We’re here to sell houses and chew bubblegum. We’re all out of bubblegum.
First-Time Home Buyer Credit & Short Sales Do Not Mix!
By now, even the most procrastinating of first time home buyers understands that the end is nigh. The end of the $8000 first-time homebuyer tax credit, that is. While rumors abound about a possible extension past the current deadline, rumors also persist that man did not actually walk on the moon in 1969 (if you happen to believe the latter, you can moonwalk your way right out of my blog catalog). When it comes to our esteemed legislative bodies, I am not ready to take the leap of assumptive faith that they will do the logical thing. As things stand, you have received sufficient warning from every warm and cold blooded Realtor type in the land that you need to get on the stick immediately. With new appraisal regulations and loans which used to take 30 days now bogged down in underwriting quicksand, it is not a good idea to venture past mid October before pulling the trigger on that home you have been patiently watching for just one more price reduction. With a fleet of fellow procrastinators waiting until the absolute zero hour (closing prior to 12/1/09), there is also the added risk of running into title company soup. Think the end of the month is busy at your friendly title company and subsequently hectic in terms of getting your deal closed? My hunch is that typical happenstance will be a walk along a tranquil beach in comparison to the buyer tsunami that figures to crash upon every escrow office near you between 11/1 and 11/30.
But these are the things you already know. Just like you already know that the credit is not reserved solely for first time buyers, but also those who have not owned Real Estate within the past three calendar years. This information is so readily available that I haven’t even bothered to write about it before now. At great risk of being the guy who runs into the empty room to yell “Fire,” I do believe there is one more wrinkle that needs to be discussed. With the deadline steadfastly approaching (just because it looms closer, doesn’t mean the pace has suddenly morphed to earn “rapidly approaching” designation, now does it?), lost in the prodding for first-timers to buy now is any discussion as to the kinds of homes you should be considering. I shall rectify this egregious oversight now.
Earlier in the year, the Real Estate world was your oyster. REOs, short sales, HUD homes, auctions … bring them on. As long as you wrapped up your purchase prior to December, you were golden. Thus, you had the ability to trawl every last oceanic trench to scrape up your sunken treasure. It probably didn’t take long to realize that the biggest finds, those Titanics of the Real Estate deep, were teeming with sharp-elbowed and deep-pocketed prospectors. Basically, you with more purchasing power. Every time you made a play for a new bank property, you and your FHA-fueled dingy were left eating the wake of 50 foot conventional vessels and staring into the live canons of the scourge of the first timer’s sea: cash buyer pirates.
Resigned to the fact that your 3.5% down and government-backed loan vehicle is not a fair fight against the types of buyers that the best values attract, you most likely started looking at resale and short sale properties. Resales have been tricky because most sellers are not in a position to compete with the banks. Many that you would be interested in continue to be priced out of your affordability.
Now you may be thinking that short sales are the way to go. The bank wants to offload a property that is in default without incurring the expense of foreclosure. The seller just wants out and is not motivated by profit, thus creating a tantalizing asking price. Sure there are only a couple months left to close on a house to secure your credit, but this listing says they are using a “Certified Negotiating Specialist.” This other one says they have a 95% success rate! Another even says that they are near bank approval!
Don’t do it.
I know you have gotten your teeth kicked in on the bidding wars that erupt on the bank properties, and the resale market is still too pricey, but short sales are not the way. Not now. If you had submitted an offer on one several months ago, you would have a shot, but I am telling you right now that YOU WILL NOT RECEIVE YOUR $8000 TAX CREDIT IF YOU WRITE ON A NON-APPROVED SHORT SALE LISTING at this point. It is quite typical for the process to take 3-6 months, and the resolution is far from a sure thing.
Keep looking at the bank properties, but reset your sights a little. Great values are still out there. You can lock one up that isn’t priced so stupidly low that every buyer and his pet chimpanzee show up to vie for it, driving the price into the stratosphere. Some of the best buys made right now are actually the ones with list prices that aren’t necessarily the most attractive. When banks, just like typical sellers, miss that sweet spot, you have a better shot at negotiating the price lower versus bidding the stupid cheap one up.
This is also not a bad time to take another hard look at the resale market. Sellers of properties that will fit the budgets of first time buyers should be receiving advice from their agents right about now that they really need to get competitive if they are to capitalize on the last minute purchasing rush. Granted, many sellers simply are not in a financial position to lower their prices, I have noticed more and more resale listings working their way into my searches.
