Carey Frankel asked:


Building and buying homes that are energy efficient and environmentally conscious is what seems to be on a lot of people’s minds. More and more buyers are becoming increasingly aware of the advantages of building green or buying a home that already has environmentally friendly and efficiency standards in place.

With electric rates rising as well as the concern for our environment’s condition, statistics show that people are ready to listen, open their minds and see how living green is a shift from being more efficient to being more effective. Now in days, people are even willing to pay anywhere from 1 to 3 percent more for this type of home.

Just in case you aren’t familiar with the “Building or Buying Green” topic, the basic principle driving this is defined by making sure the products in the home come from sustainable resources, the items are non-toxic, are recyclable, and help reduce energy use. You can easily break it down into three basic categories which is water efficiency, smart energy, and architecture/landscaping.

When it comes to water efficiency, there are a few things that builder are doing can be implemented in your own home.

* Depending on your local building regulations, some homes are designed to collect rain water for the garden and landscaping.

* Manufactures have now designed what is called an “instant gas water heater” which only uses energy to heat water when needed preventing people from letting the water run until its warm.

* Installing low flow heads on faucets, and showers as well as low flow commodes are also water efficiency practices.

Smart Energy refers to both materials and products.

* EnergyStar appliances

* Passive solar day lighting

* Improved insulation

* Compact Fluorescent lights (CFL)

* Improved insulation

* High-Performance windows

* 12 to 14 SEER variable speed dehumidification controlled, electronic air cleaning, heat pump system

* Extra-sealed air conditioning ducts

* TVs and other electronics that automatically power down when not in use

* Ceiling fans in each room

Architecture and landscaping are also very important when it comes to either looking for or building a green home.

* Situating a home to prevent the heat from the sun

* Decrease the number of windows on the south and west sides of the home

* Tight construction (Sealing)

* Reused antique brick walkways

* Recycled content roof and wall sheathing

* Countertops made from recycled concrete and glass

* Locally handcrafted cabinetry

* Landscape with plants and trees that are compatible with the local environment and climate

You can find green homes in the Jacksonville Florida real estate area and other Northeast Florida areas. Within the last two years (2006 – 2008), 500 EnergyStar homes have been built in Jacksonville Florida. You can also find green built homes in Amelia Park. Currently there are approximately 420 homes there.

Ryland Homes, Cornerstone Homes, HabiJax, Beazer Homes (most active), and McClellan Homes are some of the named builders who are building green standard homes.

Organizations that are currently participating in the green built home effort is Energy Star, Green Built Homes of America, LEED-H, Florida Green Building Coalition, FPL (Florida Power & Light) Build Smart, and Florida Water Star. These are great resources to use when researching green built homes and how you can get involved.

We hope you find this article interesting and useful and find the advice motivating enough to “Go Green”.

DCFawcett asked:


There are many ways to lose a home but signing away ownership in a manner that destroys credit, embarrasses the family and strips an owner of dignity is one of the hardest. For owners who can no longer afford to keep mortgage payments current, there are alternatives to bankruptcy or foreclosure proceedings. One of those options is called a "short sale."

When lenders agree to do a short sale in real estate, it means the lender is accepting less than the total amount due. Not all lenders will accept short sales or discounted payoffs, especially if it would make more financial sense to foreclose; moreover, not all sellers nor all properties qualify for short sales.

If you are considering buying a short sale, there could be drawbacks. For your protection, I suggest that all borrowers:

* Obtain legal advice from a competent real estate lawyer

* Call an accountant to discuss short sale tax ramifications

As a real estate agent, I am not licensed as a lawyer nor a CPA and cannot advise on those consequences. Except for certain conditions pursuant to the Mortgage Forgiveness Debt Relief Act of 2007, be aware the I.R.S. will consider debt forgiveness as income, and there is no guarantee that a lender who accepts a short sale will not legally pursue a borrower for the difference between the amount owed and the amount paid. In some states, this amount is known as a deficiency. A lawyer can determine whether your loan qualifies for a deficiency judgment or claim.

