Let’s Reward the People That Aren’t Making Payments and Torture the People That Are Doing the Right Thing
It’s no surprise that banks are still refusing to offer any relief to homeowners that can barely make their payments, even though, in many cases these homeowners have had to dramatically cut back in other areas of their lives in an effort to make timely payments. What comes as a complete surprise is how the banks have recently decided to give lots of free money to homeowners who either can’t pay or refuse to pay their mortgages. Here’s how the program works: stop paying your mortgage for a year or two. The bank is likely to send you a letter offering to give you tens of thousands of dollars to completely forgive all liability you have to them and all you have to do is agree to a short sale on their terms. The bank is likely to be reimbursed for the loss by the FDIC so they win. The distressed homeowner gets anywhere from ten to fifty thousands dollars and has no liability and lots of money to move out so they win. But guess what? We the tax payers get to foot the bill for the bank’s bad behavior in writing the loan, and the delinquent homeowner’s poor decision. So what happened to consequences for our actions? This brings the concept of moral hazard to an all time low.
Seller Close #14—The Sleeping Bag Close
One of the most important concepts to remember on a listing appointment and when negotiating price reductions or offers with your seller, is the concept of “greatest limitations are self imposed”. Another way of stating this concept is the statement “as you believe, so will you achieve”. If you as an agent negotiate with a weak mind set, or believe the negotiation will be difficult if not impossible, you will be absolutely right. That’s why the sleeping bag approach is so effective on listing presentations and other seller negotiations. Here’s how it works: before you leave for your appointment, visualize yourself putting your old camping or sleeping bag in the trunk or your car. Next, be sure there’s nothing pressing that had to be done immediately following your appointment that could require you to leave early. Finally, when you get to the house, remind yourself if it takes all day and all night, it doesn’t matter, I’m in it for the long haul. If I have to go outside and get my sleeping bag and stay overnight I will, but I’m not leaving until the negotiations are done. The power of this state of mind will work wonders on your prospects and sellers.
Buyer Close #14—I Really Can Afford This House
Buyers will often put a cap on the amount that they want to spend for a house without realizing how poorly they have prioritized what’s important in life. Let’s look at an example of how this can happen. A couple decides their going to buy a $400,000 house with 20% down. They don’t want to finance more than $320,000 yet that same couple will spend ten dollars a day on lattes at Starbucks and an extra $35 dollars for a bottle of wine at dinner on Friday night. Skip the wine and the lattes and buy a bigger, better house with the extra $420 a month. That’s another $70,000 that buyer could invest in something that really does improve the quality of their life. Tell your buyers to forget Starbucks and the piño noir.