Finally, I would be remiss if I didn’t caution that the tax credit should not be the be all and end all for your purchasing decision. If you simply cannot find the property you want at a price you can afford, don’t get caught up in the frenzy. The worst decisions are often made in the face of such artificial pressure.
But if you are ready to take the plunge, find yourself a property in which the seller can give you a thumbs up or thumbs down within days instead of weeks. Walking the short sale plank with less than 90 days to get it closed will net you an $8000 cold shower.
The 12 Steps of Real Estate Recovery
You have a problem. Your family sees it. Your friends see it. At the eye of the storm, only you lack the perspective to clearly recognize the wake of wanton destruction spawned by your vice. Despite your feeble protestations to the contrary, you need help. Your addiction does not end with you. It touches the lives of those around you with dark, restless hands. Probing unsuspecting pockets and vulnerable throats.
The cycle of despair ends today. Your days as a perpetual Real Estate shopper are over.
House hunting can give you a rush like none other. No buyer quickly forgets the first time he steps through the front door to a new potential future. The magic. The exhilaration. The knowledge that one is virtually unfettered to choose his own adventure. Of course, once that initial euphoria grabs a hold of a buyer, he must experience it again. Houses 2-10 still hold some residual magic, but do not hold a candle to that very first experience. Houses 11-20 hold an air of disappointment. Soon enough, each successive property becomes a progressively greater assault on the sensibilities. Your friends and relatives grow weary of your constant trolling of Realtor.Com. Your erstwhile volunteers will no longer join you on the weekly Sunday home tour with your beleaguered Real Estate agent.
You don’t care. Despite all evidence to the contrary, your silver bullet is out there. You don’t need help, you just need more listings. Where are all the new listings, anyway? Everyone knows that banks are giving houses away for pennies on the dollar, so this simply must be the week that the 5000 square foot home on 4 acres hits the market. For $125,000.
Welcome to Detox. My name is Paul. I will be your cold dose of reality for the next 30 days.
The first step to recovery, of course, is admitting you have a problem. Trust me, you have a problem. Further, you must admit that you are powerless to the tug of your addiction. I offer as “Exhibit A” this August 9th, 2009 email sent to your agent regarding a property you found online. Time-stamped at 3:48 AM. “Exhibit B” is your agent’s cell phone records from 3:49 – 4:32 AM of the very same day.
Step two is to understand that a power greater than yourself can restore you to a sane existence. No, it’s not your brother’s mail carrier’s uncle who owns four rental properties. It’s your agent. Listen to him/her.
We’ll just skip step three because we all know that the realm of Real Estate is presided over by a supreme being in the guise of a braying, one-eyed donkey with cataracs. Pin the tail on him and you are as likely to get donkey kicked in the goods as you are to win the investment lotto. See step two for obtaining the services of one who knows how to best manipulate, if not outright tame, the fickle Real Estate beast.
You are now ready to move on to step four. This is where you take full and unflinching stock of your own morality. “Thou Shall Not Steal” is a typical shortcoming of many Real Estate shopping addicts. The thrill of the grift, after all, is one of the primary tarpits into which the saber-toothed buyer has fallen to become bogged down to such an irretrievable degree.
While admitting to yourself the wrongs you have committed is no picnic, neither is admitting those things to the higher power of your choice and a fellow non-home buying human. When you can do so, you have conquered Step five. Don’t even think about omitting the part where you burned 1897 hours and 16,789 gallons of your agent’s time and gasoline.
Step six is opening yourself up to the full removal of the defects in your character from a higher power. Once again, your agent will gladly fill this role in absentia and remove said defects via Paypal and/or rubber mallet.
If you can bring yourself to ask for said absolution, you have mastered step seven.
Step eight requires that you make a list of all those you have harmed and be willing to make amends. You can start with your spouse, co-workers and anyone you have pumped for advice and proceeded to dutifully ignore. Just make sure that your REALTOR is somewhere in the mix. No greater sin than trumping his/her decades of industry experience with the sage advice of your hairdresser and life insurance agent.
Step nine is actually making the aforementioned amends. A little wine and cuddling to soothe frayed nerves and egos is a good start, but cash money absolves all.