Although all lenders have varying requirements and may demand that a borrower submit a wide array of documentation, the following steps will give you a pretty good idea of what to expect.

Call the Lender

You may need to make a half dozen phone calls before you find the person responsible for handling short sales. You do not want to talk to the "real estate short sale" or "work out" department, you want the supervisor’s name, the name of the individual capable of making a decision.

Submit Letter of Authorization

Lenders typically do not want to disclose any of your personal information without written authorization to do so. If you are working with a real estate agent, closing agent, title company or lawyer, you will receive better cooperation if you write a letter to the lender giving the lender permission to talk with those specific interested parties about your loan. The letter should include the following:

* Property Address

* Loan Reference Number

* Your Name

* The Date

* Your Agent’s Name & Contact Information

Preliminary Net Sheet

This is an estimated closing statement that shows the sales price you expect to receive and all the costs of sale, unpaid loan balances, outstanding payments due and late fees, including real estate commissions, if any. Your closing agent or lawyer should be able to prepare this for you, if you do not know how to calculate any of these fees. If the bottom line shows cash to the seller, you will probably not need a short sale.

Hardship Letter

The sadder, the better. This statement of facts describes how you got into this financial bind and makes a plea to the lender to accept less than full payment. Lenders are not inhumane and can understand if you lost your job, were hospitalized or a truck ran over your entire family, but lenders are not particularly empathetic to situations involving dishonesty or criminal behavior.

Proof of Income and Assets

It is best to be truthful and honest about your financial situation and disclose assets. Lenders will want to know if you have savings accounts, money market accounts, stocks or bonds, negotiable instruments, cash or other real estate or anything of tangible value. Lenders are not in the charity business and often require assurance that the debtor cannot pay back any of the debt that it is forgiving.

Copies of Bank Statements

If your bank statements reflect unaccountable deposits, large cash withdrawals or an unusual number of checks, it’s probably a good idea to explain each of those line items to the lender. In addition, the lender might want you to account for each and every deposit so it can determine whether deposits will continue.

Comparative Market Analysis

Sometimes markets decline and property values fall. If this is part of the reason that you cannot sell your home for enough to pay off the lender, this fact should be substantiated for the lender through a comparative market analysis (CMA). Your real estate agent can prepare a CMA for you, which will show prices of similar homes:

*Active on the market

*Pending sales

*Solds from the past six months.

Purchase Agreement & Listing Agreement

When you reach an agreement to sell with a prospective purchaser, the lender will want a copy of the offer, along with a copy of your listing agreement. Be prepared for the lender to renegotiate commissions and to refuse to allow payment of certain items such as home protection plans or termite inspections.

Craig Berger asked:


Spring is the traditional time to buy and sell in the real estate business, and while the housing market has not been at its best, this just allows people to take advantage of excellent deals. Whether you are trying to buy property or sell your home, learn how to maximize your profits during this home-buying season.

Maximizing Profits From Home Sales

Those looking to sell their homes should follow a few steps before putting it on the market. Firstly, make sure you understand why you are selling or else you run the risk of spending a great deal of time and money on a project that goes nowhere. Once you are fully prepared to sell, start researching where you want to live next.

Interview real estate agents and ask for marketing plans to increase visibility of your home. Also, ask them for advice on to prepare your home for selling, home staging, pricing and the net profit. Develop a plan with the agent you choose and make sure they know exactly what you want out of your selling experience. Once your house is on the market, hold off on visiting new homes since it is usually more profitable to wait until you sell before you buy.

Getting The Most Out Of Home Buying

Real estate online is the easiest way to begin researching neighborhoods and prices. Determine what you can afford first, then start looking at all the places you would want to live. Open houses are a more traditional way of looking at property without having to commit to a real estate agent. Compare prices between new homes and older ones. If you can narrow down a few choices and are truly serious about buying, then start calling real estate agents.

Mortgages rates are at a historically all-time low, so find out all your financing options before you make any bids. With the housing market flooded with sellers, now is a better time to buy than ever. If you absolutely love the house, buy it regardless of whether you think the price will drop.

