Friday, March 29, 2013

My BFF Listed With Someone Else!

So it goes like this.  My best friend has been having financial trouble for about the last 2-3 years and is into foreclosure like 40% of the properties around here.  For the last 18 months he has been picking my brain about the best way to handle his situation.  While I am not an attorney, I have had considerable amounts of experience with short sales and foreclosures.  Many of the people I have helped are very grateful and happy with the service.  So why did I not get the listing? A number of reasons come to mind, the first is Brand Association.  I am a sole proprietor broker.  While I have oodles of experience, I am not affiliated with a national chain.  Clients have a perception about what brand association can do for you.  As we all know, buying brands is typically more expensive in the long run and any savvy buyer recognizes the value of generic over the higher priced "brand".  The second reason he stated was that my competition was offering "free legal service" which is an oxymoron if I ever heard one.  What he really meant to say is that the competition has a lawyer who will not collect a fee until the closing.  While I have attorney's who work with me and offer the same service, my BFF did not ask me if that was available.  Thirdly he said the competition took the listing at 5%.  Here is where the ego of the drowning man gets between him and the water.  Eventually the short sale/foreclosure will happen and the informed short sale specialist will be up on the current regs.  In November 2012 FNMA and FHLMC agreed to up the negotiated commission to 6% for distressed assets thereby setting the base line for real estate commissions.  Since the homeowner in a short sale situation is not going to receive any funds other than a relocation fee from the transaction, why quibble about commission rates?  The only reason is that it makes the (trapped) property owner feel like they are negotiating something.  Pondering the entire situation further and reviewing why I did not get the listing, I can attribute it to one point and one point only.  I did not communicate with the prospect enough and lost the deal to someone else as a result!

Update: My BFF just called and said they only had one showing in 2 weeks and wants my advice...

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