Unit 1: Preparing to Work With Illinois Sellers

Are the Masons Ready to Sell? What question will best help Alison determine whether the Masons are serious about selling their home or just testing the waters?

"Why have you decided to sell?" **This is a great question to use because it's open-ended and lets the Masons describe their motivation in their own way. Alison can then evaluate what they say to determine if they're really motivated at this time. For example, if the Masons say they want to sell so they can move to a community for active seniors, it reveals a plan behind the decision. On the other hand, if they explained that friends recently sold their home for an astronomical amount of money, and it would be great if they could sell for the same amount, there doesn't seem to be much commitment to their decision to sell.

One More Thing Now that Alison was ready to pursue the Masons as her clients, what's the best way for her to get a listing appointment with them?

"Would this Thursday at 3 p.m. be a good time for me to come by and show you what I can do to get your home sold?" **Great job! Proposing a specific day and time showed that Alison was serious about working with the Masons and made it easy for them to agree or suggest a different time. With the appointment on the books, Alison needed to get her information and presentation materials together. But we'll cover that soon enough!

You average one client from every 10 leads, and each client represents 85% of a closed transaction. Each transaction you close has an average dollar value of $6,000. Using the funnel, how much can you expect to earn from every 10 leads? $12,000 $5,100 $6,000 $8,200

$5,100

More About the Masons Which three of these things does Alison need to learn about the Masons' needs that will help her understand if she wants to work with them as seller clients?

- Any specific deadlines they have for selling - Their past experience with selling a home is, if any - Three things that are most important to them in the sale **By asking these questions, Alison established that the Masons didn't have any specific deadlines for selling, though they'd already started sorting through their belongings, putting things in storage in preparation for their travel plans.

Can You Fix That? As you've seen, fixers and distressed properties can have some commonalities. To help you make the distinction, what best describes a distressed property, and not necessarily a fixer?

- Foreclosure - Bank-owned - Short sale **These all describe distressed properties.

The Question of Profit Next, Alison asked, "Do you have a price range in mind?" What was Alison looking for in the Masons' response to this question?

- If they're likely to be in a short sale situation - If they have realistic expectations for the sale - If a recent appraisal has been done **By asking the Masons to articulate what they expected to make from the sale, Alison would be able to find out if they were likely in a short sale situation, and if they had realistic expectations. Luckily, it was good news: The Masons explained that the property was paid off, and they expected it to sell for market price. They named a range that other homes in the neighborhood had sold for recently, according to their Internet research, and Alison felt confident that their expectations were reasonable. She also learned that they were a tech-savvy couple, which would help her tailor her listing presentation.

What's So Distressing About a Distressed Property? You're working with an investor who's interested in purchasing a distressed property. Which four buyer challenges come with distressed property purchases?

-Buyer may have to pay cash, because the property can't be financed -Closing delays -Title issues -Missing appliances and fixtures

Alison Checks the Tax Records Alison makes a point to check the tax records, which can be obtained from the MLS and other sources. What three pieces of information, from those provided, will the tax records show?

-Last sales price -Owner of record -Square footage **The tax records will also show the tax-assessed value, property taxes, lot size, and number of bedrooms and bathrooms.

Evaluating the Market Alison turns her attention to market indicators. She always has a finger on the market pulse in general, but she also needs to understand what's happening in the neighborhood where the Masons live. What market indicators will she use in her research?

-Price levels -Inventory rates -Sales volume -Days on market

What's in a Trio? Intrepid sleuth that she is, Alison isn't about to rely on the information she's found so far. She calls her favorite title representative and orders a "trio" for the property. What three items will she receive?

-Property profile -Deed -Assessor map

Why Ask That Question? You won't necessarily find this information in your resource, but feel free to consult it. Why might a licensee want to know whether a prospective seller has recently refinanced?