Just because there are more options does not mean the best deals go unnoticed. Look for foreclosed homes that are real estate owned (REOs) or find sellers that need to move in a hurry for your best bargains.

Maximizing Profits For Both Buyers And Sellers

Hire an appraiser to determine the value of your house and fix any major repairs before putting it on the market. If you are completely ready to buy a certain house, hire a home inspector to check it out for necessary repairs or damage.

Buyers and sellers should both talk to lenders and receive loan preapproval letters, so you know how much you qualify for when acquiring a mortgage. Do some comparison shopping for lending companies and mortgage types before settling on anything, and be careful of mortgage frauds.

Above all, make sure that what you want is to buy or sell before you are stuck with a huge loan you cannot pay off or a house that sits on the market. Taking time to prepare yourself for selling or buying a home will help you get the most out of this real estate season.

Julie Jalone asked:


As much as I would like to see short sales become a thing of the past there is some satisfaction in helping homeowners, who are having financial difficulties, avoid a foreclosure.  The Sacramento real estate market has been one of the hardest hit and unfortunately foreclosures and short sales are going to be with us for the foreseeable future.

Successfully completing a short sale certainly adds to the complexity of normal real estate transaction but the key to success is knowing what you are doing, having a process to handle them and experience in dealing with a variety of lenders.  At MagnumOne Realty we have had the opportunity to successfully complete a number of short sales and have a good handle on how to approach them.  We have developed a package for the homeowner that includes some basic documents we need to determine if the homeowner will be a successful short sale candidate, information our short sale team needs to get started quickly and some informative articles on what a short sale is, how they work, what will most likely be required and a general outline of how long it will take.

Getting started early is a key element in the successful short sale negotiations.  While the house is on the market we contact the lenders, provide them with the necessary authorizations and obtain their most up-to-date short sale requirements.  If they are a lender we have worked with before we talk with our contacts and let them know we would like to work directly with them again.  In addition we start working with the seller to develop a short sale package.  Because of our experience we can look at information provided by the homeowner and see questions the lender may ask and have those addressed so the first package we send is complete. 

Time is often not on our side when working with short sales.  We must have a complete package including an accepted offer prior to the home being foreclosed on.  Depending on when the homeowner hires us to help, this may be several months to weeks.  This means the marketing plan must be aggressive to attract a buyer.  Aggressive pricing will attract buyers but the sales price must be at or close to market as the first thing the lender will do is determine what current value is.   

An important element that too many Realtors are missing is that the home does not belong to the bank and it is the homeowner who negotiates with potential buyers.  This is exactly like any other sale with the only difference being that the contract is subject to lender approval as part of the short sale request.  Once the contract is accepted by the seller, it along with the short sale package and an estimated settlement sheet is sent to the lender.  We do not send multiple offers or send offers that come in later.  The potential buyer must be protected and their offer is the only one the bank will see unless the buyer withdraws.

Each lender is different and over time we have found that lenders change their process so it is important to maintain a steady dialog and use the contacts you have made over time to move the current short sale through the lenders organization.  Many of our Sacramento real estate clients have second and even third mortgages so we have to coordinate with the lenders and often negotiate between them to make sure each will release their lien.  We have found that most lenders are generally cooperative, understand the situation and will work with us to make the sale of the home a win for everyone concerned.  Occasionally we run into an overzealous negotiator who takes a position that won’t work for one or more of the other parties’ involved.  When this happens it often a good strategy to move the negotiation to the supervisor level or even get the homeowner to talk directly with the lender.

An important element in the short sale process that often goes overlooked is communication.  Not only between the short sale team and the lenders but with all the parties concerned.  Short sales take time, lenders are swamped and things you would think could be done quickly may take weeks.   During this time buyers can feel like they won’t get the house, seller’s start to think it would be easier to just let the bank foreclose and agents feel under pressure to get things done.  Frequent updates are vital to keep everyone up-to-date and focused on the sale and lender acceptance.

