An important part of any loan originators life blood is referrals from Realtors®. No training program can ignore this vital area of business. One of the key ingredients to any lender – Realtor® relationship must be for the lender to understand the Realtors® business cycle, almost as much as their own. If a lender can’t understand why a Realtor® does what they do, it isn’t a relationship as much as it is and order – order taker system.
This week we want to look at expired listings. Traditionally July is the single largest month for real estate listings to expire. July also represents a critical point in the season for those people who either want to sell a home, or need to sell a home before the end of the summer and the return of the kids to school.
Mortgage professionals need to understand that many Realtors® may or may not even be aware of this situation. While you would think it would be a fundamental part of any full time Realtor’s® business plan to market to, and be connected with expired listings, many don’t have even a simple plan to attract this business.
So how does a loan originator engage in this arena? Simple, get out of the office and go talk about it. Yes, I said GET OUT OF THE OFFICE AND GO TALK ABOUT IT! Nothing works better then face-to-face communication. Stop all the cards and letters. Stop all the emails and electronic nonsense and get out of the office and go talk to somebody!
Here is a simple plan you can easily engage. Expired Listings are people who wanted to sell their house and move on. They had an expectation when they listed that the home would be sold and they would be long gone before this point in time. So what happened? Well, likely the price they were asking for, didn’t meet the value of what they had to offer. Simply put, everyone has a different perspective on what value is. People often don’t agree on all the specifics as to what things are worth, but in real estate, we have certain tools that help us understand what the general public perceives value to be, and what the professional community will acknowledge as the value of any property.
So here is where a good loan origination with a plan, can help his Realtor® referral partner. Since emotional value of a property has no definition, we can only look to the factual definitions like price per square foot, property condition, and other tangible items to compare what has actually been sold, to what is still waiting on the market. One of the best ideas I have people use is to invite a number of people who have their current listings expiring to a small meeting, either at a Library, school, community center, or even a large conference room, and bring in a licensed real estate appraiser to explain property values from the finance side of the business. You see, a home is worth what someone is will to pay for it, ONLY if they are paying CASH! If you want to finance the transaction, the home is worth what an appraiser says it worth!
The other piece of the puzzle for expired listings you can help with is the financial ramifications of accepting a lower price from the sale of their current home. If a seller has to reduce their price by thousands of dollars to get a deal together, they often see that “loss” as something they can’t deal with. However, nothing is really a “loss” if you never had the money, or if you are prevented from achieving the real outcome you wanted, which was selling a home and moving on. And since most people selling a house are only going to buy another one, here is a simple strategy to help change the focus from the seller losing money, to one in which we work on completing the original goal of selling and moving into the next home.
A simple strategy is to look at the money in a number of different terms. Number one, $10,000 is a lot of money. $35 a month isn’t such a big deal. You see, one is a statement of a total value; the other is the monthly impact of the situation. In today’s market, what is the difference in the monthly payment while financing the difference between what they wanted and what they can accept? Often, converting the terms of a perceived loss into monthly payments changes the perception of the “loss” dramatically.
Other strategies also include the fact that since the seller first listed the home for sale, loan interest rates have fallen significantly. Much of the information they used to think about the cost of selling and buying a new home was based on loan information that has long since become outdated. Spending a few minutes with a seller to translate dollars into payments, and back the other way, can open their eyes to see that even taking less money for the house they are selling, still provides a keen advantage because they are going to be financing their new home under much more favorable terms!
Having a strategy to work with your referral partners in their business can only lead to better and stronger relationships. You need to be aware of their market cycles and what you can do to help them, help you!
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