-To determine the seller's total loan balance -To find out what the appraised value was -To see if funds were used for improving the property **A recent refinance means a recent appraisal, which may provide valuable information, but doesn't necessarily translate to market value today. Knowing the loan balance is important to understand the seller's equity position, but a recent appraisal may mean the seller has a fixed number in mind for a list price. It's best to know that going into the presentation.

T.A.D.

-turnover -affinity -diversity

When choosing a neighborhood or area to concentrate efforts, a licensee should consider certain factors. The area should have a variety of amenities, home sizes, property sizes, values, etc. This ___________ draws a wide variety of buyers. However, this won't do the licensee (or buyers) much good if there are only one or two properties sold in the area each year. A neighborhood needs __________. The 'Goldilocks' idea comes into play here. You don't want too few opportunities, because it's difficult to sustain a business, but too many opportunities may be an indicator that opportunities will soon dwindle. The final factor is ___________. The area should be likable, offering amenities and environmental factors that draw buyers.

1. Diversity 2. Turnover 3. Affinity **When employing the farming technique, licensees should spend a TAD bit of time identifying the right area in which to concentrate their activities.

Irving Inherits: In Which Property Type Will He Invest? Build the story using the following terms: short sales, investment, REOs, foreclosure, fixers Irving inherited a lot of money and has decided to pay cash for an __________ property. He doesn't mind doing a little work, so he's looking at _________, where the seller is willing to take a little less money for a cash deal and no hassle. He's also interested in distressed properties, where the seller is in default and facing ___________. Even _______, which have already been repossessed by their lenders, are options. He wants to steer clear of ____________, however, which require both seller and bank approval.

1. investment 2. fixers 3. foreclosure 4. REOs 5. short sales

Albert is testing a couple of methods to find new listings. One method involves scouring Craigslist, local newspapers, and driving the neighborhood, looking for For Sale by Owner properties. Once he identifies possible opportunities, he does some research to determine if the property is well-priced and if it's an opportunity worth pursuing. He usually steers clear of properties he thinks are priced too high. This is the ___________ method. Another method involves ___________. Albert calls homeowners to ask whether they or anyone they know would like to sell their home. Albert usually focuses his calls on homeowners in a specific area of town. He's very careful to check the Do Not Call registry before calling any of the numbers, and he only calls during permissible hours (8 a.m. to 9 p.m.).

1. owner sales 2. cold calls **With both of these methods, the licensee is calling to see if a business opportunity exists. The licensee knows the homeowner is interested in selling without representation, but is trying to gauge if the owner is willing to work with an agent. With the cold calls method, the licensee is looking to see if the owner (or someone they know) is interested in selling.

How Does the Funnel Work? Build the story using the following terms: annual income, percentage, dollar value You need to know how many leads it takes for you to get one client. You need to determine the ___________ of clients that turn into closed transactions. Using an average ______________ that you earn per transaction, you can calculate how much each client is worth to you in terms of estimated earnings. You can then determine how many leads you need to make a desired _____________.

1. percentage 2. dollar value 3. annual income **It's a useful way to tell if you're on track for your annual earnings at any given point in the year.

How Many Leads Do You Need? If it takes seven leads to get a client on average, how many leads need to go into the top of the funnel to get those 15 clients who will earn you that $80,000?

105 **Seven leads times 15 clients equals 105

Calculating Backward Let's use the funnel to calculate backwards. You'd like to make $80,000 in a given year from your real estate business. The average commission you net (after your broker's split) from each transaction is $6,500. If you know that about 85% of the clients you work with turn into closed transactions, how many clients will you need to obtain to meet your $80,000 goal?

15 **$6,500 x .85 = $5,525 per client. $80,000/$5,525 = 14.48. Round up! and that equals 15

Which of the following properties is a REO? A condo with a homeowner who's in default A duplex that a lender has tried to sell by foreclosure and failed A fixer A short sale property

A duplex that a lender has tried to sell by foreclosure and failed

Emily received Gerty's name through a previous client whose home she sold. This is an example of ______.

A referral

What's a trio?