In conclusion, short sales are not easy for anyone but have a place in the current Sacramento real estate market.  They can be done successfully if the Realtor handling the short sale knows what they are doing, has a process to handle them effectively and has experience in dealing with a variety of lenders.

Nelson Stewart asked:


Anyone who has listed their home for sale knows there are a few secrets about maximizing your home’s appeal that not only raise interest in your home, but increase your asking price. Typically these are very simple and common sense things that anyone can do with a bit of time and effort. Usually it’s a good idea to go from room to room and make a list of simple upgrades. Try to think in terms of what you might want if you were buying the home again. Which things stand out? If you are having trouble picking them out then get a in dependant opinion, ask a friend to give you their thoughts.

Speaking in general there are a few areas of the home that can be “brought up to date” to increase the panache that a home possesses. An easy place to start is with the home’s fixtures. New lighting can dramatically change the look of almost any room and new lights are something that buyers will notice right away. Another great idea is to redo the home’s floors. The difference between old carpet and new laminate is astounding. Even just shampooing the existing carpets can bring new life to a home.

Now, how far you want to go to improve the value of your home depends completely on you. If you are willing to spend some money to make some money then why not redo the kitchen or bathroom. It’s a known fact that new and modern kitchens sell homes. This will usually include a new countertop, new sinks and faucets, new appliances and perhaps cupboards and flooring. Alternatively, you can also simply refinish the cupboards. This will take a bit of time, but it’s amazing what a new varnish and new doors can do for a kitchen. The same goes for flooring. Tile is a favorite surface for kitchens as it is highly resilient and quite attractive. New bathrooms are also a highly sell-able feature. The updating of all the fixtures and major appliances will almost always ensure a higher asking price for your home.

Susan Zanzonico asked:


The American dream is changing, and real estate professionals are doing their best to keep up in order to sell homes. Many buyers still want a big house in an uncrowded neighborhood, especially if they have a family, but there are conditions attached now. Long commutes into the city are more of a deal breaker now than ever before, and areas without a nearby business community, parks infrastructure, or future-proof layout are generating less interest. Realtors working in the suburbs must now learn to identify and market smart growth, and a well-rounded lifestyle, as well as the old ideals of comfort and privacy.

Soaring gas prices have made the suburban commute a tough sell, but rail lines are a cheap solution in many metro areas. Cities with long-established commuter rails have upgraded their routes to accommodate growth, while cities that expanded rapidly during the mid-20th century are building new commuter lines. One example of a large center with a newer commuter line is Vancouver, BC, Canada, where an extensive line called the West Coast Express opened in 1995. An area like suburban New Jersey offers well-established commuter railways, but here too the traditional routes are augmented by new routes, such as the Morristown Line which runs 40 miles between Hoboken and Hackettstown. Real estate agents who know the rail routes in their area, and stay on top of development plans, can help more buyers find a suburban home suited to their needs.

The high-tech bio-tech industries have brought another marketing angle to the suburban home market in recent years. Many companies in these rapidly expanding sectors operate at the outskirts of large metro areas, where they can develop large campuses and research facilities employing thousands. High-tech and bio-tech professionals can live in low-density neighborhoods, and avoid a lengthy commute altogether, if they find a home near their campus. Realtors sensitive to the high-tech market will find these home searches easy to accommodate.

Other new marketing angles for suburban real estate can include high quality school districts, parks systems, improved inter-municipal planning, outdoor shopping plazas, cheaper home prices, and a larger new home inventory. Knowing what makes these areas attractive to buyers will help real estate professionals close more deals, and promote smart growth where they live.

Julie Jalone asked:


A short sale is where the sales price of the property is less than what the seller still owes and the lender is willing to accept less than they are owed.

Why would a lender agree to a short sale? Mortgage lenders are in the business of making loans not owning property. When a loan is in default, it is viewed by the lender as a non-performing loan. In addition to not earning interest on their loan the Federal Reserve requires the lender to put aside funds to cover the bad debt. These funds are called a reserve and cannot be lent to other clients. In addition there are some rules about how many non-performing loans can be kept on the books and the punishments for exceeding these limits are serious so banks and other lenders are anxious to get these loans resolved. It should also be noted the foreclosure process is long and expensive for lenders. The reason many investors look for bank owned properties is, historically banks have not been very good at selling property. All of these reasons are why lenders are willing, in some cases, to take less than they are owed.

