rep12. Marketing / PR firm representative

In groups like this you begin to understand how important relationships really are. This makes the agent, the “Educational spigot,” give them what they want – information on their neighborhood, community etc., that is as mutually beneficial for their businesses as it is for yours. We’ve all heard of the Golden Rule –”Do unto others as you would want done unto you,” but there is a Platinum Rule, and that is, “Treat others simply how they expect to be treated.” This makes a lot of sense to me.

How do you leverage technology and how does this help you drive business?

Tami: I utilize technology to better know my clients – Facebook, LinkedIn. People want to matter today. Everyone has a brand they are looking to build, and

agents exemplify this. Everyone wants to matter in their professional lives. In order to build this, they want to break down the boundaries that traditionally separate people, employees and companies from one another. Technology is a great way to build community. ExIT is fortunate as we have an excellent technology department with specialists that understand both technology AND the real estate markets. This enables us to serve consumers, and not just sell to them. Technology, if used in the right way, can humanize the sales relationship.

Look, consumers know more about their investment than anyone else. So, agents need to stop “selling people” – poorly trained agents sell way too much; consumers do not like to be sold. The goal is to leverage technology for top-of-mind awareness. We are human beings – you have three kids, an anniversary, something going on with your health – these are things technology can easily keep track of, send out notices, best wishes cards, etc. Technology ironically can transcend your interaction with the consumer so it isn’t just a transaction.

What is the best way to build a real estate firm?

Tami: Investing in your people.

You are right, Tami – most real estate agencies do not invest in their agents because it is assumed they will not stay, and you are only valued as much as you produce. What does that say for the industry when a company like EXIT is trying to do something different?

Tami: Well, Rick, sometimes it is appropriate to advise your client that it isn’t the right time to buy, or to hold off for some perceived reason, etc. Being honest and losing a sale in the short term can pay much bigger dividends later if that is the right thing to do for the consumer. People need to know that you genuinely care. As a real estate agency, we want that client for life – we want them to feel they are drawn to us in a unique way. We are seeing this because this is more than a marketing slogan; it is something we systemically put into place in our agent-client relationships.

You are right; I hate the ‘customer for life’ marketing campaign because so few companies actually deliver on this promise. How do you successfully accomplish this?

Tami: We don’t deal simply in real estate – we teach people how to be great real estate professionals, but we help people see the entire human being and the life circumstances behind buying or selling a home. Our agents need to understand the 30,000 foot view but they need to


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personalize things – the street-level view of where they are. So they know what is selling, what is important to people – what the consumers’ concerns are.

This is why our agents stay with us. We are a law firm of sorts – or a doctor’s office. We build relationships, and those relationships are retained. We aim at building an integrity-based culture so we can work smarter and our agents can add the most value. The bottom line is: adding value to clients drives the most revenue. This is what doing the right thing accomplishes, when it comes to serving clients well. It is the nature of the referral. If people trust you, they will do business with you. We have built a trusted brand in the real estate market. Agents are taking notice from around the country.

How are you seeing the market today – is it improving? In light of this, how is your workforce evolving?

Tami: Most definitely. Don’t get me wrong – short sales are still out there, but quite honestly, there is a lot of good business out there. There are “first time” homebuyers, property investments – baby boomers are looking at downsizing or purchasing a second home. The recession has hit them hard, so it has taken them a while to come out of the real estate comma that hit everyone so hard.

Average age of a first-time homebuyer is early 30’s. We have to work on two sides. We need to fit the demographics as a company, and we are doing this. In the next 3-8 years, 50% of the industry is going to retire – it is a great recruiting message. How do you draw in young people, if they are commission-only and you are only as good as your last transaction? This becomes a challenge. Our sponsorship program addresses this and makes it more attractive to new college graduates wanting a career in real estate. We are seeing a lot of agents – young agents.

Tell us about your growth.

Tami: We are growing aggressively across North America. Real Estate professionals are buying regional franchise opportunities in target regions, and we are excited and humbled by this growth. They are investing in us, and we in turn are investing in them. Behind their enthusiasm, they know they are building wealth for themselves as well as for their agents as they come on and take advantage of our sponsorship program. This system is a solid financial plan to help promote a positive, shared-logic-type culture that helps people work more closely together; it invests colleagues together in their mutual success. We are a very empathy-oriented company, and this shines through this program.

Agents are responding. Today, we have tens of thousands of agents. Our goal is 100,000 with 3,600 offices that love our company and that serve the consumer. It is a simple vision with the right plan to make it happen. In the first quarter of this year, we are doing 166% more business than first quarter last year; this reflects our strength as a company first, coupled with the improvement of market conditions.

We have a conference every year – this year it is in October in Nashville. This is a way we can recognize excellence and, of course, continue to build our culture. You should come and experience it.

Tami is a remarkable real estate leader. She understands what is most important for a real estate agency, and that is the purpose and primary contribution of a company like ExIT. There is a real opportunity to provide agents with a different professional path, one that enables both your own growth and the growth of those around you. This kind of culture is contagious – but you mostly value it when you’ve experienced something so negative that typically undermines your growth and not promotes it.

We can expect a lot from Tami and ExIT Realty. We will provide an update toward the end of the year on the growth of ExIT and how 2012 turned the corner in real estate.

Rick Roque is a Housing (mortgage and real estate) professional, and is managing Editor of The NicheReport, a national mortgage and real estate publication. To contact Rick to speak at your company or state conference or comment on this article, call 408.914.5895 or email [email protected]

The horror stories are everywhere. Short-sale approvals have dragged on and

on. Borrowers and real estate agents don’t hear a peep from anyone. Clients give up and let the home go into foreclosure.

That’s all in the past (we hope). The new short-sale timeline process has changed effective June 25, 2012. Fannie Mae and Freddie Mac have introduced policies to expedite the pre-foreclosure sale process.

Now, mortgage servicers must follow the policies outlined for all conventional mortgage loans held in either agency’s portfolio. Servicers are “encouraged” to follow these requirements with respect to mortgage loans sold to either Fannie or Freddie, including FHA, VA and USDA loans they may have purchased.

Knowledge is power, and by knowing the required timelines to process a short-sale approval, you’ll be able to challenge those lenders who are dragging their feet and not getting the job done.