Step ten directs that you continue to take stock of your failings and immediately admit subsequent wrongs. You may be on the road to recovery, but that doesn’t mean you are immune to calling a listing agent directly to schedule an appointment after your agent has patiently educated you over the past year and a half. And yes by the way, that does make you a bad person.
Step eleven directs you to establish more direct contact with your agent. Email and the occasional phone call will suffice. He or she is tired of sending smoke signals in the direction of East Jabib to reach you. When the right property comes along, don’t make a search party necessary. Bloodhounds are pricey by the hour.
Step twelve is reserved for those Career Buyers who have had complete spiritual awakenings and will actively work to spread and promote these guiding principles to their brethren in shopping addiction. Praise the lord and pass the turnips, you are now ready to purchase a home! Go forth and proselytize!
Should you experience temptation to return to your former habits or worse, suffer a relapse, it is important that you understand three things:
1) These things happen and you are still loved.
2) Just not by your agent.
3) You are completely and totally screwed.
Frustrated Scottsdale Renter? Some Agents Will Actually Help!
It is not atypical for Real Estate agents to spurn rentals. Much to the chagrin of frustrated prospective renters, that is one voicemail that seldom gets returned. For an agent backlogged with more lucrative opportunities, he/she will often leave the red-headed stepchild of the industry to the property managers. You don’t get rich matching tenants and landlords, especially if it is not the main thrust of your business. Thus the rental stone is not merely left unturned by the high fliers, it is disregarded as a stone altogether. More like a pebble, the likes of which will find its way into your shoe and cause great discomfort to those who would tread too close.
Part of the problem with the rental market is that the compensation is a prohibiting factor. Realtors are hired guns. As independent contractors, we are always performing risk/reward analysis. For many, the potential reward of a rental transaction is not nearly lucrative enough to justify the risk of the effort not successfully culminating in a paycheck. To operate on straight commission, productivity must be maxed and the upside ridiculously high, otherwise, we would all opt for the safety of a salaried position. With compensation for rental properties drifting downwards in recent years, the opportunity cost has simply become too great for many in our ranks. Why shuttle around some schlub for two days in hopes of collecting a $150 paycheck when they might put a $500,000 buyer in the car instead? Of course, you also have a segment of agents who might simply find such menial work beneath their inflated sense of self, but you get those types in every field.
I can’t rightly attest to the motives of those who brush off rental prospects, but I can tell you why I do not. Any agent worth his or her salt looks not only at the present business horizon, but the future skyline as well. In my estimation, today’s tenant is tomorrow’s buyer. Whenever the financial and personal wherewithal comes to make that transition, I want to be the agent they remember that helped them when the others gave them the brush off. If my competitors want to slam the door on these apparently inconsequential house hunters, I will gladly use the opportunity to get my own foot in that very same door.
Anyone can sell someone a house. It takes diligence, empathy and yes, a little luck (hard to compete with Aunt Margaret when she gets bored and gets a Real Estate license) to sell a person every home he or she will ever own. I aspire to the latter. Performing a service that can be tantamount to pro bono work in some cases is one means of achieving that aim. It never ceases to amaze me how many advertising dollars some agents will spend to attract new clients while completely neglecting the opportunities that don’t cost a nickel (a little gas notwithstanding). For the chance to gain the trust of consumers while they are at either the infancy or nadir of their journey towards home ownership, I happily pick up that slack. Working rentals over the years whenever the opportunity has arisen, I have procured some of my very favorite and most loyal clients. They tend to stick with you on the way up when you were there for them at the bottom.
To all of my esteemed colleagues who neglect the rental market, I thank you.
To the frustrated renters out there who can’t get an agent to return a phone call, email or smoke signal, give me a buzz. I will gladly help you find temporary housing in the Scottsdale, NE Phoenix and Paradise Valley area.
And when you’re ready to buy … I wouldn’t be adverse to taking that call, too 😉
Someone Can Always Make Me an Offer …
“Someone can always make me an offer.”
If there were six words I could erase from the murky bog of a seller’s mind, it would be these. Within this seemingly innocuous sentence lies a terrible sickness. A Bubonic Real Estate Plague, if you will. The black death of a home sale.
There is something to the thought that a target buyer exists for every property. That the pre-qualified needle in the haystack will know a property is “the one” upon first sight. It is another matter altogether to make the flying leap that said buyer will, in turn, disavow all semblance of self-preservation and dive onto the hand grenade that is an overpriced house.
