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What To Do When Your House Value Doesn’t Cover Your Debt

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You probably have a pile of debt.

And it’s probably getting bigger, not smaller, right?

You’re not alone.

Most of us do, and it’s the kind that gets bigger every year.

According to Statistics Canada, 71% of all Canadians carry some form of debt (2012).

“Yes, that includes mortgages, but it also includes a growing pile borrowed to buy cars, new kitchens and many of the fashionable material trappings of the modern middle-class lifestyle”(1)

How do people deal with it?

Three ways.

They ignore it, letting debt climb every year, and hoping it gets better one day. We won’t go into why that’s a bad idea.

They refinance, using equity to pay off debts. Basically, it’s like using your house as a debit card, withdrawing cash whenever you need it. The plan is shaky, and depends on the market value to increase forever and without stopping. (Don’t think prices will drop? Our neighbors to the south thought that too…)

Or they sell, thinking the profits should be enough to dig them out.

That’s when they jolt awake to the fact that the sale won’t necessarily cover that pile of debt.

And it makes them crazy. The thought of getting a payday can make people do some wacky math.  (Just ask anyone who’s dealt with the division of an estate)

They’re shocked. Disappointed. Outraged and defiant even.

But here’s the thing.

The value of a property is not based on how much debt a person has.

Aren’t you glad? Imagine paying double for a house just because the guy who owns it happens to have loads and loads of debt. Would you pay it?

Umm, no.

And they won’t pay you either, sorry.

So what can you do when the sale doesn’t cover your debt?

Brace yourself, you’re about to hear things you already know.

 

  • Adjust your expectations. Remember – house value is not at all impacted by your finances. Besides, no one owes you financial freedom any more than you owe it to them.
  • Decide to stop adding to the debt pile now! It won’t grow if you don’t feed it.
  • Make a plan to pay off existing debt. Selling the house, when the value doesn’t cover it, is not the plan. Make a new one. Second jobs, selling other assets, reducing spending and throwing down higher payments… do what you must to climb out.

It’s that simple, and that difficult.

Overspending is killing us, and entitlement about house prices is not helping.

Welcome to the reason we’re all in debt up to our eyes.

I’m in the trenches with you, and the other 71% of Canadians.

What’s say we climb out instead of expecting others to pay our way?

 

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What is Your Loyalty to Friends and Family Costing You?

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Sometimes loyalty is a bad idea.

Even to family.

Or friends.

And especially to the neighbor’s uncle’s cousin’s friend.

Like the woman whose loyalty is causing her crippling pain to continue.

She had been seeing a physical therapist to help her with the constant pain she was in. For all the therapy she’d been receiving, her condition was getting worse, not better. There were other therapists who were skilled at treating this very problem.

“Maybe it’s time to try another therapist,” I said.

“Oh! But I can’t do that! I know somebody who works there.”

I let her statement just hang in the air, hoping she’d hear the lunacy of it.

After a moment, I chided with my signature brand of sarcasm.

“Oh. Well, in that case, you’d better just stay in pain.”

She smirked. “Good point.”

I guess she felt like her leaving would mean the therapist would be out of a job.
Which, of course, is totally false.

Loyalty can be a bad idea in real estate too.

Too often people have hired a realtor because their face is on a sign (here’s why that’s a dumb idea) or worse, because their neighbor’s friend’s son is an agent.

Which apparently means you are obligated to hire them.

Let’s just let that hang in the air for a moment so we can hear the lunacy of it.

Imagine this loyalty applied to doctors. Using only doctors who someone knows, regardless of their skill level or expertise, would be stupid.

“Oh, you’re an OBGYN? Perfect. Because I have this heart condition…”

Or medications.

“Oh, this life-saving pill was made by Valeant? Sorry, I only buy from Pfizer because my dad worked there for twenty years.”

Do you hear the lunacy of it?

“Oh, you’re a realtor specializing in rural properties and digital marketing strategy? Sorry, my brother Bob always uses another agent, so I have to too.”

Your loyalty should not be treated so cheaply.

Don’t give it away.

Especially not just because someone thinks you should.

Loyalty is precious and should be earned.

When it’s not earned, it’s treated poorly. Then you get poor results.

What else could you expect from a doctor not skilled in your area of need? From a therapist that can’t help you? Please, at least find out about the services a real estate agent offers before you make a decision on who you will hire to represent you.

Make them earn your loyalty.

And if they can’t, they didn’t deserve it in the first place.

Why January Is Spectacular

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It’s over.

The rich taste of eggnog and aroma of delectable spiced ginger cookies have faded away.

Some people think that once the tree and lights are put away, winter’s sparkle is gone, and the grey must inevitably settle on us. Buckle up, it’s all dim and sad until spring…

Here’s the thing.