Here’s the short version: • Establishesmaximumrequiredresponsetimesfor

ShOrT-SAlE TiMEliNES Why You Need to Know About the New Rules for Faster

“Short-Sale” Turnaround Times!

by kArEN DEiS

pre-foreclosure sale offers submitted for consideration• Requiresservicerstoprovideborrowerswithstatus

updates during the evaluation process, and • Allowsservicerstorespondtounsolicitedpre-

foreclosure sale offers without first requiring an evaluation.

Here’s the long version: There are three types of short sales that are covered

with different timelines for each:

1. Evaluation of Borrower Response Package o 3 days – notify client that their request has been

receivedo 5 days – determine what documents are missingo 30 days – determine if they will allow short sale o 60 days – prepare documents for client to signo Client has 14 days to accept or reject the agreemento Optional 10-day extension at client’s request

2. Short Sale without Short-Sale Agreemento 10 days – Mortgage company must respond with

approval or denialo 5 days – Given to borrower to respond, if short-sale

offer is madeo 10 days – If borrower makes a counter offer,

Mortgage Company must respond in 10 days.


3. Pre-foreclosure Sale Received with Borrower Response Package

o 3 days – notify client that their request has been received

o 5 days – determine what documents are missingo 30 days – respond with an approval; approval with

conditions; deny; counter-offer; or still under review. o 5 days – If the offer is “deny with counteroffer,”

borrower to respond with decision of the counter offero 10 days – When client responds, must communicate

response with counter offer. o 30 days – If response is “still under review,” and

extension of 30 days is allowed, however, mortgage company must give weekly status reports to borrower

o 60 days – From first request, servicers must respond with final decision.

Note: These are “business days” and not “calendar days.”

This is a good thing for the housing market. Right now there is a backlog of homes and borrowers that could benefit from a quicker path to a short sale as a foreclosure

alternative, as well as myriad processes and paperwork – but no accountability or service that the servicer is obligated to follow on a consistent basis.

Knowing the new short-sale timelines can help you get your deal closed faster and challenge the servicers if not met.

This new requirement from the agencies provides a single point of contact for the homeowner wishing to find alternatives to foreclosure. It provides a clear path for all parties involved, and a defined timeline where one can finally see a light at the end of the tunnel.

Short sales, pre-foreclosure sales and foreclosures are already an emotional and frightening experience for most folks, and these new standards set by Fannie and Freddie for the servicers will now be required to meet deadlines for the steps to qualify and be approved for a short sale.

I hate to be “Debbie Downer,” but one thing is missing from this new short-sale timeline rule—there are no penalties or repercussions if these timelines are not followed!

Karen Deis, President, ApartmentTookKit.com, providing apartment address mailing lists and marketing systems for attracting leads from apartment complexes. Why market to apartment complexes? Because the address never changes, but the people who live there do, so you are constantly marketing to new people.

hOW WE SEE iT

By now you have seen those icons that look like abstract paintings on various marketing products. But do QR codes belong in real estate agents’ marketing strategy?

QR codes are a cutting-edge method of directing consumers to a company’s website or landing page when they scan their mobile device over the image.

QR codes are a fast-growing marketing strategy for all types of companies. They can be a great way for real estate agents to attract potential buyers and sellers. Before beginning to incorporate QR codes into your real estate marketing strategy, it is important to review some essential facts.

QR codes are meant to be used by consumers who have smart phones. For QR codes to be effective, your company website must work with mobile devices. It is also important to realize that your audience may not be familiar with how to access the information, so it is a good idea to include a set of instructions explaining that they will need to download a QR code reader from their app store.

fivE WAyS fOr rEAlTOrS TO uSE qr CODES:

1. On listings boards. This is perhaps the most obvious use of QR codes. By placing these icons on the listings board, any person passing by the window can easily scan the QR codes and be redirected to details of the property. Another benefit is that these scans can be easily tracked, so your office can determine return on investment for every listing.

2. Through direct mail campaigns. It has traditionally been difficult to track ROI from direct marketing campaigns. However, as discussed in Point 1, embedding QR codes on your

5 WAyS rEAl ESTATE AGENTS CAN uSE qr CODES TO GET MOrE lEADS

by DANiElA bAkEr

direct mail can help your office track the number of visits per listing. A second benefit is that you are able to adjust the direct marketing campaign to the needs of local buyers. This means that specific listings will be tailored to diverse audiences.

3. On business cards. Placing QR codes on agent business cards allows potential buyers (and renters) to easily scan agents’ specific listings.

4. Video tours. As per Heba Hosney on GariousBlog, a popular site that offers social media tips, to go the extra mile in attracting buyers, your listing page could include a QR code that links to a video with a tour of the property and floor plans. This can provide a compelling reason for potential buyers to contact you, thereby providing a great way to convert a lead into a sale. Be sure to use a good camera to record the video. If your office doesn’t have one, you can always rent one using your small-business credit card—and deduct the expense.

5. On your vehicle. While this may not be the most obvious choice, think about how many people notice your car as you drive along. For this reason, the car is a great sales and marketing opportunity. By placing a QR code on the vehicle, anyone passing by can simply scan the code and immediately view all listings for sale or rent in their neighborhood or a nearby location, and contact you if their interest is aroused.

Daniela Baker helps real estate agents and other small business owners compare business credit cards at http://www.creditdonkey.com/business.html. Visit her blog to read tips on how to use business credit to grow your business.


Any endeavor to “embrace reality” requires an honest look at how we got to where

we are today. In short, interest rates dropped in an industry with no barrier to entry. That led mortgage and real estate companies to grow fast and, unfortunately, promote people fast – and that led in turn to

mortgage company leadership in the form of great sales people who had no true management or strategic planning experience.

The pressure to grow and meet demand left very little time to think about the future. “Grow now, capture the business and deal with the challenges later” became the modus operandi. Recruiting and selling became a bidding and price war because companies had very weak and unsustainable value propositions. People were overpaid, which led to attitudes of entitlement and business structures that could not endure a downturn. Entitlement led to elitism and, most unfortunately, a

complete abandonment of customer service. In most ways, the two industries were broken and no one was taking responsibility.

Let’s face it, the mortgage and real estate industry has been through hell over the last several years. Over the last 10 years of working with Mortgage and Real Estate professionals, and over 15 years of working with leaders and top performers all over the country, I’ve found one common trait shared by the best of the best. They all embrace reality and they do it quicker than their competitors.