The underlying root of the weed of denial that infests a stubborn seller’s mental garden is the unflinching notion that “the right person” will come along and “fall in love with the house” just as he or she once did. Of course, when this simplistic rube comes along and falls head over heels in love with the one of kind abode, he won’t be able to reach into his wallet fast enough to pay whatever outlandish premium is required. Never mind that you are competing directly with homes that are 1000 square feet larger. Never mind that your home has a deficiency in location or condition. You have a pantry.
“Priced grossly above recent comparable sales? 1368 days on the market? Where do I sign? I MUST HAVE this house!”
Here is the thing, gang. Yes, someone can always make you an offer. If they see your house. If you are priced so far above and beyond the current market value of your home, however, the “right” buyer will never even see you on that outrageously lofty perch. Oh sure, you may get some traffic, but those suitors will end up buying one of the larger, nicer competing properties. The buyers looking in your size and amenity range are looking at properties thousands below your asking price. Kind of hard to make an offer when they don’t even know you exist.
And you know what? Even if they stumble across your place, why would Mr & Mrs Right make an offer on a home priced at 500k when they can make a more realistic offer on a similar home priced at 400k? It’s more than just counter-intuitive. A buyer would have to have been huffing spray paint in a non-ventilated storage room for the past 72 hours to pursue yours. If the “right” buyer is defined by constant drooling and a complete lack of interest in the alphabet past the letter “j,” you might want to rethink your strategy. The idea is to cast as wide a net as possible to find a keeper, not to dangle the bait 50 yards above the surface of the water and wait for a fish on a pogo stick to jump right into the boat.
The wise seller rolls out the welcome mat for an army of potential suitors. The foolish seller gives the assembled masses the finger as eagle eyes scout for that one, perfect, dumb-as-a-ham sandwich buyer.
Yes, someone can always make you an offer. Here’s mine: Fish or cut bait.
If you are ready to do some serious bill fishing, I’ve got the boat fueled up and ready to go. Plenty of Dramamine, too. We’ll chum the waters with a competitive price and superior product to land the biggest damn shark the ocean will yield.
If that doesn’t sound like your kind of tea party … better to wait at the marina for the seas to change. In another decade or two, the tides will surely rise high enough to deposit the price you covet.
I Had a Choice … And I Made It.
Picture a bowl of primordial soup. No, really picture it. What does it look like? I see a gelatinous, gray gumbo of sorts. The contents within completely impervious to the light of the sun underneath an opaque, spoon-devouring outer layer. I don’t need to make out the individual invertebrates that I sense roiling about the porcelain confines to intuit that a wayward finger would disappear into tiny, prehistoric mandibles within moments of straying into the land of the culinary lost.
Of course, I am talking about bank owned property sales. If the creepy crawlies in the walls don’t get you, the asset managers will.
About a year and a half ago, I, like many of my Real Estate brethren, was forced to take stock of the focus of my career. Having long relied on the nearly continuous repeat and referral business that I cultivated through years of diligent service, I was forced to ponder the unponderable when the Great Market Implosion of 2008 (c) threatened to sabotage my business model. If you could even call it a business model, that is. I subscribe to the notion that if you do right by the clients that you have now, you will never want for clients in the future. Good business practice begets good client retention.
And yet, there I was. Looking around for the vine upon which my new business had died amidst the economic crop dusting that was rendering entire markets fallow. My hedgerow bustled only with concern. So what to do? With credit markets drying up and loans increasingly difficult to come by, the resale market became a stagnant bog. The only sign of life would be Nessie popping her head above the surface of the foreclosure loch on occasion to swallow another hapless homeowner. Against this stark backdrop, many of my respected colleagues turned to the very institutions that led us down this path to housing oblivion for their salvation. Sensing that resale properties could not compete with the dirt cheap foreclosures, and that finding loans for buyers had become vastly more difficult than finding properties, I was tempted to follow suit.
The lure of pursuing bank-owned property listings was … gulp … quite tantalizing. I saw REO agents handling more properties at a given time than they ordinarily handled over the course of an entire year while I banged my head against the resale wall. Heeding the siren’s song, I went so far as to solicit lists of banks with whom I could apply to handle their overflowing inventories. Hat in hand, it struck me that this was the 21st century version of standing in line for hours on end amidst scores of other able-bodied candidates for a factory job circa 1930. A funny thing happened en route to the head of the line, however. An epiphany, if you will.
