Real Clues

[RealClues]#287: When the Lender Says No

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This week at http://www.LuxuryClues.com
"I Left My Heart in San Francisco--The Hearts of Union Square;
Blogger Connect: Congratulations to our friends Mary Pope Handy and
Frances Flynn Thorsen on winning Project Blogger! Need a laugh--we
have a great blog for you; Byron Escorts Five Really Awesome Women in
a Limo; Custom Building Series: Some Like It Hot!

(Sorry for the missed posts last week--our Internet connection at the
Palace Hotel kept going out. When we changed hotels, the same thing
happened! Thanks for understanding).

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Table of Contents
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1. CoachingClues: When the Lender Says "No" (Part 1 of 2)
2. Welcome Notes: Nasty Mortgage Scenario Gets Us Headline Press
3. Reprise: When Markets Go Down, Short Sales Go Up
4. Create a Better Life: Are You Being Coached by a Counterfeit
Coach?
5. Featured Products:
*Back to School Sale
*Free Open House Conversion Script
*SNEAK PREVIEW of our new "Listen and Learn" program launching in
August 2007: Get the Listing Every Time Teleclass
6. Increase Your Production with Personal Coaching
7. Give Us Your Feedback on this Newsletter
8. How to Subscribe/Unsubscribe

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1. CoachingClues: When the Lender Says "No" (Part 1 of 2)
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You have a property under contract, the buyer is pre-approved, and
the lender says, "Your buyer no longer qualifies for this loan." What
do you do?

There has been a quantum shift in the mortgage market. A new credit
crunch is making it more difficult even for even "A+" borrowers to
obtain loan approval. The days of lax underwriting are gone. For the
first time in many years, agents are going to hearing "No," even when
their buyers may be highly qualified. The issue is how to avoid being
turned down in the first place and secondly, if the lender does turn
down your qualified borrower, what you can do to keep the transaction
together.

According to Lou Barnes in his July 27, 2007, column in "Inman News,"

"A 'credit crunch' is a lender strike, and a bad one is a common
initiator of recession: not just raising rates for risky deals, but
choking off credit altogether."

Barnes reported in an earlier column that the regulators at Freddie
Mac and Fannie Mae are tightening standards on "A" borrowers. Barnes'
comment about a credit crunch seems to accurately portray what many
borrowers are encountering all over the country. Buyers who would
normally have no trouble closing are being subjected to a completely
new set of underwriting standards in order to close what would
normally be straight-forward transactions. Based upon previous
markets where prices were declining and foreclosures were increasing,
here are some of the common challenges that you may encounter.

Low Appraisals
Several weeks ago, I wrote two columns on the changing mortgage
market. Several people took me to task for discussing how to keep the
transaction together when the appraisal comes in low. Their concern
was that I was recommending that the buyer should over pay for the
property. There's an underlying assumption here that the appraisal is
correct. During my 29 years in the business, I have seen numerous
instances where different bank appraisals came in at very different
values. An appraisal is a snapshot of the value at a given moment. It
is an opinion based upon objective data. The data is open to
interpretation, however. Who's to say which appraiser's value is more
accurate? Even more importantly, is the appraiser's value more
accurate than the amount that a qualified buyer elected to offer?

The crux of the issue is estimating the value for various
improvements. For example, two properties may have exactly the same
floor plan and virtually identical amenities. One has a pool and no
view and the other has view but no pool. How much does the pool or
the view add to the property? If the appraiser has no comparable
sales with a view or a pool to work from, he or she will have to
guess the value of those amenities. This is just one example of how
appraisals can differ substantially based upon the fact that the
appraiser has to estimate those values. This is also the same
challenge that on-line valuation models encounter.

One of the best strategies to circumvent getting a low appraisal is
to make sure that either the listing agent or the buyer's agent
provides the appraiser with the most complete set of comparable sales
available. Many times the appraiser is relying on closed sales data
and may not include properties that are still under contract. Be sure
to include both sets of data, even if the appraiser elects to only
use closed sales.

It's also imperative that the comparable sales data be as detailed as
possible. Determine if there was a virtual tour for each of the
properties that you included in the comparable sales. If so, include
a link or any pictures that are available on-line. If the pictures
are no longer available, contact the listing agent to see if he or
she can provide them. The more data you give the appraiser, the less
likely you will be to have problems.

When prices are declining, appraisers tend to be very conservative.
Since the buyer generally pays for the appraisal, most lenders will
provide the buyer with a copy if asked. It's an excellent practice to
see what comparable sales were used in the appraisal. Sometimes, out
of area appraisers will select comparable sales that are in two
completely different market areas, even though they may be close to
each other geographically. There may be new comparable sales since
the appraisal was completed. If this is the case, submit the updated
comparable sales to the lender along with a letter explaining the
reasons the property should be appraised for more.

Bottom line: avoid these hassles by making sure that the appraiser
has the best comparable sales available prior to making the
appraisal.

Need more help with lending challenges? Look for Part 2 next week.

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2. Welcome Notes
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Welcome to our new subscribers this week. Each week RealClues
provides you with great strategies to improve both your business and
your life. If you find this issue of RealClues helpful, take a moment
to hit the "forward" button and send it to another friend in the
business.

If you've been reading RealClues, you were prepared for the fallout
from the changes in the mortgage market. Banks from around the world
have been pumping money into the system to ease the credit crunch.
Don't look for a break, however, in the jumbo loan category. You can
expect rates in the 7 to 9 percent range and that's provided your
borrowers have virtually perfect credit. Also, look for virtually all
loans to require full documentation, including tax returns for anyone
who does not have W-2 income.