I decided to share my observations with two good friends, Michael Maher, the Best Selling Author of The Seven Levels of Communication, and Ryan O’Neil, leader and founder of Minnesota’s No. 1 Real Estate team. The conversations we had around this topic were so powerful that I have included them with this article.

It became clear that for both Ryan and Michael, confronting reality and embracing it for positive change was a major part of their success. We talked first about the tension between real estate agents and loan originators. Again, we found consensus around the fact that this

EMbrACiNG rEAliTy The First Step to Maximizing Strategic Relationships

by rENE rODriGuEz

26 June 2012

Reality is merely an illusion, albeit a very persistent one.

- Albert Einstein

tension was caused by years of stress surrounding real estate transactions.

“Some of our agents would work with various well-intentioned loan originators, promises were made and, for many reasons, those promises were often not kept. Obviously that didn’t happen with every transaction, but it happened enough to where as an agent, you became cautious.” O’Neill told me.

builDiNG A fOuNDATiON fOr SuCCESSThe energy shifted when we began to discuss how real

estate agents and loan originators could begin working together to grow their businesses. Immediately, they both embraced the reality that they can’t change the past. They can only affect how things go moving forward, and to do that requires focusing on how to create a truly strategic relationship with their lender.

They both fully embraced the reality that the lender plays a critical role in a transaction that goes far beyond getting the money to the table. The lender in many cases is an extension of their brand, their promise of service to the client. They understand that the client judges the entire

transaction as one experience, not as separate ones. So if it goes bad at any point, everyone looks bad, period.

What makes that so powerful is not just the realization that they are in this together, but the decision-making that follows it. You see, by embracing the reality that both play instrumental roles, they turn that into value by ensuring that they partner with lenders that share the same values that they do. Both Michael and Ryan have intense interview and due diligence processes that are designed to uncover whether they share the same beliefs and have the systems to support those beliefs.

“It’s great when a lender says the right things, but that’s only the beginning. My team needs to see that they have the support and resources to back up their promises. And the good ones conduct the same review on our process as well….” said O’Neil.

Michael Maher likes to make it simple by asking, “Do you believe in under promising and over delivering?” His follow-up is what makes that question so powerful: “Can you give me specific examples of how you manifest that belief?” By asking for specifics, Michael is not only able to uncover whether they have the same definition or

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28 June 2012

expectation around service, but he is also able to gauge the sincerity and commitment to this core value. Everyone will say they believe in under promising and over delivering, but in my experience, very few ever deliver on it, let alone have examples to prove it. By starting with that question, the natural conversation flows to “what systems do you have in place to support you in under promising so you can over deliver?” These seemingly simple questions spark conversations around customer service philosophy and begin to create an agreed-upon set of expectations for how clients are to be treated.

GrOWiNG ThE buSiNESSOnce the groundwork and foundation for service is

laid, you can then move into discussing strategies to grow the business. Another common trait of high-producing agents is that they realize that loan originators typically don’t generate leads for agents, and they are okay with that. They see the value of the lender in helping improve the overall borrower experience of the transaction, and as an additional resource to improve the business.

“My newer agents get frustrated by this and I ask them, ‘did they close the deal for you? Were the clients happy with the experience?’ They need to learn to see beyond lead generation and into ensuring that the entire client experience is a positive one….” O’Neill said.

When I asked Michael for his favorite ways to leverage his lender relationships, he immediately replied, “cross selling through pre-planned scripting, proactive weekly updates to reduce stress, events and seminars to drive more leads and economies of scale that can be reached through combining resources.”

Let’s break these down a bit further.

CrOSS SElliNGOpportunities are always present, but we aren’t always

ready to take advantage of them. By having all parties trained to uncover opportunities, the landscape of new business expands for all parties. Simple things like saying, “I see that you haven’t signed on with an agent yet, may I recommend a professional to you that I trust and will give you the service and attention you deserve?” The opportunities to uncover value are endless, so the more training and discussion around these areas the better. I’ve only seen a handful of groups fully leverage this, because it takes discipline and an investment of time to ensure the right people are in place and that they have the proper commitment. I can assure you that once properly

implemented, the ROI will transform your business.

EvENTS AND SEMiNArSAll agents know they should be offering more events

and seminars but many don’t have the time, expertise or resources to pull them off. Here is a great place for a lender to play a role. The job of a lender requires them to be extremely organized (especially now). Those skills transfer easily to organizing events. Also, many lenders have access to powerful marketing tools and technologies that can also help in driving attendance. By partnering together in these events, an agent can leverage these resources to grow their business. Michael is a big believer in “housewarming parties” and “client appreciation parties.” When done correctly, they can yield all sorts of new opportunities.

At the end of the day, recognizing what we can’t control and being diligent in improving the quality of what we can control will make the biggest impact. It is crucial that we see the opportunity to grow our business by strategically aligning with the right lenders who share our philosophies and level of commitment. Make sure to take the time upfront to ask the tough questions, and be willing to dig deeper for a better understanding of how their business structure will actually support their promises. Your clients will thank you by coming back again. Your referral partners will thank you by sending you more business. Your team members will thank you by staying loyal to your vision. This is what it means to maximize the power strategic partnerships to grown your business.

The 7 Pillars of a Sales Professional is a trademark of Rene F. Rodriguez. Rene is Chief Executive Officer of Volentum, (www.volentum.com) a management Consulting Firm that specializes in sales training, employee engagement, professional influence & change management, with significant expertise in applying brain research to improving results. He has been a trusted advisor to Leadership and Business Teams Bank of America, Coca-Cola, Liz Claiborne, Daimler Chrysler, dozens of mortgage and real estate companies and many other major corporations. As a highly sought-after keynote speaker, Rene's mission is to lead the Resurgence of the Sales Professional and to ignite the voluntary momentum within organizations to reach their goals. For more information on improving your sales process or how to become a more influential leader, please visit www.Volentum.com, www.FollowRene.us or call 612-310-4010.

Gone are the days of Dayplanners and ACT contact databases that don’t sync. In today’s world of cloud-based contact management platforms, real

estate professionals have no excuses when it comes to the management of clients and deals.

Across corporate America, sales teams are adopting cloud-based CRM, or customer relationship management solutions, at a record pace and the real estate market is trailing behind. Below are three CRM services that are simple and cheap enough to get wide adoption quickly:

hiGhriSE Highrise is a well-designed, clean CRM built for any

type of business. It is a great option for Realtors® and small teams because features are limited and the layout and navigation is intuitive.