In the current market, we all work for the banks in one manner or another. You either list their houses, or you bring them buyers. Only one side of that equation will bring you repeat business down the line, however. I realized that I could not take on the workload that REO specialists enjoy tolerate without alienating the loyal client base that had propelled me to heights I had never really thought possible in my career. Knowing there are only so many hours in the day, I made the conscious decision to forgo the possibility of immediate gratification with the banks to continue to serve real people. It’s not an entirely altruistic choice either, but a pragmatic one. The foreclosure market will dry up eventually, leaving the few remaining morsels to the established denizens of the deep who have waded through that knee-deep filth for the last two decades. Those Johnny Come Latelys whose bank-owned property experience extends back a year or two will be in the unenviable position of having to redefine their expertise yet again. Their neglected mom and pop clients will have moved on.
I do not want to watch my business wash up on the rocks along with the myriad other souls aimlessly following the tide on a makeshift raft of sticks and desperation when the winds finally change. I’ll continue to take my chances with my own internal compass and weather-battered crew.
So, here you sit. Spoon in hand, ready to dive into that noxious looking soup. It may not be the most appetizing dish you have ever seen, but it’s the house special and the price is right. The maitre d’ has already slipped back into the kitchen, hurriedly gathering the same ladled gruel for the next table.
No fear, your royal tester is still here. Pass that gnarly bowl on over and I’ll help you determine its edibility.
I was sitting on your side of the table when we were eating steak and lobster, and I’m not looking for the check now that my dinner guests can only afford spam. It may bring a little indigestion on this particular evening, but there are plenty of four star evenings ahead.
If you are buying or selling a home in Scottsdale, Arizona, and you are not an amorphous, soul crushing financial institution, it would be my great privilege to represent you in your pursuits.
Selling Homes and Nailing Things to Trees
My wife has an affinity for collecting quotes. Whether humorous or inspirational, on fridge magnets or flowery stationary, she likes having the visible reminders nearby as a lifeline to help pull her out of whatever malaise she may happen to find herself mired in at a given moment. Truth be told, prone as I am to ridicule the sappy sentimentality, I kind of like having them around the house, too. Sitting here in the kitchen on a slowly unfolding Sunday morning, sipping my first cup of coffee and awaiting the incubating bounty of cranberry muffins that is teasing my nose and stomach, one particular wall hanging catches my eye. Emblazoned across its whitewashed, faux wooden surface in black scroll lettering is the following:
“Raising children is like trying to nail jello to a tree.”
Not the first time I have seen it, but it still draws a chuckle. Substitute the words “Selling Real Estate” for “Raising Children,” and you have this agent’s description of the arduous world of buying and selling property in 2009.
Case in point, one of my property listings is a short sale. My lone short sale listing. Now, and hopefully forever. Over the four months it has taken our buyer’s offer to gain full approval, only to have a needed extension to the closing date entail another two week period of review and authorization from the banks involved, the twists and turns of this transaction have been nothing short of spectacular. Fortunately, with a closing now on the horizon, we finally appear to have this bit of transactional jello firmly nailed to the mesquite in my backyard.
Apparently a glutton for punishment, I currently have two buyers with offers accepted by sellers and submitted to their respective banks for approval on short sales. One of those buyers deploys for Iraq at the end of this month. We will be lucky to have a loss mitigator assigned to the transaction by the time his boots touch the 130 degree foreign sands. The other buyer is a first time homeowner who has been looking with me for several months. In both instances, we’ve only grudgingly included short sale listings recently in our lists of properties to see. The time factor is brutal, but it is the uncertainty that has been the primary deterrent. It’s one thing to wait indefinitely for a foregone happy conclusion, but quite another to invest a month or six of your life into a transaction that may be doomed from the start. As such, for many, short sale properties have really turned into the “just-in-casers.” Throwing an offer at a bank as a contingency plan, buyers are well advised to continue shopping for a property in which the seller is in a position to provide a quicker response. If a resale or bank-owned property pops up while the short sale is still in limbo, the buyer is free to cancel that transaction (provided a standard AAR short sale addendum is included with the standard verbiage) with no loss of earnest money and pursue the new candidate. Lots of additional work for all parties involved, but you’ve got to get your fingers dirty in the current market if your seeds are to take root and grow into an actual sale.
