The truth of the matter is that there are more properties on the market, fewer buyers, and prices continue to drop due to foreclosures. As a real estate motivational speaker, I speak to thousands of real estate agents and the number one question I receive is “So how do I sell a house in this market?” The way a house gets sold in this market is exactly identical to any previous market, and they are the following:

1) Pricing the property for the market: This is by far the most important decision a seller needs to make to sell a house. No matter what the problem with the house, if it is priced right it will sell. If on the other hand the property is not priced appropriately, statistically speaking, it will stay on the market longer and sell for less than if it had been priced right in the beginning. So, how do you do it?

a. Work with an agent that has access to the MLS system
b. Pull properties that are in closest proximity and are similar in age, square footage, number of bedrooms, and bathrooms.
c. Pull properties that are currently active, sold, and under contract properties.
d. Only look at the above type of properties within the previous 6 months.
e. Once you have found the competing properties, list your property a bit lower than the lowest priced competing property. The reason you do this is so that you can have the most amount of offers, and therefore sell your property in less time and get the best price. Buyers, in general, first put offers on the properties with the lowest list price within a category of properties and then work their way up.

2) Great Curb Appeal: It is vital to have the exterior of the property looking its best, so that when individuals are driving by or coming to look at the property they are automatically attracted to the property.

a. First, make sure that any plants that any potted plants that are currently dead due to the winter have been brought inside
b. Second, make sure that the sidewalks and the front of the property have been properly swept
c. Third, assure that all leaves have been raked from the lawn
d. Fourth, repair any railings that are currently broken

3) Great Interior Appeal: make sure the interior of the property is in move-in condition. Currently, there are quite a few properties are in a horrible mess from the inside, and yet individuals are wondering when they are going to get sold! People fall in love with homes that are clean.

a. First, make sure that the property is sparkling clean
b. Second, de-clutter the house – take as many knickknacks and tons of furniture out of the house.
c. Third, take your personalization away – take the items out of the house such as pictures of the family, leopard skins, and anything that makes it you.
d. Fourth, try to use colors in your house that are accepted by a majority – whether it be on your walls, your carpet or the furniture you choose to keep there.
e. Fifth, if there are appliances or items in the hose that need to be repaired or replaced, go ahead and repair or replace them as purchasers generally cannot imagine how it will look in the future.
f. Sixth, make your house feel like anyone would want to move in and live in your house, similar to a model home at a new home development.

The short answer is maybe. There is quite a bit to know about the economic stimulus before we can gauge what impact, if any, it will have on the economy. Currently, congress and the white house are still trying to create a deal as to what will be in the economic stimulus plan, but there is some positive news. Basically, Bush and congressional leaders have come up with a plan to try to keep the economy afloat, so that a recession does not occur. There is strong belief in congress that if a law is not passed soon, the United States will have a recession, and some are suggesting that we are currently in a recession.

The definition of a recession is when there have been three consecutive quarters of negative GDP (Gross domestic product) have occurred. For the last 3 quarters we have been having positive GDP, in the third quarter it increased 4.9 percent and in the second quarter 3.8 percent. So a recession, not according to the definition and we are not even close until we begin to start having at least one quarter of negative GDP.

So what does this plan entail? This plan costs the American people $150 billion dollars; it gives individuals a tax rebate equating $600 for an individual and $1200 for married couples making less than $75,000 individual and $150,000 married couple. If you, either single individual or married couple, made at least $3000 in 2007 you will still receive $300 for an individual and $600 for a married couple. By throwing money back into consumer’s pockets the hope is that this will ensure that the GDP continues to keep positive and does not become negative. But there is still a clear problem of energy costs being high, and consumer confidence being very low. As well, this little amount of money will not help the ability of millions of homeowners to purchase.

But, there are some parts of this plan that would help individuals purchase and refinance their properties. Specifically, they are stating that they will increase the GSE for a conforming loan from $417,000 to $625,000 which will allow individuals to refinance at a much lower interest rate. As well, they are speaking about increasing the conforming loan limits for FHA loans from $362,000 to $725,000. By taking these two steps coupled with the reduction of the Federal Reserve interest rate, this will allow individuals that currently have subprime loans to be able to refinance them, in theory. The problem still lies in the ability for these individuals to now get approved for loans under the new guidelines which continue to keep changing. This is especially difficult if the individual has been late, and their credit scores have dropped as a result of late payments. This will make it increasingly more difficult for them to refinance their property before the loan readjusts, if their loan is an ARM.

So there has been a lot of talk about this new law that the president has signed, and I know that we all want this law to fix the subprime lending issues we are having. There are quite a few laws that are slated to go through the senate, which have already gone through the house, but unfortunately this law is not really going to be helping us. Why not? Good question. Well this law has quite a few drawbacks.