Highrise lets teams aggregate all of their contacts and deals in one place and collaborate in real time, similar to a internal social network. Highrise also has the added benefit of an integrated to-do list that can be shared or assigned across an organization. Realtors® will love the options to

rEAlTOr® CrM: ThrEE SErviCES ThAT CAN MAkE yOu MOrE EffiCiENT TODAy

by kAriN NArODNy

add tasks and contacts with one-button click. The Highrise

iPhone app aggregates and syncs with all of the information

online.

If your organization requires more robust project

management tools for listings or large real estate

acquisitions, Highrise integrates with the program,

Basecamp, for effective project management.


30 June 2012

TOP PrODuCEr CrM An issue that you may run into with certain

robust CRMs like Salesforce is that they require a huge amount of customization before you can start to use them effectively. This is certainly not the case with Top Producer because it was built from the ground up with Realtors® in mind. Top Producer was built for agents who are mobile, with its primary offering existing on the iPad and smartphones, which may be difficult for agents who spend most of their time in front of a computer. One benefit that we have seen at Marin Real Estate is that it syncs with Google Apps so all of our calendars and contacts stay up to date. We tested Top Producer with

three agents using the same system and didn’t find any problems syncing contact information because of the reliance on the Google Apps contacts.

PODiO Podio is the European CRM that has recently made

huge headway in the US. It is used by BMW, Twitter and Subway to manage contacts due in large part to its customizable interface and apps. Podio is much more than just a CRM. They call it a “work platform,” which allows you to create custom workflows and interactions between your contacts and deals. The biggest issue with Podio is that it may require a little bit of setup time which, for many Realtors®, is a big red flag.

Once set up, Podio is a great platform for managing larger teams and contact lists.

Karin Narodny has been a residential Realtor in marin County, CA for over 40 years. She serves buyers and sellers looking for everything from mill Valley real estate to San Anselmo real estate

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Bill Hart: As we look at the relationship between Realtors® and mortgage lenders over the last twenty years, describe how the relationships have changed.

Steve Harney: Twenty years ago, the agent sold houses and saw the mortgage professional as a necessary evil to get the transaction completed. I think that was very shortsighted. I’m not going to blame the Realtor® alone. I think that both sides were worried about their half of the equation and sometimes the communication between the two sides wasn’t as good as it should have been.

However, today, the real top real estate professionals and the top mortgage professionals are starting to realize that working together right from the beginning—as soon as that buyer walks in the door, maybe even before that buyer walks in the door—has really helped them and the consumer. I think it is consumer driven right now. The consumer wants to know that they have a team working with them to help them reach their dreams. The great Realtors® and mortgage professionals realize that working as a team makes the whole process much easier for the consumer.

BH: I agree, Steve. I think that’s a great way to frame it. And from my perspective as a guy who’s interviewed over 200 top agents and coached a number of Realtors® and mortgage lenders, there is less overall volume which demands an efficiency of scale and synergies that I see working out there. I wrote a blog on this recently: “Forks and Spatulas.” There was a time where everybody in the business sort of had their fork in this really big pie. And now that pie is smaller. And the best people, both on the real estate and the mortgage side, are starting to pull their spatulas out, not just forks. And so you touched on all of it. I’m just seeing it from a slightly different perspective, kind of that “boots on the ground” perspective.

SH: I agree with you a thousand percent. Out of every challenge comes opportunity. I think the challenge—a shrinking market over the last several years—created the efficiencies that you are talking about. It created relationships where people started to depend on one another. As the market starts to go the other way and that pie starts getting bigger, we can’t forget those efficiencies and how important they are. We must take these efficiencies, along with the other things we learned over the

STEvE hArNEy TAlkS AbOuT SuCCESS Bill Hart sits down with Steve for a one on one

by bill hArT

32 June 2012

last couple of years, and project them forward into a much stronger market.

BH: I agree with you and think we’ve seen that in other industries. I’m thinking of the airline industries and automobile dealerships. There were a lot of businesses that were, as they say in Texas, "fat, dumb and happy" for a number of years. When a market contracts, there’s a need for efficiencies. There is a natural rising to the top by the cream—the best of the best. People start to see new ways to do things. As you said, each side probably viewed the other as a necessary evil twenty years ago. Now, there is a true and genuine synergy, Steve, of which you’re certainly at the leading edge as you travel across the country talking about Bridge Builders. I refer to it as “better together." It's the same message: find someone with whom you have a similar world view, a similar way of approaching your business, and create synergies.

I’ll give you a simple example. In the lending industry, for years we have referred to a discipline as an annual mortgage review. So a good mortgage lender would tell their borrower: "I’m going to reach out to you each year. We're going to take a look at your rate and see if it is time to refinance.”

I recently interviewed a woman named Lisa munoz in Austin, Texas, a Realtor® who sells 75 homes a year. She has taken this concept and applied it to real estate. She tells all of her clients: "We’re going to do an annual review. I'm going to come by with a clipboard and look around the property, see what improvements you’ve done, try to give you an idea of some changes I would make, talk about the possibility of refinancing. If that makes sense, I’ll refer you to my mortgage partner.” And she brings in a sense of long-term continuity with her client base, Steve, by talking about an annual review instead of talking to them in five to seven years.

SH: You're right on there, Bill. I listened to your interview with Ms. Munoz and it was sensational. I agree with the point you’re making. On the real estate side, we’re very much a PEOPLE business. On the mortgage side, there has always been more concentration on the BUSINESS aspects of the industry. Many real estate professionals have learned much from the mortgage professionals. They are incorporating these business concepts with the people side of it to really drive their businesses.

BH: Absolutely.

SH: They are the people who are going to see the most

success going forward.

BH: I agree. Historically, there has been more of a business approach on the mortgage side than on the real estate side. There are a few reasons for that. There are people in the mortgage industry that came from financial backgrounds and maybe had more advanced degrees. In real estate, historically, the entrance criterion has not been as difficult. It had been very easy to just dabble in real estate. But, not today. That’s not who’s in the real estate industry today. And I think most of us, including the consumer, would say, “Thank goodness.” Today, although their numbers are fewer, agents' professionalism is higher.