Then there are the bank properties. Foreclosures, REOS or whatever other term you know them by, they differ from short sales in that the bank has already taken the property back from the defaulting homeowner. No interminable wait while the bank assesses value and the seller’s qualification for a short sale, but there are still a few wiggly characteristics with these properties. For starters, while infinitely quicker, you can still forget about an immediate response or any loyalty to the author of the first offer. You can attach a two page cover sheet with your offer outlining your love of the home, how the drapes match your furniture and for the first time in your life, you feel like you have really found “home,” but the asset manager at the bank will still sit on it for 3-5 business days to see if anyone will beat it by twenty five cents. Even if you offer full price or above. Trust me … been there, done that. Further, because everyone wants bank owned pricing, these properties are often highly competitive. The banks know it. Given this truth, the very best values that you are holding out for as a buyer are highly competitive. If you’ve seen 100 properties and think the latest one is a screaming deal, so do the thirty other buyers who have been looking at the very same houses. That awesome deal you see on a bank-owned price is often just the floor for the higher offers that pile up like clowns in a circus car.
Wiggle, wiggle, wiggle.
Of course, if transactions involving banks are akin to manipulations with an amorphous edible substance, selling a typical resale home at present remains more like nailing a pickup truck to a tree. By and large, resale properties continue to be drastically overpriced. Only the savvy sellers who price to compete with the banks stand a chance of actually unloading their homes. No matter how strong the marketing nail or stout the trunk of seller resolve, gravity continues to win that lopsided struggle. You can only prop up an unrealistic price for so long before it finally crashes back down to market value or the broken down rig gets towed right off the market. No buyer is going to shimmy up that tree, get behind the wheel and drive said truck straight into the ground.
Is buying and selling Real Estate in 2009 a tricky business? Hell yes! Up is down, down is up, and nobody knows when this crazy ride will end. But just like raising kids, the process is uniquely rewarding. So grab a helmet, buckle up and don’t be afraid to enter the scrum. As long as you know what to expect and bring an experienced chaperon, you’ll eventually get where you want to go.
Even if you end up with a few stains on your shirt along the way.
Scottsdale Victorian for Lease
Update: This Home Has Been Leased
This is not your typical rental home. Gorgeous Victorian style home in prime Central Scottsdale neighborhood that you never knew existed. Nestled on a premium, oversized, interior lot, this 2300+ square foot home boasts 3 bedrooms, 2.5 baths, pebble-tec diving pool (fenced) and 2 car garage. Hardwood and slate flooring in main downstairs traffic areas in addition to upgraded carpeting. Slate covered fireplaces in family and living rooms. Master bathroom completely overhauled in 2008 with travertine flooring & shower surrounds, new vanity w/granite top, new fixtures, etc. Upstairs hall bath remodeled as well with travertine flooring & shower surrounds, new counter top and fixtures, etc. Wide open floor plan with all 3 bedrooms up and entertaining areas down. Kitchen opens to family room and overlooks the backyard. Front yard includes porch, beautiful mature ash trees, lawn and even a white, picket fence. The prettiest home on one of the prettiest tree-lined streets in the Valley. Close (but not too close) to Loop 101 freeway, Scottsdale Community College, parks, schools, golf, shopping, ASU, downtown Scottsdale … everything. Better hurry, these homes are quite rare and lease quickly.
Pool service included at $1895/month. Landscaping also included at $1995/month. $1900 security deposit (refundable) and $300 cleaning deposit ($200 non-refundable) due at move-in along with first month’s rent. $500 earnest money required to tie property up. $15 credit check fee per applicant. Good credit & verifiable income a must. Most importantly, looking for tenants who will love the home as much as we do!
Offered for lease by Owner / Agent, Paul Slaybaugh w/ Realty Executives. (480) 948-9450
Equal Housing Opportunity.
Houses Are Selling Like Hotcakes! … So Why Isn’t Mine?
Sales are up, inventory is down. Buyers are here, there … seemingly everywhere. Matter of fact, I’m getting downright chummy with the agents and buyers who my clients and I keep running into as we troll new listings.
“Frank, how are ya? What’d you guys think of that last one? Nice wallpaper, right?”