They’re wrong.

January shimmers with the romantic splendor of no other month.

At each country property I show, soft white snow trims the evergreens. Snow stretches atop fences like a garland and frost sparkles on branches like crystal fireflies. It’s almost as though the properties heard we were coming, and excitedly dressed up in their Sunday best.

It’s impossible to feel grey and dull when glimpsing that kind of dazzling display.

The other day the most stunning sun dog blazed in rainbows around the sun. I stopped in my tracks to admire them. It amazed me to think that their incredible beauty is simply light reflected by ice crystals.

That’s what I want. I want to reflect Light – to be the clean, clear crystal that reflects all the colors light contains.

What the heck does that mean, right?

I guess to me it means sharing. I want to share what I know and how I live and work so that my colleagues can gain success. Watching my peers grow and succeed gives me great joy. The joy is immensely more if I get to participate by helping somehow – even if it’s as an example seen from afar.

January’s clean, crisp freshness is its splendor.

I feel … like January.

I’m clean and free of the clutter of resentment and bitterness I once carried.

Before me is 2016 – a fresh layer of snow on which I get to make new tracks.

Wait – do you smell that?

*deep breath*

Yep, it’s adventure.

This is gonna be good…

What new tracks do you hope to walk this year?

How To Surprise Colleagues & Win Clients Even in Slower Markets

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Whatever your business, slow markets or a sluggish economy can make things tough.

It’s natural to respond in fear and shift into self-preservation when that happens.

And it’s the worst thing you can do.

For one thing, it reveals that deep down inside, you believe you can’t make it. Which is a problem, and probably means you’re self-sabotaging in other ways to.

It is also really bad for business.

People operating in a fearful state of self-preservation often cut marketing dollars and put a stop on any investment in their own education.

Flipping on the autopilot and just trying to hang in there is a weak strategy for any business.

Even when money’s tight or when things aren’t selling as quickly as you’d like, it’s still important to invest in your business, your marketing, and yourself.

In fact, during market lulls may be the most important time to do that!

Here’s why.

While everyone else is hiding under their desk, hoping the same old strategies will keep them safe, you will be perfecting your skills and understanding of the very things that distinguish your business from the rest.

You’ll lay down a power card while everyone else is lying down.

You’ll pay handsomely with time and money to learn new skills. As you apply what you’ve learned, you’ll surprise your colleagues.

Here’s another point.

Keeping up with the latest trends is critical to your business, no matter what the market is doing.

Even now, where and how people shop for homes is changing. It’s critical to be aware of it, and then know what to do about it. As a real estate agent, I need to know where people are shopping, and how to get in front of them.
When times are tough, don’t hunker down and hope for the best.

Strategize.

Work to understand the trends in your industry. It will require an investment of hundreds of hours of reading and listening to podcasts and attending seminars and workshops. It will also take time to practice using the related new software, platforms, and technologies you’re bound to discover.

Then get out there and be surprisingly generous.

I’ll bet you’re still wondering how this helps one to win clients.

Here’s the thing.

With your keen understanding of the market and trends, (and after some practice and troubleshooting) you’ll know where the clients are and how to get in front of them. Once you’re in front of them, your reputation as a knowledgeable and generous professional will attract people.

I know because it’s how I am attracted to businesses and leaders and authors and speakers.

I also know because as I’ve been generous and applied what I’ve learned, colleagues, competitors, and even clients notice. And they seek me out to ask questions.

Strangers will walk up to me and say “Hey! You’re Tina! I read your blog.” Or they’ll hire me because they found me easily exactly where they were looking. (You know where that is, right?)

What about you?

How do you weather slow times in your business or industry?

How To Speed Your Sale in a Slow Market

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In southeastern Manitoba, home sales have slowed. And sellers are getting frustrated.

For the last decade, our area has enjoyed a boom – a fast-paced market where buyers were tripping over themselves to secure the house they desperately wanted to buy. Prices swelled, there were competing offers, and it was a thrilling ride.

In the last year or so, something changed. We suddenly have an abundance of homes to choose from in today’s market. Buyers are now able to take their time (and they surely do), and browse the wide selection. They are no longer desperate to get whatever they can.

This is why to sell a home takes much longer than it did only a year or two ago.

Homes listed on MLS can take twice as long to sell than they would have in the past.  It can take six months (or more) to sell your house in the R16 region.

If you’re a seller, this is disappointing news.

If you’re a seller in a hurry to sell, this is downright scary.

There is a way around it, but new markets call for new ways of thinking. Are you ready to adapt to the new market? If you are willing to change with the times, you’ll have an easier time. Stubborn adherence to past prices, old marketing, or even just your own perceptions though, can cause you a world of unnecessary hurt.

