Real Clues

[RealClues] #339: Agents Beware

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New for August 16-31, www.ListenandLearnRealEstate.com (See Featured Products for detailed descriptions)
The Top Features Desired by All Home Buyers
How to Overcome the Objection: "You Make Too Much in Commission."
How to Avoid the One Behavior that can Cost You the Listing
Which Opportunities Are Right for You?

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Table of Contents
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1. CoachingClues: Dirty Little Secrets in Lender Listing Agreements
2. Welcome Notes: Sneak Preview--Bernice's New Book!
3. Reprise: Secrets of Powerful Negotiation (Part 4 of 6)
4. Create a Better Life: Do You Have What It Takes to Sell a Billion Dollars Worth of Real Estate?
5. Positive News for Positive Realtors(reg): Inventory is Decreasing, Days on Market is Declining, Could the Market be getting better this fall?
6. Luxury Clues:
*Luxury Agents--Do You Have a USP?
*Taipei Restaurant--Unlike Any Restaurant Theme Anywhere
*Billiard Tables--A Work of Art?
7. Featured Products:
** New at www.ListenandLearnRealEstate.com
8. Increase Your Production with Personal Coaching
9. Give Us Your Feedback on this Newsletter
10. How to Subscribe/Unsubscribe

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1. CoachingClues: Dirty Little Secrets in Lender Listing Agreements
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Up to 50 percent of all transactions in many markets are foreclosures, short sales, and REOs. Like it not, these types of transactions are part of the landscape. While you're busy protecting everyone's interest, are you taking the necessary measures to protect yourself and your brokerage?

Back in the early 1990s, I specialized in representing REOs (properties that the banks had taken back in foreclosure). At that time, my role was to do essentially the same thing that I did with every other seller. The banks sent their representatives to regularly inspect the property, they were in charge of making any repairs, and they paid for the utilities.

In 2008, this is no longer the case. In their enthusiasm to list multiple properties from a single lender, agents often agree to pay for the utilities and repairs out of their own pockets. When the property doesn't sell or the lender goes out of business, the agents are stuck footing the bill.

Many agents who represent REOs are also having an issue with lenders not providing reimbursement for the expenses the agent incurred. When agents submit a request for reimbursement, the request is lost, disappears, or the person responsible doesn't return their calls. If the reimbursement is not processed prior to the lender's deadline, the agents can be out the money they paid. Paying the utilities for several listings can run thousands of dollars per month. While this practice doesn't happen with every lender, it's a serious risk you must address if the lender says that they will reimburse you.

Reimbursements are only the tip of the iceberg. Harold Justman, an attorney who spoke at the Foreclosure Workshop at Real Estate Connect, described how lenders are now trying to push the liability attached to the sale of the property on to the brokers and agents. Here are four of the dirty little secrets to look for in a lender's listing agreement.

1. Insurance
Many lender listing agreements require the brokerage to name the lender as an additional insured on their errors and omissions insurance. They also require the broker to indemnify them for any general liability or workmen's compensation claims arising from the agent's marketing of the property. In other words, they require the brokerage to assume the insurance risks that are usually covered by the homeowner's insurance. If the lender is sued, the brokerage is required to defend the lender, even though this is a conflict of interest. The result is that the brokerage now has to pay for TWO separate attorneys to defend the lawsuit.

2. Property Management
Many REO listing agreements require the listing agent to engage in property management. Property management is a high risk activity that requires special insurance. In fact, most errors and omissions policies exclude property management coverage. This means that the brokerage and the agents are personally responsible for any litigation costs or judgments. One solution to this issue is to set up a separate property management company independent from the brokerage. The property management company bills the lender for their services and if there is a problem, it is independent of the brokerage.

3. Disclosures
Many lender listing agreements require brokers to inspect the property weekly and to report defects to the lender. Since over half of the foreclosure properties have significant damage, the brokers are now in the difficult position of having to track and disclose defects. Most agents lack the knowledge to handle this job--after all, that's why buyers use inspectors. This creates a huge risk management issue for both agents and their brokers. By requiring weekly reports on the condition of the property, the lenders shift the disclosure burden entirely to the agents. Furthermore, since lenders in many states are not required to make disclosures about REO property, the liability for those disclosures rests solely on the brokers.

4. Indemnification
When lenders require agents to oversee the repairs on the property, the lender shifts the liability for doing the repairs on to the agents. One of the most important ways to avoid litigation in any transaction is to give a credit to the buyers for repairs. If there is a problem with the work, it's the buyer's contractors that are responsible rather than the sellers and agents. When the agent arranges for the repairs, then the agent and the brokerage is responsible for any problems. Furthermore, some contracts call for a blanket indemnification of the lender on any problems arising out of the property.

What can you do? First, you do not have to agree to a "lethal listing agreement." It's negotiable as is any other contract. If you represent REO properties, have the listing agreement reviewed by an attorney. Justman recommends that your contract include both mediation and binding arbitration. If the lender threatens to go somewhere else, don't be afraid to walk away from this business. If you sold 25 houses where you received a commission of $5,000 per house, the legal fees from a single lawsuit would wipe out every bit of that profit. Furthermore, the cost to your business in terms of the depositions, the trial, and the time away from your other clients is enormous. As Justman put it, "when you're in litigation, you're out of commission."

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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.

Yahoo! I just sent the final chapters of my new book off to layout. Watch for "Real Estate Dough--Your Recipe for Real Estate Success" to be released at NAR this November. I'll be speaking on "BAK2BSX"--what works and what doesn't work in today's market as well as an updated trends session for 2009.