SH: Right again, Bill. You mentioned Bridge Builders before. What we’re seeing is that, in marketplaces where top mortgage professionals are working side by side with top real estate professionals to deliver five-star service to that buyer, both sides are seeing their businesses really skyrocket. Most importantly, it’s helped the consumer, and the consumer is going to make the final determination of who they’re going to use to find a home and get a mortgage based on the services offered.

BH: Absolutely. On the mortgage side, Steve, I see mortgage lenders using real estate information such as Keeping Current matters (KCm), the monthly subscription, as well as the KCm blog, to remove some of the confusion in the industry. They use the data that you compile on a monthly basis to help the person who knows they should buy but are just nervous.

SH: There are definitely people sitting on the fence right now.

BH: There you go, fence-sitters.

SH: We shouldn’t be selling houses to people who shouldn’t buy. But, we should assist the people who are ready, willing and able to buy. We have to help those people realize the opportunity that exists right now. We have to let them know that people are still getting approved for a mortgage at the rate of 8,300 a day!

BH: Unbelievable.

SH: I think there are many people sitting on the fence, worried about whether or not they can get a mortgage. We have to get them in front of mortgage professionals and let them know that while the lending criteria have definitely tightened, they haven’t disappeared. And, if they have a challenge with qualifying for a mortgage today, they can

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work on getting themselves ready in six, nine or twelve months from now.

BH: Exactly. It is going to take time for some borrowers to get their finances together. maybe they need to get more cash pulled together, or they need to improve their credit. Some of the mortgage professionals that I coach have forty, fifty, sixty different people that they’re sort of incubating for the Realtors®. So if we can get completely real with this conversation, one of the dialogues that have happened historically in the real estate industry has been: mortgage lender approaches the Realtor® and says, “I’d like to do business with you.” Realtor® responds—it’s almost like they were taught this in pre-license school— “Great. If you’ve got leads for me, I’d love to talk to you about working together.”

Well, here’s the problem with that: it’s completely transactional, and to be completely honest with you, the mortgage lender typically is not in the lead-generation business. I’ll tell you what business they are in—they are in the lead-incubation business. So my message to real estate agents who have not yet flipped this switch in their head is to

look for the person you connect with, that you have a natural affinity and dialogue with. “I met some people at an open house this weekend, they need a little work. Here’s what I’d like to do. I’d like to turn them over to you. You have your conversation with them and keep me in the loop. I recognize this transaction may not come to fruition for six, nine or twelve months, but let’s work together.” I believe that’s the way that mortgage professionals and Realtors® in this market and beyond can begin to work together even more efficiently. They become a team working with a buyer to help the buyer reach their family’s goals. We'll be able to move them closer to those goals every day until they are not just ready and willing, but also able.

SH: You hit the nail right on the head, Bill. Right now, the market’s picking up in many regions across the country. We’re starting to see more and more people at the open houses. We keep hearing more and more about multiple offers. I know the agent is going to take care of the buyer who gets the home. They’re going to make sure that deal gets to the closing table. They’re also probably going to take care of the buyer who lost the bid, because they know that

they’re ready to buy.However, because they’re spending a lot of time on

those two people, I’m nervous about the other ten people who came to the open house.

BH: It’s a great point.

SH: Who’s working with them?

BH: You're absolutely right.

SH: Let’s at least get those ten people qualified and working with a mortgage person to find out what they need to do to move forward. And if a real estate professional gets a call from a mortgage person saying: "Remember that young couple that you met at the open house? Well, we just found out that they have a hundred thousand dollars in cash and both of them have really good jobs. They're going to buy something in sixty to ninety days. You have to get back in touch with them.” I think these are the things that can really help drive the market.

BH: I completely agree. You know, we refer to that as the “law of the harvest.” Picture yourself in a field walking up to an apple tree. You have a basket and you’re picking the low-hanging fruit. You can fill your basket for a time. But, after a while, all that fruit is gone.

The law of the harvest states: you can’t just be pulling fruit off the mature trees. We need to be planting seeds; we need to be turning over the soil, watering them, feeding them, and watching over time. And I believe that’s what we’re doing. We’re creating a harvest mentality. Steve, I want to ask you about what you’re doing out in the field right now with Bridge Builders because I think it’s unique in terms of building that bridge, just as we’ve been talking about this entire dialogue between Realtors® and mortgage lenders. What would be the primary thrust or focus that you have right now with that group?

SH: In the market we’re in right now, financing is changing rapidly and the real estate market is evolving very, very quickly. No one person can keep up with both aspects. We need a team. We need someone who can stay abreast of all the little nuances and changes that are occurring almost on a daily basis in lending. We have to make sure that, on the real estate side, we have someone who really understands the market and how it is moving forward.

What we try to do with Bridge Builders is find those two groups and put them together. We know the true professionals on both sides really care about the consumer experience. But they have to learn how to communicate better with one another. So, we’ve built a program to help the great loan officers across the country understand the real estate side. We started with a small pilot program and have had amazing results. We're about to open the program to other mortgage lenders across the country. Bill, you’ve been a great coach for many, many years, helping mortgage professionals build their business. We are excited about joining forces with you to make the new program something truly special.

BH: Thanks, Steve. I am also excited about the potential. As we wrap up, I want to close with some sense of action

planning. I would encourage anyone who’s reading this to look at this dialogue—to pin it up on the wall and look at it—and say "Okay, I get it. This is the trend; this is the direction that our two industries are going in together. Thank goodness, we're flying in formation now."

Steve Harney is a residential real estate expert with over 25 years of experience who specializes in sales and leadership training. He authors a monthly informational audio/visual presentation for top professionals titled, "Keeping Current matters,” and travels the country as a sought-after public speaker and trainer.

Bill Hart has enjoyed a dynamic 25-year sales and consulting career highlighted by the development of long-term relationships and high-profile visibility in the real estate and mortgage industries, primarily in the areas of sales and marketing, public presentations and strategic partnering. Bill has taken this knowledge and has focused it on the mortgage and real estate professionals he coaches.

If you are a mortgage professional and would like to learn more about the Bridge Builders program please contact: [email protected]

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The income tax consequences of foreclosure and short sales have been the subject of

much interest due to the mortgage crisis. This article will provide an overview of the major Federal income tax issues. However, it is not intended to provide advice on specific

situations. Rather it will help real estate and mortgage advisors become more valuable assets to their clients by better understanding when to refer borrowers for professional assistance.