If you’re eager to sell, and willing to accept that the tides have changed, here’s how to change with them.

If your home is listed at 100% of market value, expect the sale to take six months or more.

Pricing at 95% of market value would bring you back up around 2-4 months.

Listing at 85% of market value may take closer to 3-8 weeks.

If your home is listed at 70% of market value though, which is what investors typically pay, you can expect a sale very quickly – in 1-3 weeks!

 

Then there are those who insist on listing above that value. Theirs can be a dark road.

That road often ends in the listing becoming stale, receiving low-ball offers, and then either selling for way, way, way below even market value, or being repossessed because the owners could not finance the long haul that kind of greed demands.

The bottom line is that you can control your bottom line.

You can’t force people to buy, but you can certainly sweeten the deal for them. And in a buyers’ market, that’s an essential element to selling your home.

Like much of life, it seems the home seller must choose between time or money.
Which are you willing to pay?

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How Rich are Real Estate Agents? (And Why a Complete Stranger Asked Me for Thousands of Dollars)

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Real estate agents facilitate millions of dollars in transactions each year.

 

And we get a cut from each one.

 

…So we must be rich, right?

 

By that logic, car salespeople, furniture sales staff, and the Tupperware lady must all be raking it in with the value of sales they make. After all, they broker thousands of dollars in sales – tens of thousands even – and get a cut from each sale! They must be rich.

But, they’re not.

I’m afraid we real estate agents are about as rich as anyone else in any other industry who earns a commission.

For some reason though, people continue to assume real estate agents are rich, and should give up their over-stuffed commission to benefit the little guy. (Which is apparently everyone else.) It’s bizarre. In no other industry I’ve worked, have I been asked to forego my earnings (translation: the deserved paycheck I worked hard for!) just because. But it happens in this industry – sometimes as casually as one says hello.

I recently received an email from a complete stranger, who immediately asked a favor. “I’m interested in one of your properties… can you help me with the down payment?” To clarify, this person was asking that I “help” by giving up my commission. This person I’ve never met was asking me to forfeit my paycheck. (Has anyone asked for YOUR paycheck after you put in the time?)

It’s a big ask, even for a family member who loves you dearly. To ask it of a complete stranger is beyond a favor. It’s downright offensive.

If you, like this person, assume real estate agents are too rich and just a bunch of greedy hoarders who for no reason at all owe you a living, then I guess you wouldn’t understand how such a request could be remotely offensive.

If you work hard for what you have though, and a stranger walked up to you and required your thousands of dollars just because they wanted it…  I seriously doubt you would smile and fork it over just to be “nice”.

Well, reading that email did not inspire any nice thoughts. I imagined all kinds of things I could say to “educate” the person who sent it. But I know better than to open my mouth when I’m upset. Once I cooled down, I thought back to the days before I owned a house.

Saving up the down payment is about the most difficult part of buying your first home. It takes diligence, discipline, and a whole lot of work and time.

It’s hard. I get it. Been there.

That’s why I’ll write about how to build up that down payment in a future post.

Today, I just wanted to highlight once again that real estate agents are not some uber-wealthy race of robots whose earnings belong to the human collective.

We are your average working Joe.

We are your average mortgage holder.

We are you.

ADVERTISING Is the responsibility of the agent!

Experience in real estate has allowed me to observe a variety of thoughts from many agents on the subject of advertising. Before I share, allow me to say that each thought has a point. Just because I think differently and make my choices differently from other agents, does not mean that I don’t see their point of view.

Here are some statements that I have heard from competing agents:
* The house will sell regardless, so why spend money on advertising?
* I put an ad in there once and I did not get any calls, therefore it is useless
* It’s too costly!

Here are a few reasons I choose to advertise:
* My seller has entrusted me to work on their behalf to market their property. I have access to advertising opportunities that a private seller does not have. Any agent can put a listing on MLS and put a sign on their property! I want to give my seller’s home maximum exposure!
* The seller does not just want a sale. The seller wants the sale to bring them maximum profits in the least amount of time! I don’t want to sit back and wait for someone to call, I want to entice the buyer to call!
* Well over 90% of buyers are beginning their home shopping on line! That statistic is reason enough to be strategically searching for the maximum online presence! If that’s where the buyer is, then that’s where I will go to attract the buyer!
* The age group that buys the most houses is 25-34 year olds! This young generation is tech savvy! I absolutely love working with first time home buyers and young people. This was motivation for me to become tech savvy and speak the language of the young. It can be a quick step to get more information on the house I am marketing! The mobile generation appreciates that I am a mobile friendly agent. I make myself accessible through social media and I am willing to respond in a timely manner.
* Complacency is offensive to me! It is upsetting to me when a seller is paying 5% or more of the sale price to an agent to market their home and they get no marketing exposure in return!
* I am grateful for the business!
* I want my sellers to be completely satisfied so that they will refer me to other sellers!
* MARKETING IS MY JOB! I chose this profession because I enjoy serving people and marketing is one of my skills!