A report that shows the parcel map, owner of record, and property profile

Acceptable Ways to Find Listings There are many ways a licensee can find listings. Contacting For Sale by Owner sellers to persuade them to list with you. Acceptable or unacceptable?

Acceptable

Sending an introductory postcard to the homes in a specific neighborhood. Acceptable or unacceptable?

Acceptable

Which of the following information can be found in a subject property's former listing on the MLS? Amenities at time of listing Anticipated property taxes Current appraised value Current square footage

Amenities at time of listing

Match the Source to Its Data What other data might Alison use to prepare for her listing appointment with the Masons, and where would she find it? Where could she find Property dimensions and boundaries?

Assessor's map

Alison Has a Prospect Licensee Alison had just bid her client adieu after a showing. Before leaving for her next appointment, she checked her cell phone. Three messages! One of them was from a man who identified himself as Hugh Mason. "My son Brent worked with you not long ago when he bought a house," Hugh said in his voicemail. "Now my wife, Rebecca, and I are getting ready to sell our home, and Brent suggested that we talk with you about representing us." He described the potential listing as a 25-year-old, four-bedroom, three-bathroom home in the River Valley subdivision. Alison smiled. Nothing like a referral from a satisfied client! Still, she didn't want to count her chickens before they hatched. There was no guarantee that Mr. and Mrs. Mason would become clients. For the relationship to work, Alison needed to know that they were serious about selling and would be able to work with her. Alison also needed to make sure the Masons knew that she was the best person to help them sell their home. It was time to whip out her seller pre-qualifying questions.

BACKGROUND INFO FOR THE FOLLOWING QUESTIONS!!! so don't worry about this flashcard!!!

This Property Has Issues It's better that you hear it from us: Not all sellers are happy to sell, and not all properties are move-in ready. Some sellers are forced to sell, and some properties ... well, they wouldn't win a beauty contest. Whenever you perform a market analysis for a distressed property or fixer, keep in mind that your likely market will be investors, and possibly cash buyers. This often means a quick closing, because financing isn't a concern, and the buyer won't ask for minor repairs, but it also means an expectation of deep discounts. When performing a market analysis, it's difficult to compare distressed properties to non-distressed properties, or fixers to move-in-ready properties. Try to avoid using these as comparables for your subject property, unless the subject property is also a fixer or distressed property.

BACKGROUND INFO FOR THE FOLLOWING QUESTIONS!!! so don't worry about this flashcard!!!

Andy ran out of money in the middle of his remodel, and now the bank is foreclosing. Fixer, distressed property, or both?

Both

Cash buyers are common. Fixer, distressed property, or both?

Both

The roof needs to be replaced on the bank-owned property Jamal just toured. Fixer, distressed property, or both?

Both **in need of fixing and falls into one of the distressed property categories

Where could she find Code violations and permit records?

Building division

Contacting homeowners to determine whether they or anyone they know is interested in selling describes the ______ approach to finding listings.

Cold calling

Where could she find Date of recording and how title is held?

Deed

Price levels are an indicator of _______.

Demand

Emil needs to get out from under his mortgage, and is headed for a short sale. Fixer, distressed property, or both?

Distressed property

Ruth's property is in foreclosure. Fixer, distressed property, or both?

Distressed property

A rehabilitation loan is a loan that ______. Borrowers can take to stall foreclosure Encompasses repair or remodeling costs Is available to borrowers who've recently cleaned up their credit Pays off a junior mortgage

Encompasses repair or remodeling costs

Which Method Is Tarek Using? Tarek keeps a close eye on MLS listings, especially those listings approaching their termination date that have not yet been sold. If the property is unsold after the termination date, he contacts the sellers to gauge their motivation to sell and their interest in listing the property for sale with him. What method is this?