The fundamental concept is the Federal rule about Cancellation of Debt Income (CODI). Briefly, debt that is cancelled or forgiven generally results in ordinary income to the debtor, unless an exception, such as bankruptcy, insolvency, 2007 Relief Act, etc. applies. For unsecured debt the application of this rule is quite straightforward. If a man owes $25,000 on a credit card and settles with the

issuer for $5,000, the man has $20,000 of CODI, which is ordinary income added to all his other income for the year.

However, for secured debts such as home loans, the application is much more complicated. For undisputed debts, CODI will only occur if fair market value is less than the loan balance and the debt is recourse (borrower personally liable).

The apparent simplicity of the determining fair market value is deceptive. The unanswered questions are who determines value, and what the standard is. [Section 580a of California’s Code of Civil Procedure (CCP) provides for a hearing to determine fair market value. But that hearing is normally only used in the rare cases of judicial foreclosures seeking deficiency judgments; this at least suggests that non-judicial foreclosures can never have deficiencies, as there is no 580a hearing.] Lender Form 1099 show values that suggest little concern with accuracy, e.g., a recent 1099 showing a value of $777,777.77.

The more complex legal question is whether the loan is


MOrE ON TAxES AND fOrEClOSurES AND ShOrT SAlES

by WlliAM MATz

recourse or non-recourse. Loans can be recourse (or not) by contract or by operation of law. Essentially all home loans are recourse by their terms. So to become non-recourse, it must be by operation of law (or by agreement). Here, it is important to note that the I.R.S. allows recourse to change to non-recourse without being a taxable event, and the character at the time of the debt cancellation that controls. Recourse status must be determined under state law, so there can be different results (and tax consequences) for different states. In California two sections of law interact to determine a lender’s ability to pursue the home borrower personally. CCP 726, the Security First rule, requires the lender to foreclose before it can proceed against a borrower personally. Lenders violating this law can lose both the security and the loan.

The other laws affecting recourse are the anti-deficiency laws. These prevent the lender from pursuing the borrower personally after the triggering event. Nearly half the states have anti-deficiency laws. California’s include CCP 580b (any purchase money primary residence loan foreclosure), CCP 580d (non-judicial foreclosure of real estate secured loans), and CCP 580e (residential short sales). [Note: as of June 2011, CCP 580e applies to 1-4 unit residential firsts and seconds in short sales.]

The combined effect of these two sections of law in California (and states with comparable laws) is to prevent residential lenders from ever acquiring the right to proceed against the borrower personally. CCP 726 requires the lenders to proceed against the property before the borrower. After foreclosure CCP 580d bars any personal action against the borrower. So at no time can residential lenders proceed personally against the borrower. [In the virtually unheard-of event that a lender tries a judicial foreclosure, the lender still does not acquire the right to pursue the borrower personally until after foreclosure

and a CCP 580a hearing to determine fair market value and whether any deficiency exists.] Caution: different analysis will apply in the case of a “sold-out junior”; where the first has foreclosed, the second deed of trust then becomes “legally worthless” and not subject to the Security First rule. Purchase loans for primary residences (including seconds) are protected by 580b even in judicial foreclosures.

The foregoing determinations can have a critical effect on the borrower’s tax liability (or lack). If the loan is non-recourse at the time of the cancellation of the mortgage debt, the U.S. Supreme Court ruled in Tufts v. Commissioner (1983) that the disposition is treated as a sale for the outstanding balance of the mortgage. However, this rule only applies where there is a disposition of the home (e.g., foreclosure or short sale); a loan modification or settlement, in which the borrower retains the property, can result in CODI if one of the exceptions does not apply.

This analysis has been limited to California law. Other states may have comparable provisions. Borrowers should seek an attorney’s opinion for the result in those states, as state law may determine whether a loan is non-recourse. This article does not address the consequences of other alternatives, such as deeds in lieu.

By becoming familiar with the rules for their states, brokers and other advisors are in a position to refer borrowers for professional assistance and recognize improper reporting by lenders after foreclosures or short sales. If a borrower receives a Form 1099 from the lender showing erroneous recourse status or fair market value, the first step is to write the lender requesting a correction. If the lender refuses or fails to respond, the borrower’s tax preparer should report the disposition correctly and attach an explanation of why the lender 1099 is incorrect. While brokers and others in the real estate field should not offer firm conclusions on these tax issues, a basic knowledge of this area will make them a valuable resource to refer clients to qualified tax advisors familiar with the state’s laws.

By William P. matz, B.S., J.D., LL.m. Attorney/broker William P. matz focuses his law practice on real estate, finance, and tax. Having also run an active mortgage business since 1992, he has a unique perspective on the mortgage crisis. He practices in Windsor, CA 95492, (707) 837-2161 ext. 121.

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There are some business relations that just seem custom made for each other.

Imagine an automobile manufacturer without the dealership, or the textbook publisher without the university. For most of the latter half of the last century, real estate sales professionals

and mortgage loan brokers would have fit nicely into this category. That changed about 10 years ago when historically low interest rates and easy access to capital turned home finance salespeople into order takers. It might be about to change again.

Since the beginning of the downturn, the ranks of mortgage originators, especially mortgage loan brokers, have been dwindling. The first to go were call center employees who had nothing to do when the phones stopped ringing, and no real prospecting skills to reload their empty pipelines. These were followed by professional closers who had previously survived by taking apps from

borrowers pre-qualified by call center workers.Today, the professional loan originators that remain

in the business are true salespeople, and that’s fortunate for the home finance industry. Never before have lenders found themselves so desperate for front-line salespeople. According to HousingIntelligence, nearly 40% of real estate transactions that occurred in 2011 didn’t even involve financing, as investors rushed in and buried their cash in real estate in the hopes of future appreciation.

For mortgage lenders, 2011 was the worst year since 2000, according to Inside Mortgage Finance, with loan originations topping out at $1.35 trillion, down 17.2% from 2010. This year doesn’t look much better, with Des Moines, Iowa-based iEmergent forecasting 2012 originations of between $825.6 billion and $914 billion. In a word, dismal.

So what does all this mean to the professional real estate sales person? That knocking you hear at the door is probably a loan originator. Before you send out the dogs, there are a few good reasons you should consider letting

ThE rETurN Of ThE AGENT’S lONG-lOST friEND

After all these years, the mortgage originator wants to rekindle the relationship

by riCk GrANT


38 June 2012

your former partner in.