My methods bring results!

Tina Plett, Sutton Group-Kilkenny Real Estate

Getting Personal

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The question arises, Should a REALTOR® get personal with their client?

Selling or buying a house is foremost a personal matter! The reasons for your move are personal. The preferences you have are personal. Your budget is personal!

The best way for me to serve people is to understand them personally!

If you are about to lose your house due to finances, I may choose to market with a different strategy!

I am not uncomfortable with personal topics.

If someone struggles with depression, it may change which hours in a day we will allow showings. Sickness interrupts lifestyle, as does anxiety.

I want to show dignity to the person who has discomforts in daily living. I find that when I know my clients personally, I am able to serve them attentively and they will have a greater satisfaction in the process and in the outcome!

That being said, I respect a persons privacy. I will not require someone to tell me about their finances and health or relationships, that they don’t want to discuss!!! Clearly, that would make them uncomfortable from start to finish and that would be counter productive!

Being personable means that I can adapt to your comfort level to serve you best!

I believe that when I put the person first, the pay cheque will be greater than just cash. I will feel fulfilled and my client will be satisfied! I believe that is why I am being referred to other people. I believe this is why my business is growing!

It is up to you whether you choose an agent who serves people, or one who serves himself and his wallet!

I serve people and sell houses. I hope this blog clarifies what that means!

Tina Plett, Sutton Group-Kilkenny

Your budget or your lifestyle?

 

PERSONAL PREFERENCE is the driving force that dictates where you choose to live! When you purchase a house, you are determining your lifestyle. The obvious first consideration is location!

Most often, when a buyer tells me they are approved for a certain amount, I notice that they shop for homes as close to the top of their budget as they can get! We all want as much as we can possibly have! Too often, once we get what we want, we cannot afford the lifestyle we wanted when we chose our home!

For the urban active lifestyle, a condo in the heart of the city may provide all the convenience you need for a carefree lifestyle. Remember, if you max yourself to the limit of your spending budget, you won’t be able to go out on the town the way you pictured when you chose this option. It is the lifestyle you are after! Choose lower payments and afford some night life!

For the rural lifestyle, you are considering an acreage where you can have a few animals and feel the purity of country life. Have you looked into the price of buying and maintaining the animals? Will you be buying saddles and building shelters? If you are shopping at the top of your pre approved budget, where will you find the additional a cash to take the horse to the vet?

BALANCE is necessary. When you find out how much you “can” spend on your next house, please stop and consider the costs of the lifestyle you want to live when you get moved in to that house!

Tina Plett, Sutton Group-Kilkenny Real Estate

Dealing with disappointment

 

Disappointment is an empty feeling. It comes when you experience a loss! Everyone experiences loss and disappointment at some time or another.

This week, I have seen many people be disappointed! I took a young couple to look at what they thought was the perfect property for them. When we arrived, we found the house needed extensive work beyond the budget! I watched their expressions turn from eager anticipation to  utter disappointment!

I also heard the tears of loss when a buyer was declined financing on a home after their house had already been sold. They are now homeless!

A young woman tried to purchase a budget home and was not able to do so because the divorce was not yet final, and that affected her financial status.

Another couple looked at nineteen homes and finally fell in love with one, just to find out that due to circumstances, they now have to put off buying for a while.

One of my sellers was ready to build their next home when a deal fell through because their buyer had been given an approval without a credit check.

I too have felt disappointment in each of these circumstances! I have suffered financial loss in each situation!

So what can we do to handle our disappointments?

1. Get some sleep!

2. Take time to eat. That sounds elementary, however, when you are stressed, it is easy to keep going and skip a meal.

3. Remind yourself of this: I have been disappointed before, and I did not like it. I survived the disappointment! Therefore, I will overcome this disappointment.

4. Consider:  Is there another option? Is there something I can do to make this work in the near future? How can I avoid getting into this situation again?

5. Plan. What steps will you take to pursue change that will move you in the right direction?

6. Realize this: My disappointment and my loss do not define me. My identity is not in the one thing that went wrong. I am created to live an abundant life and I have hope for my future!

7. Remember. Take a moment and remember your success stories. Give thanks for the wonderful moments you have enjoyed in life.

8. For me, I can by pass all those steps if someone just gives me a hug!

We have to find a way to get through and past our disappointment, or we cannot be proactive in helping others!

I am sorry for all the stuff that went bad for you, the reader. I am sure you have experienced deep disappointments in your life. Don’t let your past rob you of your future!

Tina Plett, Sutton Group-Kilkenny Real Estate

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