Expired listings **These interactions can be tricky. The sellers may be a bit down because their home has not sold and they may be skeptical that another agent can get the job done. Tarek doesn't bash the other agents' actions, because that's unprofessional. Instead, Tarek focuses on what he can do differently to sell a property. Remember, a licensee cannot contact a seller under contract with another agent and attempt to get the seller to relist with him instead. Contact must wait until the contract has terminated.

Choosing a neighborhood and concentrating real estate activities there is an example of the ______ approach to finding listings.

Farming

Which Method Is Rhonda Using? Rhonda is a new licensee. She wants to find an area of town and establish herself as the real estate agent to use. She starts by sending a letter introducing herself to all of the individuals living in the area. She places ads in the monthly community newsletter. Around the holidays, she visits each home, leaving a card and magnetic calendar with her name and contact information. As spring approaches, she visits homes again, leaving packets with flower seeds and notepads with her information on them. What is this an example of?

Farming **By using the farming approach, Rhonda's goal is that any time people in the neighborhood want to sell their home, or know someone who wants to move, they'll think of her. She wants to establish a steady supply of business in this neighborhood. Regular interactions or reminders—"Hey, I'm here, I can help you sell your home"—may help meet this goal.

Don't Be Distressed, Fix This! Do you know the difference between a fixer and a distressed property? Let's find out! Match the description to the appropriate term: fixer, distressed property, or both. Carol knows her porch needs to be replaced, but she'd rather go to Tahiti. Fixer, distressed property, or both?

Fixer

Be a F.O.R.C.E for Generating Listings

For Sale by: Farming, Owner, Referrals, Cold calling, Expired listings

The Final Word on Funnels Which one of these is the main takeaway about how the funnel concept works?

Generating leads = generating income. **The funnel concept helps you understand how important it is to spend time generating leads.

What Will Alison Research? Alison has qualified the Masons and is preparing for the listing appointment. Which items are important for her to research about the property before the listing appointment?

Important: -The names of the rightful owners -Market activity and indicators in the neighborhood -Current liens on the property, especially any recent financing Not important: -The last time major renovations were made to the house -The length of time the current owners have lived on the property **These are the areas that Alison should research in preparation for the listing appointment with the Masons.

Which of the following is a true statement about a short sale transaction? It can help a seller avoid foreclosure. It helps a seller avoid a credit hit. It's quick. It's used primarily when the seller will be performing a 1031 tax-deferred exchange.

It can help a seller avoid foreclosure.

Where could she find Former sales price, days on market before sold, property amenities?

MLS

Alison Does Some Research Alison has a listing appointment scheduled with the Masons, who are planning to sell their home in the River Valley subdivision. She'll do a comparative market analysis (CMA) for the property, and along with that, she'll perform some other essential research. The end goal is to arrive at the listing appointment with enough knowledge about the property and the market to convince the Masons that she's the right person to help them with their real estate transaction. Open your resources to learn what information Alison needs and where she'll turn to find data on the Masons' property.

MORE BACKGROUND INFO FOR THE FOLLOWING QUESTIONS!!! so don't worry about this flashcard!!!

Meet Hugh and Rebecca Mason When Alison returned the Masons' call, she was ready to take a few notes, but for the most part she'd be evaluating their responses on the fly. Mr. Mason answered the phone, and Alison introduced herself. Mr. Mason ("But call me Hugh!") quickly added his wife, Rebecca, to the call, and the conversation continued. After a few pleasantries, Alison began her pre-qualification process by asking, "Are you currently working with another broker?" The answer was no, so she asked the Masons why they'd decided to sell. They responded that they'd recently retired. Rebecca had had a recent health scare, and they'd decided after that to liquidate most of their possessions so they could spend a year or two traveling and visiting with friends and family. "After that, I think we'll be ready to settle down in our own place again," Rebecca confided, with Hugh finishing, "But we'll be looking at a senior community where everything is nearby ... you know, doctors and activities and all."

MORE BACKGROUND INFO FOR THE FOLLOWING QUESTIONS!!! so don't worry about this flashcard!!!

Alison wants to see if the property's attractive. Reason or not a reason?