Steps to a Successful Short Sale

1. Determine if the property qualifies for a possible short sale. There are two elements to determine if your home qualifies for a short sale. First is what you owe on your combined mortgages more than what you could sell your house for less the selling costs? In other words after you have paid all the closing costs will there be enough money left to pay off the lenders? If the answer is no to this question your property qualifies for short sale consideration.

2. Determine if you qualify for short sale consideration from your lender. Mortgage companies make loans to borrowers and use the home as collateral. Their first source of repayment is you, your income and capacity to pay. Their second source of repayment is the liquidation of the collateral, in this case the house. Since we have already determined the selling of the collateral is not going to repay the mortgage in full the lender will look to the borrower to pay the balance.

You will only qualify for short sale consideration if you have had a hardship and can demonstrate to the lender you have no capacity to pay the balance that will be owed after the sale is complete. A financial hardship can be death of a co-borrower, divorce, unexpected medical bills, loss of a job, reduced income, and even a job transfer that requires you to relocate. Any or a combination of these must have drained your capacity to pay. The lender is not going to grant a short sale if you have a large investment portfolio, savings accounts, and/or a 401k pension account. In reality they may accept the short sale contingent on the borrower paying the balance from savings.

3. Hire a Realtor with experience. Find a Realtor with direct hands on current experience in working with lenders to secure a short sale or at least make sure they have access to such a person. Selling the home is easy; you just keep lowering the price until a buyer shows up. Having an experienced agent who knows how to contact the right department within the lender’s organization and find out exactly what their short sale package requirement are and knows how to put it together in a way that makes the decision for the lender easy is who you must have working for you. This agent will also be able to explain the process to you and, as importantly, to your buyer and their agent.

4. Willingness to bare your financial soul. The requirements for a short sale vary from lender to lender but they all will want to verify your claim that you are going through difficult financial times and do not have the capacity to pay any unpaid loan amounts after the sale of the home. This means they will want items like pay stubs, bank statements, pension, credit card and other statements. In addition they will want copies of recent tax returns. They will want to understand what your monthly obligations are including alimony, child support, insurance, utilities, etc. In most cases the lender will be asking you for more information than you may have provided to get the loan. Here again your experienced Realtor can help you put together the package in a manner that will limit subsequent information requests and speed up the process.

5. Patience and flexibility. These are key ingredients in many things but are vital in the short sale process. Lender employees working on short sales are swamped right now, most packages require many requests for more information and they have no emotional attachment or need to have a relationship with the borrowers they are dealing with. Consequently it may take days or even weeks to get an initial response. In my opinion, I think some are trained to give non-encouraging feedback. They will generally hire an appraiser to come out and give them a value; they may question your Realtor on the negotiated price. In other words it is often a back and forth process that can take weeks to complete and most lenders are not very good about keeping you and/or your Realtor informed.

6. Understand the credit and tax consequences. Although recent changes to the tax laws appear to relieve the forgiven amount as taxable income consult with a qualified CPA to make sure you have a complete understanding. There is a misperception that a short sale will not be a negative on your credit report. That is not true; it will negatively impact your credit and ability to get a loan in the future. Talk to a credit professional and make sure you understand exactly what a short sale will do to your credit.

Many homeowners, especially here in the Sacramento area where we had such rapid appreciation and a large number of homes built in the 2004-05 time frame, are finding their homes are not worth what they paid for them and worst yet, they now owe more than the house is worth. These homeowners should not panic or start working on utilizing a short sale unless they are experiencing a severe financial hardship. In that case a short sale may be an option to avoid foreclosure. The best advice I can give is, contact and talk to an experienced professional and make sure you explore all your options because there may be others.

Kim Gibbons asked:


Short sales are becoming more of a topic as overburdened real estate investors in Pensacola and Destin Florida look to relieve themselves of top heavy mortgage obligations. Savvy investors know to be aware of possible tax liabilities and the effect short sales have on your credit rating.