Why NOW iS ThE TiME TO Ally WiTh AN OriGiNATOrThe professional home finance salespeople who are

left in the business today are the best the industry has ever fielded. They understand the mechanics of cultivating business. They know how to seek out and find qualified applicants and how to get those deals to the closing table. It is true that they are currently suffering through some loan officer compensation and licensing challenges, but lenders expect these compliance hurdles to be overcome in short order.

The biggest challenge these salespeople will encounter in 2012 will come from competitors intent on reaching qualified applicants before they do. To combat this, today’s front-line loan originators are using every marketing trick in the book, including leveraging social media and web-based video. But most will go back to the old ways of generating leads, getting more involved in their local markets, advertising, and forming alliances with trusted third parties, including real estate agents. These tried-and-true methods will serve them well.

As part of this push to beat the competition, loan originators will be calling on real estate brokers and their agents again. Some, who felt abandoned when loan brokers got so busy with refinance business that they forgot their real estate agent friends, may resist this, but that’s a mistake. The best reason for real estate agents to embrace these relationships now is because the mortgage industry currently needs real estate partners more than real estate companies need originators, putting you in an excellent position to capitalize on the relationship. Besides, lenders are bringing more to the table today than ever before.

bETTEr OriGiNATOr TEChNOlOGy EASES SAlESReal estate companies that forge alliances with

mortgage lenders now will find that the technologies originators can bring to bear on the process today are light years ahead of where they were 10 years ago. Consumer-facing technology provided by lenders can make it easier to close deals that require financing because consumers can find the answers they need more quickly.

A few years ago, when mortgage technologists first began working hard on web-based portals, there was some confusion as to who would be left in control of the transaction. While many agreed that the consumers needed to feel like they were controlling the home buying and

financing processes, neither the real estate company nor the mortgage lender wanted to relinquish control.

Today’s mortgage origination software is much more sophisticated, providing interfaces that make it seem like all parties are in control. The result is a borrower that feels better educated and more in control, which empowers them to close deals faster.

Many modern mortgage loan origination systems (LOSs) have built-in functionality that allows the lender to create micro-websites for each loan transaction. This allows the lender to share information in a secure fashion with any party it chooses. In most cases, lenders are sharing status updates with real estate agents and borrowers.

It’s not just the lender’s primary processing technology that is providing benefits to real estate agents - a number of upfront marketing tools have been employed in this area as well. A number of Product & Pricing engines have spawned web widgets that can be placed on a real estate agent’s website in order to providing production information to site visitors. MarksmanLMP from Mortech, Inc., Lincoln, Neb. is a good example.

When it comes to earning consumer trust, nothing beats providing solid information that doesn’t change at the closing table. Tools like the mobile loan closing cost estimator provided by Ernst Publishing can provide an estimate of the cost to close or, if the lender or agent pays a fee, a guaranteed cost to close a given loan. By offering this type of information to the real estate agent, lenders are doing their part to help agents build trust and close loans faster.

OriGiNATOrS hAvE MOrE TO OffEr NOWBut it’s not just technology that today’s originators

bring to the partnership, it’s also the promise of more work. In the old days, the lender often promised to bring partner agents any deals that originated in the institution, but in practice the results were not impressive. Lenders were not good at watching their portfolios for signs that their existing borrowers were ready to trade up, and those that were ready often reached out to a real estate agent first.

Today, loan originators can bring real business to real estate agents in the form of Real Estate Owned (REO) listings. There are currently hundreds of thousands of properties owned by banks. While the lion’s share of this REO has been handed over for listings to the nation’s largest real estate companies, their inability to sell it

quickly is making some lenders reconsider their property disposition approach. This could open the door for other real estate brokers and their agents to get in on this action.

The only caveat here is that lenders are still working through a backlog of loans in default, and that means that more lenders are under government pressure to avoid foreclosure by any means necessary. For some, this means pushing for a short sale that can benefit everyone – the existing borrower, a new homeowner, the loan servicer and the investor. Not an easy thing to accomplish even when you consider that the real estate agent, the party most likely to bring a buyer to the table, isn’t really even considered.

Short sales are a touchy subject, and they have done a good job to keep loan originators and real estate agents from forging tighter relationships, to the detriment of both. Don’t let a less-than-desirable method of stopping foreclosure keep you from working closely with an originator who may be able to bring you more lucrative deals as the year progresses.

As lenders work their way through the remainder

of 2012, the most successful will deploy professional

salespeople back into the market who are very likely to

make their local real estate companies primary targets

of their lead-origination efforts. While some agents

may harbor ill will over the way these same originators

abandoned them in the face of walk-in business during the

historic refinance boom, those that forge new relationships

with lenders are likely to be the winners.

Originators are bringing more to the table than ever

before, including new technologies that will make it easier

to close transactions and increase the real possibility of

REO listings. These reasons should be enough to compel

most real estate brokers and agents to welcome originators

back to the table.

Rick Grant is founder of RGA Public Relations. He has been a real estate and mortgage finance reporter since 1997. Follow him on Twitter at @nyrickgrant.

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After the borrower fell into default on his mortgage, Wells Fargo’s automated system began applying his mortgage payments to interest and fees that had accrued instead of to principal, as required by his servicing contract, which in turn led to him being charged with a virtual waterfall of additional fees and interest. And even after the borrower filed bankruptcy, Wells Fargo continued to misapply his payments, according to Judge Magner’s written opinion.

And why wouldn’t they? I know, it sounds weird to say it, but I think I would have been disappointed had Wells stopped there.

There’s even a terme de l'art for this scenario used by consumer lawyers… they call it a “rolling default.” I suppose the name refers to the idea that once the scheme gets rolling, it’s all downhill from there. I think it should be called a “boiling default,” because once it’s boiling, you’re goose is most assuredly cooked.

Or, wait a minute… hang on… how about we call it: “Getting Stumpfed.”

(Come on, admit it… I’m good.)Judge Magner went on to describe Wells Fargo's litigation

tactics as involving the filing of dozens of briefs, motions and other filings clearly designed to slow down legal proceedings to

such a point that anyone thinking of mounting a legal challenge against a bank quickly finds it essentially impossible.

