The lender accepts an offer to purchase from a 3rd party buyer, thus relieving the original owner from encumbrances and potential, future liabilities.

Home lenders are willing to take less for the home than is owed on it and less than it’s worth in today’s declining market. Why?   Because lenders will lose more if the property goes into foreclosure, and so will the homeowner.

There are three stages in the foreclosure process. They are pre-foreclosure, foreclosure and post– foreclosure. The pre-foreclosure stage is the only one where  everyone comes out a winner.  In the foreclosure stage, the homeowner’s FICO credit score can be reduced by 250-280 points and it will take 3-5 years before a lender will offer a sensible interest rate to make it possible to buy another home.

In the “pre-foreclosure redemption status” stage, with the help of a Realtor^® , trained to negotiate a “short sale” with the lender, the FICO credit score will only take an 80-100 point “hit”, and the homeowner will be able to buy another home with a good rate in 18 months to 2 years or less.

Other advantages of the “short sale” option in the pre-foreclosure stage include the possibility of leasing back the home from a third party investor/buyer, no defficiency judgement, no repair costs, no money to closing, stopping nagging collectors, avoid bankruptcy, a smoother transition to get out from under and get on with life.

As a trained Realtor^® you will be able to explain the other pre-foreclosure options you have to assit you a distressed Seller in making a decision that’s in their best interest. With over 1 million properties expected to be in foreclosure this year, the difference in losses to be sustained by lenders between a negotiated short sale and a fully executed foreclosure is estimated to be in excess of $50 Billion.

The costs to the Lender for commissions, closing costs, basic repairs, property maintenance, insurance, taxes, homeowner association dues, eviction and court costs, attorney fees, and much more averages about $400 a day for an average priced home. Over the 11+ months that the Lender has to carry the property and their hard costs can add up to over $130,000.

When you subtract these costs from the reduced sale’s price dictated by the depressed market and then take that sum away from the over-extended loan balance, the lender’s loss is substantially greater than a quick short sale. Time certainly is money!

It should come as no surprise to Sellers that they’re behind in their payments or can’t  afford to continue making payments on their home because of a recent rate adjustment or for whatever other reason that has put their life in crisis. Sellers should not ignore the notice or telephone call that reminds them of their obligation. They should call their lender immediately so they won’t accelerate the process of foreclosure.

To the veterans, it brings back memories of cycles past. And sellers now have an additional rationale of why an agent should lower his/her commission-after all, “we’re going to lose money because we didn’t sell when the market was at its peak so you, Mr. or Ms. Agent, should help in assuming some of that financial loss.” This may be a new “reasoning,” however, the following situation is probably familiar to most productive agents:

Your listing presentation went smoothly. The sellers seemed receptive, perhaps to the point where you perceived them to be impressed. All that remains is their signature on the listing agreement. And then, the dreaded happens. You hear “The other agent will do it for less” or something else of the sort, which, in effect, translates into, “Lower your commission.”

Conventional wisdom, training and practice have prepared us to overcome objections or handle concerns, both of which are alternate descriptions of “defensive justification”-an attempt to fix the problem. Sometimes it works and at other times it doesn’t. Should we accept this “fact” as the “nature of our business?” Do we continuously strive to improve our “defensive justification” skills? Or, is it time to rethink and reexamine our strategy and focus during the listing presentation? With the big question being: Are we unconsciously setting ourselves up for a fee reduction predicament?

First let’s consider our preference. Throughout life, we may experience a recurring problem. Which do we prefer to do: keep fixing it over and over or do we try to prevent it from happening in the first place? If prevention takes preference over fixing, are we flipping our solution options when it comes to commission issues at the listing presentation? If you anticipate that your preferred commission rate will be questioned or challenged-and if it does happen with predictable or unexpected frequency-entertain the possibility that that predicament may only be a symptom and not the problem to be fixed with defensive justification skills! Your listing presentation, content, focus and delivery may be finely tuned in “fulfilling and exceeding expectations,” however, in striving to achieve that objective, it is very easy to get pulled into and respond to those “expectations.” Herein, may be the core of the problem and an opportunity to shift into a more effective prevention strategy.

Sellers are consumers. The majority are price conscious and comparison shoppers when there is no critical urgency or impulse involved. A familiarity, experience or hearsay will determine what their perception is of a “good deal.” But what is it exactly that they know that we do? What are their perceptions which lead to expectations?

Seller surveys identify “find qualified buyers” as one of the most important services provided by real estate agents. Add to that a small handful of “other services” and we end up with a consumer who initially has a “limited awareness” of the agent’s workload and multi-functionality necessary in achieving a successful sale. This “limited awareness” now leads the Seller to get stuck in an agent selection criteria that is based on how an agent fulfills, or exceeds their expectations in finding/attracting and bringing qualified buyers.

The issue of marketing/advertising is put into the spotlight and if your competition has a comparable plan and schedule, what is the likelihood that the seller will be inclined to actually choose the agent with the lower commission fee? A more pertinent question is the one that we need to ask ourselves. Is the extent and diversity of our marketing a critical gauge of the service value we bring into each successful transaction? Our response should serve as a catalyst for expanded thought on the likelihood of content similarities in listing presentations.

The seller-a consumer-will recognize a better value and no one ever regrets investing in quality. Working from this solid premise will create a foundation from which you will be able to shift your delivery and affect a preventive strategy for seller concerns and objections.

To start that shift, your earliest objective should be to expand the seller’s knowledge of the critical issues and considerations involved in achieving a successful sale. Presenting the seller with a discussion agenda will accomplish that for you. The agenda is a short list that includes items that you anticipate as potential objections or concerns. As examples, the topic of general real estate market conditions will open the door for you to bring up the statistical fact that it takes 120 days to consummate a sale in that market area. That revelation makes a short-term listing agreement an unreasonable condition.

Overpricing can be avoided when the appraisal procedure is explained under the category of the “influence of banks and lending institution” on the sale. Perhaps the most powerful discussion topic to include in your agenda is an overview of the major stages in the sales process.

Here is your opportunity to make a major impact on the seller’s opinions and expectations, which cause concerns or objections. It is an opportunity to differentiate yourself from the competition, rectify any thoughts the seller may have on the simplicity of the process and have them recognize the added value you have as a consultant and project manager. It takes preparation before you apply this prevention strategy. Begin by reviewing your current listing presentation and identify items, which, in all probability, are also mentioned or focused on by your competition.

Consider these as a reinforcement of the seller’s opinion that “all agents are the same.” Position and regard these issues as a “given” and a fulfillment of the seller’s expectations. More and better of the same may exceed the seller’s expectations but, it does not pull them out of their restricted “limited awareness.”

The competitive edge is developed by educating the seller on and about the entire sales process and the critical functions you perform from start to finish. Before you can do that it is necessary to go through an exercise of self-appreciation. It is not unusual for agents to grossly underestimate the amount of time they put into an average transaction until they break down the sales process into benchmark events. Consider the following example of benchmarks and give each one a time value.

Yes, your competition may be doing all of the above but are they mentioning and establishing these as an agent’s true service value in a real estate transaction?

Probably not, because it is estimated that the bulk of most agents’ listing presentations revolve around or focus on marketing/advertising. Is your job almost done the minute you find a qualified buyer? It may seem so to the superficially informed Seller. With the exception of handling some odds and ends paperwork, they may think your next function is to collect a hefty commission check. You know it isn’t so because getting it together, keeping it together and running smoothly to closing/settlement places a big demand on your time and application of knowledge, expertise and skills. Add to that your ability to counsel and guide the seller in making the best pricing decision and the entire scope of what you do to earn a commission becomes evident.