Homeowners will need to consider the effect short seeing will have on their credit rating. A lender will typically report a short sale transaction to the credit bureau. While it may be better than a foreclosure, a short sale will definitely leave a considerable mark on your credit report.

Short sales occur when a lender accepts an amount less than the amount mortgaged as the total payment to settle the real estate debt obligation. Essentially the lender allows the homeowner to sell his or her property for less than what is owed on the mortgage. For example, let’s assume your home’s mortgage is $200,000 and you have fallen behind on your mortgage. You decide you need to sell your home to be relieved of the remaining mortgage. Your real estate agent tells you based upon recent sales in your area that similar properties sell for $170,000 today.

The problem is that the homeowner who sells their home in a short sale may face a considerable tax bill based on the amount of the mortgage balance. Having the lender forgive the debt does not lessen the tax liability. The property will be taxed as if it were sold for the total outstanding amount of the real estate loan, or the sale price, whichever is higher. If the bank were to forgive the $30,000 deficit the money will be reported to the IRS as cancelled mortgage debt on your behalf.

Short sales are considered by the IRS to be a debt cancellation. Your Bank will send you an IRS Form 1099C-Cancellation of Debt. The IRS views the cancelled or forgiven mortgage as income to the borrower in the tax year the debt was cancelled. You may end up with a large and unexpected tax bill on April 15th of the next year.

Banks don’t always agree to short sales and generally will not consider one too early in the process. Short sales are easier to negotiate if you already have a purchase contract from a qualified buyer. The Bank will make its decision based upon a number of factors including the best interest of the depositors and the hardship of the homeowner. Homeowners are required to prove that they are insolvent in an audit like process that can take weeks or months to complete.

The taxability of the gain and deductibility of the loss depend on the nature of the property. The loss may be tax deductible if your property is a rental property. Talk to your tax adviser to see what options are available to you before you short sell your real estate.

Carol Freyer asked:


As someone in the real estate industry, I’m always eager to find out more about buying and selling strategies. However, I’m not sure what to think about using astrology to sell a home. Or Feng Shui. Or magic spells. There are a lot of people more than happy to take your money in exchange for your magic number, star alignment, or real estate amulet, though.

Astrology has been used to divine the future since before the Common Era. Many people today view it as a harmless amusement. Move.com even has a section for “homestrology” profiles. Realty Times did an article entitled, “Look to the Stars for Decorating Advice”, featuring astrologer John Marchesella, who claims that knowing your Sun Sign can help you choose colors for your home.

In some cases, astrology becomes serious business, spawning websites like realestateastrology.com that sells subscriptions for astrology questions, natal charts, and business outlooks. These cost between $25 to $50 a month. Some astrologers promise results if you buy a personal profile from them, ranging from 19.95 to hundreds of dollars. One website promised that my problems selling a home stemmed from not having my home in proper alignment with the stars. For only 39.95, I could get a astrological profile that would improve my real estate transactions. Some Realtors even claim that they use astrology to sell homes.

Magic spells aren’t just for Mickey Mouse in “Fantasia” any more. Some people believe that they can help you sell your house. One spell requires allspice, myrrh and benzoin. If Eastern magic appeals to you more, there’s a site that sells Chinese Prosperity Oil at the bargain price of 39.95. Apparently you can anoint the doorstep with it or burn it for a pleasing ‘buy-me’ scent.

Another route is to bury a statue of St. Joseph somewhere in the lawn. St. Joseph, one-time husband of Mary, the mother of Jesus, is also the patron saint of real estate sales. One site selling St. Joseph statues intimates that you can sell your house faster if you buy the bigger statue size. One wonders why it is necessary to deep-six an effigy of a saint in order for him to take notice of your house selling woes, but there is no explanation forthcoming from history aside from anecdotes.