And since it’s only through costly litigation that the insidious crimes of Wells Fargo become apparent, all the bank has to do is prevent those with limited resources from doing what they can’t do with limited resources. Now there’s a winning business model for you. Like making billions by stopping blind people from seeing.

What sort of a company engineers this sort of strategic core competency anyway? Remember Ford’s infamous Pinto strategy… rather than fix the problem, just settle them as they exploded? Well, this Wells Fargo stuff makes that look as benevolent as Girl Scouts selling cookies after church.

Wells Fargo actually engineered a strategy and built a system to rampantly abuse the individuals in our society least able to defend their interests. This is a bank that deserves to have a statue erected in its likeliness and even its own Lazarus-styled sonnet. I’m just thinking out loud here, but how about…

“The Statue of Larceny”And inside the base, engraved on a bronze plaque, could be

these words…

Give us your jobless, injured, bankrupt filers, whose lawyers won’t work free.

The wretched refuse against whom in court we’ll always score. Send them one by one, homes all sold by substitute trustee,We’ll rape them, rob them, force them out Wells Fargo’s

golden door.

Not bad, right? No? Sheesh… tough crowd. Judge Magner, in an interview with Ben Hallman of

Huffington Post, said that she personally analyzed the loan files of twenty borrowers in her court and found supposed “errors” in every single instance. So, at least we know the systems are working properly, and somehow I find that oddly reassuring.

I don’t know why but there’s something even more terrifying about the idea that we might be getting ripped off by banks in an entirely random way. Like one day you get hit for a hundred… and the next day not only is your entire IRA gone, but two weeks later you learn that the bank bounced one of your checks to the IRS for the penalty on the early withdrawal.

I know, right? Now, that would be rude.I guess I only have a couple of questions I’d like to ask, and

the most obvious is: Why would anyone whose read about this decision continue to bank at Wells Fargo?

I mean, if they do this sort of thing systematically… AND THEY UNQUESTIONABLY DO, how do you know where the other spots are that are picking your pocket for twenty here and twenty there. Because you’re not going to tell me you think this case has uncovered the only place at Wells Fargo where this sort of thing goes on, are you? Come on…

And, my second question is: What do our elected

- continued from page 46

briNGiNG uP ThE rEAr

hOW WE SEE iT

44 June 2012


representatives do these days… I mean specifically? State or federal, I don’t care which… you pick. Because it kind of seems like we’ve quietly been transformed into a lawless society in many ways, don’t you think?

Like in this bankruptcy case… the judge has uncovered the systematic stealing from the defenseless, but it’s not like it’s a major news story, or anything. To the contrary, it’s nowhere. Doesn’t anyone but me find that amazing? How do they do that? Where have all the journalists gone?

I can tell you that I receive more complaints about Wells Fargo refusing to approve loan modifications than any three other mortgage servicers combined. But then, Wells did modify one of the homeowners I wrote about a few months back. I don’t know why, maybe it was an accident.

Here’s one more thing Judge Marner said about Wells Fargo in her written opinion…

"These are loans of working-class people who bought homes they could afford and whose loans were not administered correctly from an accounting perspective," Judge magner said. "I think that these types of problems occur in almost every [defaulted] loan in the country."

Good Lord.So, Mr. John Stumpf… Wells Fargo’s CEO… you just go

ahead committing those criminal acts with impunity. Don’t

change now… go down with your ship. Besides, I’m sure there

are deceptions your people haven’t thought of yet.

Do you have a program that targets autistic children yet?

Or what about something abusive for unmarried pregnant girls

that never finished high school? Or, what about the elderly, are

you doing enough to take advantage of the elderly?

I’m sure you’ll think of something, which is why I’ve told

my wife and daughter to stay out of banks for the foreseeable

future. We only make deposits at the ATM at night, which

may sound crazy, but I’m betting will one day soon prove

considerably safer than being inside during the day.

Lo siento. Que se mejore pronto.

martin Andelman is a staff writer for The Niche Report.

He also writes an almost daily column on mL-Implode called

mandelman matters. He also publishes a monthly museletter and

you can follow “mandelman” on Twitter. Send your responses to

[email protected].

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Does anyone know what’s happened at Wells Fargo Bank? If so, please let the

rest of us know, because in a line-up of TBTF bank CEOs, to stand out as being particularly awful is no easy task… and yet Wells Fargo’s CEO, John Stumpf has risen to the challenge and then some.

At the beginning of April of this year, Judge Elizabeth Magner, a federal bankruptcy judge in the Eastern District of Louisiana, characterized Wells Fargo’s behavior as being "highly reprehensible." Think about that for a moment. That means that the judge decided that to describe Wells Fargo as merely “reprehensible,” wasn’t enough.

Wow, that is something. Can you imagine someone saying that about you… a federal judge, no less? I’m thinking that if a federal judge ever has the occasion to describe my behavior as being worse than “reprehensible,” I’m going to jail for a long time.

Of course, no danger of anything like that happening here… bankers don’t go to jail in this country, everyone knows that. But, in this instance, after more than five years in litigation with a single homeowner, Judge Magner ordered

Wells Fargo to pay the New Orleans man $3.1 million in punitive damages.

Now, if that sounds like a paltry sum for the likes of Wells Fargo, that’s only because it is. And that it represents one of the largest fines ever levied related to mortgage servicing misconduct hardly makes it feel any better.

It’s kind of like being forced to eat dog turd ice cream, but finding out that it’s okay if you pour motor oil on top. Does that improve your circumstances? I guess so, but…

Judge Magner, in her opinion, wrote… "Wells Fargo has taken advantage of borrowers who rely on

it to accurately apply payments and calculate the amounts owed, but perhaps more disturbing is Wells Fargo's refusal to voluntarily correct its errors. It prefers to rely on the ignorance of borrowers or their inability to fund a challenge to its demands, rather than voluntarily relinquish gains obtained through improper accounting methods."

So, what was Wells Fargo doing exactly? Well, they were systematically over-charging the people least able to do anything about it… those filing bankruptcy. In this case, Wells Fargo improperly charged the borrower $24,000 in fees, but it wasn’t done by hand, it was the bank’s automated systems doing precisely what they were programmed to do. Like, anything but an isolated incident.

briNGiNG uP ThE rEArJohn Stumpf, CEO, Wells Fargo Bank

by MArTiN ANDElMAN

- continued on page 44


“

46 June 2012

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Documents

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