by Paul Slaybaugh | Nov 25, 2010 | Home Selling, Scottsdale Real Estate
If only it were that simple. I’ve had this pearl lobbed across the kitchen table by a would-be Scottsdale home seller in denial more times than I can count, and I can count all the way to eleven, thank you very much. After all, it’s self-evident that the single most effective way to combat the potential deal-killing reality of a third party evaluation is not to have one. Thus, it never comes as a surprise when a homeowner objects to the recent sales data by flipping the script on my argument that there is no way on God’s green earth that the home would appraise for the lofty number in his/her head, even if some foolhardy buyer would prove willing to plunk down greenbacks well in excess of true market value.
“You need to find us a cash buyer so there won’t be an appraisal, then.”
While rummaging through my briefcase for the ready supply of cash buyers I keep on hand in case of emergency, I’m dismayed to find that there appears to be a hole in the bottom. All those investor whales who bleed money from their blowholes must have fallen out as their portfolios shrank to guppy size over the past few years.
There are cash buyers out there, but times have changed, people. This is not 2005-2006 where many “cash” buyers were actually relying on draining a HELOC to close. Or those others who have been bounced from the pool by decimated 401k’s and suddenly nonexistent pensions. The cash buyers who are still around in 2010 are genuine Daddy Warbucks types and professional investment syndicates.
Genuine. Cash. Buyers.
And you know what? Those with the coin to be players in the current market are not interested in overpaying for your, or any other, property. The only people buying homes at present, regardless of whether the property is a need or a want, are those intent on a modern day train robbery. When even the value-priced properties linger on the market as the slap-your-momma-value-priced properties are the ones being snapped up, the game plan is to grossly overprice your home in hopes of landing one of these cash buying makos? Seriously? Because they are so darned cute and cuddly, I gather?
As strategies go, I’d sooner advise trick or treating at Dick Cheney’s house as a pheasant hunter.
Happening upon a cash buyer is one of those fun eventualities that is largely determined by price point and fate. Those fortunate enough to have such a creature fall in their laps quickly learn that the cash comes with a steep price: negotiating disadvantage. If you are overpriced, your home won’t even be a blip on Mr. Moneybags’s radar. If you are priced in line with values, he will lowball you. If you are priced significantly under market, he still might attempt to haggle a little. After all, he has cash, and cash is king, right? You aren’t the only one who knows it.
While a cash offer may represent the panacea to the appraisal conundrum, the actual cash buyer is not a willing participant in the “I’m willing to spend whatever it takes, because I simply must have THIS HOUSE” game. He goes across the street and buys the ugly one for 100k less.
Don’t believe me? Let’s try a quick role-playing exercise.
You are a homebuyer in 2010. Through shrewd investment strategy, you have managed to not only hang on to your capital, but to actually amass a larger fortune during these lean economic times. Sensing that opportunities abound in Scottsdale Real Estate at present, you are in the market for a house or two. You might even live in one when you are not at the penthouse in Manhattan, the chalet in Brussels or the flat in London. You’ve studied the market, read all of the stories and spoken with your most trusted advisors. Putting to work the analytical mind that has served you so well in critical financial decision-making to this point … what are you going to buy?
Are you going to spend all day making doe eyes at some overpriced turkey playing hard to get, or are you going to fill your tag by blasting the one with a limp?
Thought so.
by Paul Slaybaugh | Nov 6, 2010 | Scottsdale Real Estate
… but too long to label someone as such within 30 seconds of making their acquaintance.
A common theme across the Real Estate net is a gleeful willingness to drop a potential client like they’re hot if deep levels of compatibility with the affronted agent do not reveal themselves within five seconds of introduction. Talk down to me in our initial correspondence? Adios, muchacho! Dare to erect contact limitations or dictate a preferred method of communication? Bon voyage, bubba! Unilaterally impose any restrictions whatsoever upon our future relationship? Sayonara, sucka!
For a line of work that requires a teflon-coated epidermis, we Realtors can be a squishy bunch. In what other field would a business person refrain from taking on bill-paying work because the tone of an email seems mildly strident? A message from a complete stranger who is taking a leap of faith by merely initiating first contact via a spam-inviting contact form, mind you. No wonder so many in our ranks are crying the blues about the current state of the economy, as we appear slow to receive the memo that most no longer have the luxury of turning business away simply because a client lead has an annoying voice, a face reminiscent of the junior high bully, responds to painstakingly crafted emails in terse staccato bursts, or … heaven forbid, is just plain mean.