Feng shui is a Chinese practice rooted in ancient times. Basically, the idea is arranging objects in one’s life to attract positive energy. However, feng shui also attracts money from people who believe that this practice can help them sell homes. 19.95 buys one information about their element at one website. One feng shui consultant who works in real estate charges $150. An hour. On the plus side, feng shui does encourage people to pay attention to their color scheme and the placement of furniture in the home.

The principles of feng shui may actually work in real estate simply because they encourage people to arrange their house in an uncluttered fashion, with an eye for pleasing colors. Magic spells and astrology, though… are these people genuine, or are they simply taking peoples’ money? The truth is that the efficacy of such things has never been proven. It’s one thing to look at your horoscope for fun; another to hand someone hundreds or thousands of dollars, only to be told that your house didn’t sell because the stars weren’t aligned properly.

In the end, I would urge you to put your faith in a Realtor, whose ‘magic’ you can rely on.

Barry Cunningham asked:


If you are not aware of just who Sun Tzu was, then you may want to order The Art of War. It is an absolute must read for those in business.

More than 2,500 years ago, there was a period in China known as the Age of Warring States. This was an age of great conflict and uncertainty as seven warring states fought for survival & control of China.

For these states to win they sought out any means of gaining advantage over their opponents; those individuals with knowledge on strategy & leadership were extremely valuable and highly coveted.

During this period arose a general from the state of Ch’i known as Sun Tzu. His ability to win victories for his warlord gained him fame and power.

To hand down the wisdom he had gained from his years of battles Sun Tzu wrote a book, The Art of War, that became the classic work on strategy in China. His book, which details a complete philosophy on how to decisively defeat one’s opponent, has given guidance to military theorists and generals throughout the ages.

Military greats and business leaders alike have hailed The Art of War. Former U.S. Chairman of the Joint Chiefs of Staff Colin Powell said, I’ve read the Chinese classic The Art of War written by Sun Tzu. Sun Tzu has been studied for hundreds of years. He continues to give inspiration to soldiers and politicians. So every American soldier in the army knows of his works. We require our soldiers to read it.”

Today, Sun Tzu’s appeal has extended beyond the military realm into the world of business. IBM, XEROX, 3M, and many other corporate giants use the teachings of Sun Tzu in their training of executives because business by definition deals with competition.

So in looking at how Sun Tzu can be applied to short sales, let’s look at a few of his teachings and how they can be applied, and be applied successfully.

The Grand Duke said “one who is confused in purpose cannot respond to his enemy”.

This is the beginning of our journey in applying the teachings of Sun Tzu to our real estate business. Without purpose there can not be any victory. Without purpose there can be no success. Most importantly, being confused in purpose leaves you weak and unable to respond properly to the challenges of the real estate business.

For instance, if your goal is to successfully complete a short sale transaction, you have to define your purpose while simultaneously being able to respond to that of your enemy’s; in this case the foreclosing lender.

When we enter into a short sale transaction we define our purpose very clearly. Our objective is to obtain the highest possible discount on the payoff we are seeking and to sell the property by dual transaction immediately at closing to a buyer we have farmed. We also do not want to be involved in any transaction where we are not receiving at least 30% off of current market value and we expect a minimum of $20,000.00 profit per transaction.

This gives a very, clearly defined purpose and allows us to easily respond to our enemies, whether lender or real estate agent. Whatever response the lender gives us in reaction to our short sale proposal, we are not deterred in endeavoring to achieve OUR goal..OUR purpose.

Here are some other really valuable “Tzuisms” that we can apply to short sales.

“Knowledge that does not go beyond what the generals know is not good.”

This means that being successful is more than simply being on the same page. A short sale project is worthless if it’s not effectively communicated to everyone on our team (Seller, Buyer, hard money lender, agent, Title Company, attorney, office staff). As a project leader on a deal, or as an agent representing the project, one must make certain that all are informed, educated and prepared to orchestrate the transaction successfully.

How many real estate agents know how to manage a short sale correctly? Can you truly coordinate a short sale? Are you following the game plan as designed by the Buyer, or are you out there winging it, hoping it all works out? Calling a bank and asking if they accept short sales is transactional suicide. Sending every offer to the bank for approval is short sale suicide.