First, this law is only for those individuals which were on an ARM not for loans which just had an increasingly high interest rate to begin with.

Second, the individual must be able to pay the starter rate. This is a large issue and you will know why if you have been in my subprime class, which I suggest everyone to come. I will be teaching it in January at GCAAR. The reason is that a majority of the issues that we have seeing in terms of subprime defaults are individuals whose loans had not even reset yet. They were not even able to the starter interest rate - so this law will not help them.

Third, there are specific dates that the borrower must fit into. The subprime ARM must have been originated between Jan. 1, 2005, and July 31, 2007, and the reset for the ARM must occur for the first time between Jan. 1, 2008, and July 31, 2010.

Fourth, the borrower can never have been late on their payment by more than 60 days in the last 12 months.

Fifth, when the first reset on the ARM is supposed to occur, it has to be more then 10% of the current starter rate.

Sixth, the borrower’s credit score cannot be higher than 660 and it cannot have improved more than 10% since the loan originated.

Seventh, this law only deals with own that are owned by securities, otherwise known as mortgage backed securities. It does not deal with loans that are currently owned by banks, individuals or investors.

Eighth, the loan cannot have reset already, the first time that it is resetting must be during the dates given above.

Clearly, the program is only for a limited group of individuals. It will not help individuals already having issues, but it prevent this from continuing to occur. Basically, this law was created for individuals who are going to be having their first reset of their subprime ARM and they will not be able to pay the new higher interest rate. These individuals must also not be able to refinance their loan due to their credit score or income. If the meet the requirements set forth above, their starter interest rate will be frozen for five years. During that time the government’s hope is that the individual can be able to refinance their loan. The best possibility for refinancing the loan would be the FHA loan, only once the loan limits are increased. This is a great law for the individuals that fit into this narrow category, but for now we have to wait for laws to pass that help the individuals that are currently suffering. If you have clients currently having issues, below I have given resources that you can contact.

If you have questions or comments on this law please don’t hesitate to contact me and/or comment below.

Thanks so much and see you in an upcoming class!

Prabhjit Singh
Further Resources:

http://www.995hope.org/

Resources from NAR for your client

I get this question in my classes all the time. Agents tell me about clients that don’t want to purchase, and they are scared about the market. They tell me about clients that they have shown a ton of houses to, but they are too picky. They tell me about clients that should be motivated to buy, because they need a place to live and are already selling their house. So they ask - how do we sell a house to them?

The truth of the matter is that what we as real estate agents do is not sell houses. The buyer either wants to buy or not buy. What we do is facilitate the process - so it is smoother and in the best interest of the buyer. We use all of our knowledge and experience to educate the client throughout the process, so in that way they make the most educated decisions they can. At the same time, we inform them of everything they will need to do so that there are no surprises.

So if we don’t sell houses to clients, how do we get them to buy? You don’t. What you do is determine if they are interested or not. Certainly there are ways to overcome some of the objections that they have, but at the end of the day the agent should never try to sell the client on the house. Why? This generally comes off making the agent look bad. It seems as though the agent is only interested in their own best interest. You advise the client what they should do based upon all of their information. When you speak to the client get to know everything you can about them. What is their family, job, life situation? What is the reason they want to buy a home, and specifically now? Only if you look at the client in a full picture will you be in a place to advise your client as to what they should be doing.

So how do you overcome objections then? Overcoming objections are pretty simple if you are strong and do not waiver. Simply stated you look at what they are telling you, and you change the view and give support. For example, if they say they are looking for a property that is the cheapest house you need to help them define what cheapest house means. If they are currently renting, and they live in an apartment for 5 years looking for the cheapest house, how cheap is that house when you add all the rent that was paid out? As well, how many houses really fulfill the desires of the buyer? There are very few. The best house and cheapest house is the one that fulfills their needs. Of course the agent will be there to help the client negotiate and get the best price possible for that house.

You need to be strong when you have clients that aren’t sure of what they want. You need to be able to overcome the objection, and then step back. Allow the buyer to tell you what they think based upon what you have told them. Allow them to make that decision for themselves, so they do not feel like they have been pressured. At the same time, if that client is just wasting your time you need to be able to say - no! Do not be mean and arrogant about it, but be honest about how you make a living and that this is not working for you.

In the long run the agents that are most successful are those that understand how to gauge their clients. They understand where they are coming from and they get them ready to buy a house by maintaining their expectations. They then educate them throughout the process so they make the buyer make all the decisions. By doing this it allows one to really become a great real estate agent.

The Rempower website has had quite a few additions in the last few months. If you have not checked out the Downloads section under the Resources tab - you will be quite suprised at the addition of new documents. Please check it out here

As well, we have added a new Podcast. It discusess the ten steps to be a more successful real estate agent.

Download Here

If you have any questions/concerns/comments please do not hesitate to email us at info@rempower.com Thank you for listening!

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