Not a reason

Why Qualify a Seller Client? Why is Alison planning to qualify the Masons? Are any licensees really so busy that they need to pick and choose their clients? Is Alison being too particular? Or is there a method behind her madness? Select whether each of the statements is a reason Alison is doing her due diligence. Alison wants to decide if she likes the Masons. Reason or not a reason?

Not a reason **Alison knew that a few questions could help her avoid wasting time on a client who would end up being a source of frustration and would also help her make a great impression if she decided to go ahead with a listing presentation. She qualifies them so she does not waste her time

Where could she find Whether a recent appraisal was done on the property?

Owner

Identifying properties being sold by owners and persuading them to list with a licensee describes the ______ approach to finding listings.

Owner sales

Alison wants information that will help her tailor her listing presentation to the Masons' needs. Reason or not a reason?

Reason

Alison wants to evaluate if the Masons' needs match her goals. Reason or not a reason?

Reason

Which Method Is David Using? David was ready to sell his home. He talked to several co-workers about getting his home ready to go on the market, when one of them mentioned Chris, the real estate licensee who helped him sell his home. He dug up his contact information and gave it to David, who called Chris later that evening to set up an appointment to discuss listing the house. What method is this?

Referrals **Referrals can come from a wide range of sources.

Understanding the Masons When Alison asked, "What are the three things that would make the transaction a success?" the Masons pondered, apparently engaging in some telepathy with each other, before giving Alison their list: a fair price, a sale within three months, and no drama. Alison made note of these items. The first two would be relatively easy, though she wouldn't know for sure until she saw the property. The last one was more of a challenge. Why is the information Alison just noted valuable to her?

She had a better idea of how she should tailor her listing presentation to show the Masons how she could meet their needs. **Alison could use this information to show the Masons exactly how she could meet their expectations. For example, she could help them avoid drama by emphasizing that she'd be on top of deadlines and had strategies for handling negotiations with tact. Now that she'd reached the conclusion that she wanted to pursue the Masons as clients, this would be essential for a successful listing presentation.

Name That Distressed Property! Let's further distinguish distressed properties, especially as they relate to the seller. In which distressed property type does the seller owe more than market value?

Short sale

Where could she find Owner of record and contact information?

Tax Records

Which of these actions would cause a property to become an REO? A rental property was deemed not up to code, and was sold to a developer. The bank doesn't get an acceptable bid at a foreclosure sale and takes ownership of the property. The lender stops waiting for payments and forces the sale of the property. Under duress, the borrower short sells the property.

The bank doesn't get an acceptable bid at a foreclosure sale and takes ownership of the property.

Analyzing the Market Indicators If Alison's review of inventory rates and days on market in the River Valley subdivision (where the Masons live) shows that the market has slowed in that area, how will that affect the list price she suggests for the Mason's property?

The list price should be lower than the price at which similar properties were listed in the last couple of months. **With these market conditions, Alison's suggested list price is likely to be a little lower in order to pique buyer interest in this slower market.

The average commission you earn from each transaction is $6,000, and 20% of your leads turn into clients. Using the funnel, what else do you need to know to calculate how many leads you will need if you want to earn $50,000 in a year? The number of homes you list The percentage of clients who turn into closed transactions The percentage of homes that sell below listing price The percentage of your commission

The percentage of clients who turn into closed transactions

Which of these is a reason that a licensee would qualify sellers before deciding to sign them as clients? To assess if the property will be a sufficiently interesting challenge to sell To determine if they'll be willing to work with a lender To evaluate the seller's motivation to complete the sale To find out if they'll work with VA-guaranteed and FHA-insured buyers

To evaluate the seller's motivation to complete the sale

Calling all homeowners, regardless of their presence on the Do Not Call Registry, in an area to see if they are interested in selling their home. Acceptable or unacceptable?

Unacceptable

Contacting sellers under contract with other licensees and persuading them to relist with you. Acceptable or unacceptable?

Unacceptable