I'm very excited about the new book. It picks up where "Waging War on Real Estate's Discounter's" left off. It's also the first book to give you the best of the tried and true as well as the latest strategies to incorporate web 2.0 into your business.

We have been preparing for this release for almost a full year. When I wrote "Waging War," people wanted training and other supporting materials to go with the book. We'll have these plus much more. Those of you who have signed up for our Listen and Learn Real Estate Program have already experienced the podcast portion of our exciting new programs. We currently have over 80 recordings in our library that you can listen to anytime. The price is $147 for six months or $29.95 per month. There's no long term contract or obligation. Come in, try it for one month, and see if it doesn't help your business.

If money is short, we have one other option. Each month I will select two sessions designed to help you specifically with today's market. These are available for $10.00 for the two sessions. The two August selections include, "Six Ways to Get Sellers to Be Realistic about Pricing" and "How to Calculate Square Footage CMA." You can listen to these two broadcasts any time during the next 30 days for only $10.00. See Featured Products for a complete description.

Make it a great week!

Bernice Ross and Byron Van Arsdale, Chief Dough Makers
www.RealEstateCoach.com, www.RealEstateDough.com, www.LuxuryClues.com, www.RossdalePress.com, www.ConferenceCallTraining.com, and www.TeleconferenceLine.com

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3. Reprise: Secrets of Powerful Negotiation (Part 4 of 6)
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Your language can undermine your negotiation success. Is what you say costing you money? Read the article below to find out:

http://www.realestatecoach.com/articles_archive/art200705-powerful-negotiation-4.html

In case you missed Parts 1, 2, and 3:
http://www.realestatecoach.com/articles_archive/art200705-powerful-negotiation-1.html
http://www.realestatecoach.com/articles_archive/art200705-powerful-negotiation-2.html
http://www.realestatecoach.com/articles_archive/art200705-powerful-negotiation-3.html

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4. Create a Better Life: Do You Have What It Takes
to Sell a Billion Dollars Worth of Real Estate?
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If you want to know the secrets of what it takes to sell a billion dollars worth of real estate, click on the link below.

http://www.realestatecoach.com/articles_archive/art200702_sell_real_estate.html

We need to clear our warehouse of our remaining copies of Steve Kantor's book, "Billion Dollar Agent Lessons Learned." These books retail for $29.95. We're selling ours at a clearance price of $20.00. Don't wait! Start making money today by uncovering the secrets of our country's top real estate performers. To order or learn more,

http://www.realestatecoach.com/billion.html

Order now!
http://tinyurl.com/54rl9k

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5. Positive News for Positive Realtors(reg)
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http://listenandlearnrealestate.com/news.html

Prices are lagging, but there's plenty of good news about summer activity. Could the sun finally be coming out?

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6. LuxuryClues.com
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*You'll never believe the theme of this restaurant
*Not a pool table--how about a luxury billiard table?
*Do you have a unique selling proposition? What's required to stand out in the luxury market.

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7. Featured Products: Nano-bite training and our hottest selling package
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**Nano-bite training from Listen and Learn Real Estate
This month we are pleased to offer the following two sessions from our "nano" version of ListenandLearnRealEstate.com program for only $10.00. Click here http://tinyurl.com/5kdgwg to order:

Podcast 1: Six Ways to Get Sellers to Get Realistic About Pricing
You have an overpriced listing--what do you do? Never fear, Bernice is here with five different ways you can persuade sellers to get realistic. These tips and techniques were developed in the disastrous buyers' markets of the 1980s and the early 1990s. This is no bunk--they really work, not only with sellers, but with banks, attorneys, CPAs--anyone who may be involved in pricing property.

Podcast 2: How to Calculate Square Footage CMA
This is the most valuable tool in the world when it comes to getting sellers to be realistic about price. Best of all, it's simple and easy to use. All you need to do is know how many months of inventory are on the market. This simple, but exceedingly valuable session will pay for the cost of your Listen and Learn subscription many times over. Don't wait, listen to this powerful listing dialogue today so that you can start closing those tough listings tomorrow.

**NEW at www.ListenandLearnRealEstate.com
Eight new audio broadcast training modules EVERY month for only $29.97 per month or $147.00 for six months. Here's what's new for August 16-31, 2008:

*The Top Features Desired by All Home Buyers
Do you know what the top 10 features that all real estate buyers want? What about luxury real estate buyers? Don't miss this fast hitting real estate training session that will show you how to make sure your buyers get the house that they really want.

*How to Overcome the Objection: "You Make Too Much in Commission."
In this session, 50 top agents shared how they would handle this common real estate objection. Hear their responses as well as three sure-fire strategies to make sure that you earn the real estate sales commissions that you deserve.

*Eliminate This Behavior that is Costing You Real Estate Listings
We used to train agents that this was a smart way to get new listings. Learn why what worked for real estate sales in the past is costing you listings today as well as what you can do to change it.

*Which Opportunities Are Right for You?
Is opportunity knocking on your door? Is it the right opportunity for you? Do you really feel like coping with the changes that new opportunities demand? Learn how to identify what opportunities are the best fits for your business as well as a proven way to cope with change.

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8. Increase Your Production with Personal Coaching
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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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9. Give Us Your Feedback On This Newsletter
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We want your feedback-to share your thoughts and suggestions, please e-mail us at Shane@RealEstateCoach.com.

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10. How to Subscribe/Unsubscribe
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Visit our Web site, http://www.RealEstateCoach.com to subscribe/unsubscribe to RealClues.

Copyright (c) 1996-2008, 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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