It is borderline comical how many luxury SUVs and bluetooth-clad agent types can be found milling about outside of the latest foreclosure as the hesitant listing agent shuffles towards the front door to place the combo lockbox. He is buried under an avalanche of paper as seventeen offers are hurled in his direction before he can escape to whatever underworld chasm in which an REO agent keeps a cubicle.
Multiple offers, bidding wars, thousands over asking price … so why hasn’t your house sold yet?
There it is.
The sum total of a seller’s concern when it comes to the overall vitality of the market is his or her own home. So bank-owned properties are moving at a record clip, so what? If there are so many buyers out there, why aren’t any knocking on your door?
The unspoken fact of the matter is that the market is still out of whack. While the free fall in prices seems to have finally stalled (hopefully at the bottom of the cliff, not just on another ledge), and sales activity has agents excited about going to work again, there is an underlying issue that I have heard little, if any, mention of in the media, or even amongst fellow agents for that matter. It is self-evident that bank properties are stiff competition for the average home seller, but pricing concerns are only half of the equation.
The soft underbelly of our purported recovery is the lack of move-up buyers. Not only are the higher priced resale homes suffering from a dearth of financing options, but from the very buyers that should be fleeing the lower end of the market. When the market is healthy, an entry level Real Estate transaction acts as a domino. The seller of the entry-level home moves up to house #2, thus freeing the seller of house #3 to buy the dream house, and off we go. When a foreclosure property sells, however, it’s one and done. No seller eager to use the proceeds to take another step up the ladder. Just an institution eager to get an albatross off its books.
Until buyers start turning back to resale homes in the lower price ranges, we will continue to see improved sales statistics …
…. for the banks.
It may not be what sellers want to hear, but it’s where we are. We need to clean out the glut of foreclosures not only on the market now, but the backlog (rumor has it that banks are sitting on many foreclosures and bringing them to market slowly, so as not to implode their own values by flooding the market) as well, before buyers start purchasing resales with more regularity. Though the market is showing definite signs of life as of late, your buyer may still be trapped in a home that he can’t sell.
So if you want to be a part of those happy, happy, joy, joy reports of increased sales, you can’t rely on the move-up guy. The market is improving, but not enough to swing buyers to you of its own accord. You still have to meet it halfway and position yourself to compete with the banks. We may be down to 33,000 listings in the greater Phoenix area, but buyers are really only competing for the most viable 3000 or so (in accordance with rigorous scientific guestimation).
In the “one and done” market that we have become in 2009, it is much better to be the former than the latter.
Grinding to a Halt: The Art of Killing a Deal
Everyone wants a piranha.
Whether a professional athlete intent on a signing bonus the size of Madagascar, a victim of a vicious fender bender fixated on the 2.8 million dollar legal prescription for a tender neck or a home buyer/seller whose sole purpose on this earth at the immediate moment is to grind as many Ben Franklins as possible out of the guy on the other side of a negotiation, aggressiveness is typically the hallmark virtue in the professional representation that is sought.
The sports super agent, who we are 95% certain has a life-sized portrait of his bare chested self wearing a boa constrictor around suspiciously well tanned shoulders hanging in his posh downtown office, is universally loathed by all. Secretly, however, we all know he’d be the only guy we’d call if we needed to make a cash withdrawal from the abundant posterior of a team owner.
The weaselly ambulance chaser with the slicked back, Grecian Formula enhanced locks is similarly unlikely to find himself on the guest lists of many Bat Mitzvahs and baby showers. That narcissistic predator might eat the baby. When we spill the drive-thru coffee in our laps or stumble over the “Watch Your Step!” sign at a public establishment, though, he’s the guy we call.
Amicable folks are great to have around, but when the conversation turns to business, we don’t want Mary Poppins going into battle on our behalf armed only with a spoonful of sugar to make the medicine go down. We’d rather employ the services of Dr. Jekyll to go all Mr. Hyde on the opposition and cram that spoon straight down their throats.
Easy, tiger.
There is a time to kill, and there is a time to frolic. The problem with the constant grinder is that he often grinds himself right out of a transaction. It is critical that you leave the other guy with some dignity at the end of a tough negotiation, lest all of your efforts collapse under the weight of the other party’s exhaustion. After you’ve knocked the poor bloke to the ground and bloodied his nose, do the smart thing. Extend your hand and help him up.
