by Paul Slaybaugh | Jul 16, 2009 | Home Selling, Scottsdale Real Estate
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.
by Paul Slaybaugh | Jun 19, 2009 | Home Selling, Scottsdale Real Estate
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.
by Paul Slaybaugh | Jun 16, 2009 | Home Buying, Home Selling, Scottsdale Real Estate
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.
by Paul Slaybaugh | Jun 8, 2009 | Home Selling, Scottsdale Real Estate
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.
by Paul Slaybaugh | May 23, 2009 | Home Selling, Scottsdale Real Estate
Real Estate agents are largely responsible for the massive housing inventories of the past two years.
That bears repeating.
Real Estate agents are largely responsible for the massive housing inventories of the past two years.
This is a conclusion that does not please me to reach, but my conclusion nonetheless after continuing to see overpriced home after overpriced home hit the market. You can blame banks or non-paying homeowners for the glut of foreclosure inventory, but guess what? Bank owned homes sell. By and large, they are priced appropriately and adjusted regularly until they sell. Compare this to the unrealistic seller/listing agent tandem with the home down the street that enters the marketplace grossly overpriced, and just sits there while the days on the market pile up without mercy.
You can blame the banks again for the short sale listings that take forever to work their way off the market because of all the bureaucracy and idiocy involved. In many instances, I would agree with you, but I find ample fault with the listing agents who do not take the time to learn the process and requirements involved for the institution(s) that hold the lien(s) against the property. Even though many banks seemingly select the files they will actually review via a no holds barred game of inebriated backgammon on the first of every month, too many agents simply throw a short sale listing on the market at a completely unrealistic price (compared to what the bank will be willing to accept) and hope that they can make it stick. Buyers get frustrated with the process after several months of inaction and often exit the transaction before getting a response from the bank. Even if the home eventually sells prior to the looming trustee’s sale, it has contributed to the bloated inventory level for months instead of weeks. Some banks will not negotiate with a seller at all until an offer is in hand, but that doesn’t mean that the agent can’t have all of the documentation lined up in advance. Many short sale listing agents that I have encountered have been a bit lacking in the communication department as well. Buyers are more likely to hang around and wait for a response if they are receiving regular feedback and updates from the seller’s side of the table as to the progress with the bank. A phone call or an email update every week or two would go a long way to keeping some of these deals together and clearing out these negative equity weeds that are choking out the resale lawn.
Inventory levels have dropped considerably in the last couple of months, but we have a long way to go before we reach a nice healthy balance of buyers and sellers. While everyone is currently focused on stimulating demand, we professionals bear a large portion of the responsibility for the supply. Every time an agent in our ranks takes a listing for 100k over the property’s current value, or even 10k for that matter, he/she is contributing to the stasis that has plagued our Valley since the equity and credit bubbles burst in 2007.
We all want your business, and are generally eager to please. As such, it can be a temptation to tell a prospective client what they want to hear when it comes to the value of their house. Less charitably, it can also be a temptation to “buy the listing” by quoting an unrealistic price to sway a seller to list the home with us versus the agent quoting a considerably lower asking price. A good agent will ensure you command a top of market price for your home, but not a one of us has a secret stash of magic beans that will grow the value of your digs above and beyond what a buyer will be willing to pay. We can advise you as to how to make your home more market ready, and how to improve its value, but we can’t fit a $750,000 peg into a $500,000 hole.
Ray and I vow to give it to you straight. It does neither party, nor the market, any favors to cram yet another overpriced listing into the protesting pair of lycra pants that is the MLS. Nope, no more glazed doughnuts on our watch. It’s time for an industry-wide low glycemic carb / high saleability diet.
As I tell my clients when we sit down to review the data, I would rather tick you off with my evaluation up front than 6 months down the line when your home hasn’t sold. Better to lose business truthfully than be complicit in the further swelling of our hemorrhaging housing market.
A home should be priced accurately, or it should not be priced at all.
We don’t list homes to practice. We list them to sell.
by Paul Slaybaugh | May 15, 2009 | Home Selling, Scottsdale Real Estate
There is always opportunity in the margins. Unfortunately, margins tend to attract the marginal.
The latest water cooler rumbling to emerge from a recent tour group meeting centered on a purported professional short sale negotiation company. Here in the Valley, short sale negotiation has become its own cottage industry in the past year and a half, and for good reason. Most Realtors had never encountered a short sale before the recent woes in the market. You can include me among those ranks. As such, there has been great demand recently for third party professionals who know the drill and have contacts within the various institutions for expediting the process. While the skill-set required to negotiate with the bank is really little more than gumption, persistence and know-how, the learning curve can be steep, and the time commitment impractical. Many agents would rather enlist the help of a specialist to handle this critical portion of the transaction than practice on their first few short sale clients. The stakes are too high for an erstwhile, but bumbling rube to fumble it all away. For many of us, it just makes good, practical sense for all parties involved.
Now comes the “but.”
Back to the recent tour meeting of which I mentioned, the latest scuttlebutt is that at least one major short sale negotiation company is the focus of an open investigation. It seems there is some question as to whether this outfit was utilizing fraudulent measures to cash in on a much grander scale than the stated fee of their services. Nothing has been proven, and no charges have been filed to my knowledge (hence the glaring omission of the company name here), but the concern is that this company might have engaged in the “double escrowing” of the short sales they were hired to negotiate. Plainly stated, upon receiving an offer that both buyer and seller had executed and forwarded to the negotiator to submit to the bank for review/approval, this company is thought to have tabled said offer and worked to negotiate an even lower sale of their own with the bank. Once accepted, they would orchestrate the virtual simultaneous closings in which they bought the property from the bank and turned around and sold it to the buyers at the higher price. Neither the buyer nor seller would ever know that there were actually two transactions taking place concurrently.
Of course, if the negotiation with the bank failed, the buyer and seller would simply be informed that the offer had been rejected … eventually. Even though the bank never saw it. The buyer wouldn’t be overly thrilled to learn of this, of course, but the seller is the one who really stands to lose in such a scenario. He is the one with the imminent foreclosure and interminable credit limbo on the line while the entity hired to negotiate on his behalf plays Russian roulette with his financial well being.
So while nothing is proven in this instance as of yet, it serves as a consumer alert. While I was careful in the selection of the professional I have enlisted to negotiate with the various banks on my sellers’ behalf, some might mistakenly believe that any fly-by-night company that has branded itself as a “short sale negotiation specialist” is reputable. Just as you would exercise diligence and perform your own investigations in the selection of your Realtor, don’t let your guard down when settling upon the service enlisted to actually talk to the bank. Find out how long they have been in operation. Are there any complaints lodged with the Better Business Bureau (though some may be such neophytes that they haven’t been around long enough to incur complaints)? How long has your specific negotiator been involved in either the Real Estate or banking industry prior to their current position?
Maybe I’m just jumping at shadows, but I can’t help but wonder if this is a niche that won’t prove to be populated by failed Realtors, loan officers, car salesmen, financial advisers, taxidermists, Maytag men and arthritic slow-pitch softball umpires in hindsight. There are some good ones out there who are absolutely invaluable to the busy Realtor and desperate seller alike, but I am under no illusion that there aren’t more than a few soulless chasms of dollars and teeth hiding behind the polished veneer of a snappy tagline as well.
When dealing with a property that you are trying desperately to sell before the bank forecloses, the stakes are elevated to financial Thunderdome proportions. If your short sale survives the fight, you will walk away with a limp (credit damage, possible tax ramification, etc), but at least you walk away. A foreclosure will effectively kill your aspirations of future home ownership for the next 5 years.
Choose your weapon wisely.