We had such a messy loan on our new house that we ended up being
interviewed by the Wall Street Journal and the Chicago Tribune.
Yesterday, the Tribune sent a photographer out to catch us "moving
in." The photographer took over 100 pictures--it will be interesting
to see which ones appear. My office is still bursting at the seams
with unpacked with boxes. If you live in the Chicago area, look for
the article in Tuesday's Business section. I don't know if the
Journal will include us in their article or not.

Our Listen and Learn Program will launch the week of August 27, 2007.
We're interviewing the top people in the business to make sure that
you have the tools and the strategies to keep your business going
strong, no matter what the market is doing.

Have a great week!

Warmly, Bernice Ross, MCC, and Byron Van Arsdale, MCC
www.RealEstateCoach.com, www.LuxuryClues.com, www.RossdalePress.com,
www.ConferenceCallTraining.com, and www.TeleconferenceLine.com

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3. Reprise: When Markets Go Down, Short Sales Go Up
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

With the tightening of the mortgage market, it will be much harder
for many borrowers to refinance their homes. It will also be more
difficult to sell them because every one percent increase in the
interest rates results in approximately a 15 percent decline in
affordability. This will probably result in more short sales. If
you're facing short sales in your market, this article can show you
how to successfully navigate this difficult, but lucrative real
estate niche.

http://www.realestatecoach.com/articles_archive/art200609_2short.html

In case you missed Part 1:

http://www.realestatecoach.com/articles_archive/art200609_1short.html

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4. Create a Better Life: Are You Being Coached by a Counterfeit
Coach?
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Lots of people call themselves coaches. Just as there are over 2
million people with real estate licenses, there is a difference in
quality. All of our coaches at RealEstateCoach.com meet the stringent
guidelines set forth by the International Coach Federation to be
called a professional coach. If you would like to know more about
coaching and how to tell the best from the rest, check out this
article that first ran in 2003.

http://www.realestatecoach.com/articles_archive/art_counterfeit.html

If you would like a complimentary interview with a member of our
coaching team to see if coaching is right for you, Email me at
Bernice@RealEstateCoach.com. I would be delighted to chat with you to
see which of our team members is the best fit for you.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
5. Featured Products: Back to School Sale!
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Click on the link below to learn more about what's included:
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Here's a sample of one of the open house scripts from List and Sell:

Converting Open House Leads

Script #32: Working with Open House Buyer Leads Who Are Not
Interested in the Property

Strategy: Use "switches" to motivate the buyer to work with you.
A "switch" is a good property that is not open during your open
house. Choose properties with different bed and bath counts from your
property as well as different price points. As a rule of thumb, open
house visitors look at properties priced about 30 to 40 percent
higher than they can afford. Be prepared to tell them about other
properties you could "switch" them to in their price range.

Prospect: Bernice, thanks for showing me this home, but it simply
isn't right for us.

Agent: Mr. Buyer, I have put together a list of some of the
best-priced properties in the marketplace. Some of them are
foreclosures and probates. Others are excellent properties that are
simply well-priced. Would you be interested in seeing a list of these
properties?

Prospect: Yes, I would.

Agent: Here's the list. To the best of my knowledge, none of these
properties is open today. However, if you're interested in seeing any
of them, I would be happy to set up an appointment.

Prospect: Several of these look interesting. Any chance I could see
some of them today?

Agent: Absolutely. I can meet you at my office on Fifth and Main at
5:15. Let me know the properties you want to see and I'll set up the
appointments. It would also be smart to spend a little bit of time
discussing exactly what type of property you would like to purchase
so I don't waste your valuable time showing you properties that are
not a good fit.

Prospect: I'll see you at 5:15.

Before you spend a lot of time showing someone property, it's smart
to have them pre-qualified with a lender. Also, be sure to conduct a
Buyer's Interview to determine their exact needs.

SNEAK PREVIEW of our NEW Listen and Learn program:
Sign up today for our sneak preview "Get the Listing Every Time." You
can listen to this at any time by first clicking on the link, filling
out the simple form, and open the link. This one hour class will show
you how to get more listings at the right price. What are you waiting
for--there's no obligation. Check it out for yourself and watch for
details about our new Listen and Learn Program starting soon!

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~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
6. Increase Your Production with Personal Coaching
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Looking for a well-trained coach who knows the real estate business?
Our coaching team can help you increase your production and make your
dreams come true! Send an e-mail to Shane@RealEstateCoach.com and
we'll help find the right coach for you.

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7. Give Us Your Feedback On This Newsletter
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

We want your feedback-to share your thoughts and suggestions, please
e-mail us at Shane@RealEstateCoach.com.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
8. How to Subscribe/Unsubscribe
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Visit our Web site, http://www.RealEstateCoach.com to
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Copyright (c) 1996-2007, RealEstateCoach.com and Teleclass4U.com,
LLC. All rights reserved. Permission is granted to reproduce, copy or
distribute RealClues as long as this copyright notice and full
information about contacting the contributors to this newsletter is
attached.

Contributors to this newsletter:
Bernice Ross, MCC, and Byron Van Arsdale, MCC, Owners,
www.RealEstateCoach.com, www.LuxuryClues.com,
www.ConferenceCallTraining.com; www.RossdalePress.com; and
www.TeleconferenceLine.com
Shane Bowlin, REC General Manager

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