“If your troops do not equal his, temporarily avoid his initial onrush.”

Do not initially engage a competitor unless you are prepared. In regards to a short sale, don’t ever, ever speak to a bank regarding a short sale until you are prepared to do so. This means the only contact you are to have with a lender is to find out who the contact person is and what their contact information is. That’s it; you are not prepared at this point to negotiate. You are not educated, do not have all of the necessary information compiled, no package has been prepared and if you are just sending offers to the bank without preparing a full package to justify your requested discount then you will not likely succeed and be overrun by your opponent, the lender.

“If officers are unaccustomed to rigorous training they will be worried and hesitant in battle”

In his teachings, Sun Tzu often reiterates the importance of preparation. Proper training, proper education and battle tested experience are crucial. Of great significance is that Sun Tzu believed that training should be distinguished from education. While the latter employs a classroom setting, the former provides hands-on learning. In relation to short sales, you can see how to be a short sale expert; you need to have BOTH aspects. You need to have professional class room oriented educational instruction as well as successful hands-on experiential training. Absent both of these vital components you hardly are an expert. In addition, the value of real estate cross-training is integral to your short sale success.

You need to have knowledge of how things work in a short sale and how things impact a short sale. Issues like latent material defects, inspection problems, double closings, Hard Money lending, loss mitigation techniques, subject to transactions, obtaining deeds, foreclosure law, certain tax ramifications, and much more are parts of a short sale expert’s toolbox. What’s in yours?

“Therefore, when I have won a victory I do not repeat my tactics but respond to circumstances in an infinite variety of ways.”

Each deal is different. Sun Tzu recommends that you examine what you did right or wrong and changing your strategies accordingly. Peyton Manning is a MVP quarterback in the NFL, part of his pre-game preparation is watching every defensive play, from every single game, that his opponent has played that season. When we work our short sale deals we do the same. We review what our opponent is doing, and has done and what position they are currently in.

We look at what REO’s the bank has in inventory, we check their annual report and see what level of non-performing assets the bank has on their books, we sometimes buy a single share of stock so we can obtain various documents and the ability to attend shareholder meetings and conference calls, we see what the level of foreclosure activity they have in our immediate market; I could go on and on but suffice it to say, you need to know what changes you need to make in your presentation and approach and continually fine tune your game.

“The supreme importance in war is to attack the enemy’s strategy.”

The bank wants to make sure they get as much money back from the non-performing asset as they can. In mitigating their loss, their object and purpose is to minimize your profit. It is of the utmost importance that you attack their strategy as forcefully as possible. You have to be in a position of absolute dominance. You do not want to show up to a gun battle with a water pistol.

Our short sale package is over 150 pages once complete. Our template alone is 100 pages. We want our artillery to be armor piercing. We want to go for the jugular and not release until we win. It is of absolute importance to strike hard and attack the enemy’s strategy. If you are not prepared to use every weapon in your arsenal. If you are not educated and trained as to how to wage battle in a short sale setting, then you will succumb to the lender’s strategy.

By the way, you do know they have their own defined personal battle strategy? Don’t you? You do know they are practicing these exact precepts against you don’t you?

If not, you are underestimating your opponent and as Sun Tzu teaches, “He will win who, prepared himself, waits to take the enemy unprepared.”

The bank will own you if you do not know how to properly and expertly execute a short sale.

“To fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemy’s resistance without fighting.”

Your goal, like ours has been, is to reach the point in your short sale business that you no longer need to fight. Become a proven opponent. Get to a point of credibility that once the lender acknowledges your presence, you can go straight to negotiation. No need to neither battle and prove your might nor demean your opponent. A mutual respect has been achieved through previous battle. Our capacity to wage battle and the manner in which we are prepared to do so is known and precedes us. Now, with many lenders, we can break their resistance to our numbers simply by being excellent in what we do. They know what kind of package to expect, they know what lengths we are willing to go. They know we are educated, trained and skilled opponents. We are respected warriors.

We train and educate others to be good soldiers and we’ll teach you as well.