In practical terms, this is akin to finally saying “yes” after repeated “no’s.” When you win on the key points, you are often in a position to make a small concession on some trivial tangential issue. Too many times, I see lost opportunities for a clear victor to score easy diplomatic points at these junctures in the waning moments of a deal. Want the inspection and other critical aspects of the transaction yet to come to go smoothly? Give up something that isn’t really necessary. Offer something minor, but unexpected.
You’ve bitten his neck on price, drank his blood on terms … time to give him a transfusion unless you want to carry his Doppelganger the rest of the way to closing. For the record, undead weight is quite heavy.
Of course, because you are reading my blog, this advice assumes you were on the dispensing end of said treatment throughout the course of the initial negotiation. If you were unfortunate enough to be on the receiving end, go ahead and drive a wooden stake through the SOB’s black heart.
The Feedback Fallacy
So an unexpected job transfer snakes its way into your idyllic garden of domestic bliss one uncharacteristically blustery evening, and everything changes. The fertile soils that you have so lovingly cultivated within its confines are to fall under the purview and care of another’s spade. It’s time to sell your house.
Home improvement and design shows supplant your regular programs as you strive to understand what today’s buyer is looking for in a house. While you would never think of replacing the charming old world tiled counter tops for yourself, you know you just might have to for your suitors. The incremental evidence of your little one’s time on this earth will be obfuscated with nothing more than a coat of fresh paint on the kitchen wall. All such changes both minor and monumental as you prepare to open your doors to the world.
Once fully prepped, your venerable old home is a lot less old and venerable than modernly stylish. You’d buy it all over again, and that makes the forthcoming transition doubly tough.
For every showing, you light your strategically placed oatmeal raisin cookie scented candles and illuminate just the right number of lights. Light jazz emanates from the surround sound stereo system. No buyer can possibly navigate your well laid maze of hugs and snare traps without signing on the dotted line.
And yet, inconceivably, they do. The first buyer puts up a fight, and somehow manages to wriggle free. The second showing yields a prize relo catch who is lost to the sea of competition when the line snaps just as he breaches the water. The third candidate hops away on his one good leg after gnawing through an ensnared limb to escape your clutches. One after another they come and go.
You know there can be no possible objection to the condition of your home. You also know there can be no objection to the price. Though a bit higher than recommended by your Realtor, you are well aware that your home is vastly superior to anything else on the market. And the comps? What a joke! Sure the Johnson’s home sold for 100k less last month, but they didn’t even have a pantry! Something is rotten in Scottsdale, and you demand to know what it is.
You ask your agent for feedback from the buyers and agents that have viewed the home.
Which brings me to my serpentine point.
Showing feedback is not to be trusted. While I routinely solicit input from those who have shown my listings, I do so more as a means of keeping my properties top of mind with the buyer’s agent than as an honest assessment of our positioning within the market. It’s a tricky business to seek the opinion of the person to whom you would sell something. For starters, if I am working with a buyer, and the listing agent calls for my showing feedback, he or she better be prepared for the forthcoming diatribe about how horrifically overpriced they are … especially if my clients are interested in the home. Further, if the listing agent calls me multiple times, emails me and sends a carrier pigeon to my office with a note pleading for feedback, you better believe this mako smells more than a drop of blood in the water. You can only push so hard before the obvious desperation cedes all negotiating leverage to the other party. Not a good way to start a dialogue.
I understand the frustration that accompanies a non-selling home. Believe me, it frustrates your agent, too. However, you have to tread carefully when chasing down every prospect like they stole the good china. One of them might actually be your buyer, so you have to maintain some sense of decorum. Even the mangiest house on the market could do well to play slightly hard to get.
As I sit here typing this, I have received a second voicemail and another email from the listing agent of a property in which a client of mine has expressed an interest. I have pointedly ignored the first correspondence attempts just to see how hard I will be pursued. Every subsequent call will result in a 10k reduction on what I ultimately advise my clients to offer. Believe that.
Ain’t nothin’ but the shark in me.
Besides, the most vociferous feedback seekers don’t seek feedback at all. They seek affirmation.
Oh yes, it’s wonderfully appointed and wonderfully priced! It has been on the market for 150 days because buyers are obviously blithering idiots!
You already know the answers to the questions you pose, even if you are not ready to admit it. No need to run the gauntlet of buyer agents to decode this self-evident truth:
Are you getting offers?
No?
Drop your price.