The horror … the horror …
There are, and there always will be, people I refuse to put in my car – pedophiles, overt racists/sexists/anything ‘ists. I will not tolerate personal abuse. Or Justin Bieber fans. Those rare sociopathic encounters notwithstanding, prematurely casting aside difficult personalities because I’d rather my job be stressless than profitable is not a winning formula for a career I’d like to see advance through another decade.
Business is hard if you are actually doing business. It is only easy if you are broke.
So give me your tired, your wary, your befuddled masses with whom you refuse to work because they have the audacity to treat you like the business you are, and not their best friend. I’ll sell them a house and go home to delouse.
The next five years in this business ain’t for sissies. If you think you can survive them by ignoring the tough customers, be grateful there are always job openings in La La Land.
by Paul Slaybaugh | Nov 4, 2010 | Home Selling
Open houses were how I made my initial bones in the Real Estate business. One of the tried and true methods for encountering the home buying public in its natural environment, it proved to be the old school prospecting technique that was the best fit for my sensibilities as a rookie agent. Why sit in a hermetically sealed cubicle, cold calling non-receptive “leads,” when those with an interest in a product type, if not the actual product I was hawking, would willingly walk through the front door and engage me in non-abusive conversation? Actual face time with actual consumers, you can’t beat it.
Lacking a single stalwart in my empty stable of listings at that nascent stage of my career, it wasn’t unusual for me to sit open the listings of colleagues. One in particular still stands out. A gorgeous semi-custom Spanish style home in McCormick Ranch, I couldn’t wait to throw my directional signs all over the neighborhood and wait for the inevitable human deluge. A planned community that is one of the few pockets that produces enough traffic to make the exercise worthwhile, chances were good that I would pick up a few decent buyer leads, if not sell the property on the spot.
The day before the scheduled open house, I met the owner at the property to introduce myself and assure him I was not a kleptomaniacal serial killer. Satisfied I wasn’t there to steal the toaster, he proceeded to give me the tour. I’d already previewed the home prior to selecting it as a viable open house candidate, but I was happy to oblige the owner’s turn as proud tour guide.
Until we got to the fun bubble.
A property that featured newer construction and more modern architecture than neighboring subdivisions, granite countertops, porcelain tile flooring and additional hot button features too numerous to count, and the poor, misguided soul had it in his mind that demonstrating the “fun bubble” feature in the swimming pool would sway potential buyers to slap their cash down on the barrel. Now, I like fun, and I like bubbles, but frankly, this bubble was apathetic at best. As I have yet to encounter the buyer who includes a fun bubble amongst his/her criteria, however, the fun factor is largely irrelevant. Your pool could turn into a cauldron of unmitigated mirth at the turn of a rheostat, and I am still not demonstrating it to every buyer who walks through the front door. That’s not salesmanship. That’s “What do I have to do to get you in this house today?”
The oft overlooked component of selling is the ability to discern what is of material import to a prospective customer, and what is … well … a fun bubble.
Following a buyer around a home like the security guard at Ross is more likely to result in a restraining order than a ratified purchase contract. Selling the brushed nickel doorknobs, blood red curtains, pewter towel racks and five-bladed ceiling fan to the prospect who is only interested in the room dimensions is a losing proposition. You run the risk of chasing away a perfectly good buyer before reaching an item of any import to him, and/or missing a chance at the other prospect wandering down the opposite hallway unescorted while you yammer on about the Pella windows on a home that is $200,000 out of mark number one’s price range.
Enthusiasm and pride of ownership is commendable, but leave some mystery for the second showing. Gotta make sure the hook is firmly set before we can encapsulate your buyer in a bubble of home buying fun.
by Paul Slaybaugh | Oct 25, 2010 | Home Buying
You have Scottsdale Real Estate questions.
We have answers.
Q: Is now a good time to buy a house in Scottsdale?
A: Forgive me for answering a question with a question. Do you need a house? The best time to buy a house is when you need one. Conditions are advantageous for buyers who can scrape up the requisite down payments and qualify for financing due to low interest rates and home values, but such external factors are irrelevant if you are not in the market for a new home. It’s probably a great time to buy a car right now, too, but are you going to rush right out and get one if your current vehicle serves your present needs? We agent types like to drum up business by urging consumers to act before a window of opportunity closes forever, but don’t let outside forces push you into a purchase based on fear or avarice. Likewise, don’t let extraneous market “noise” prohibit you from making the right purchase for your current needs. Obsessive market watching tends to lead to the dreaded “analysis paralysis,” which shackles a would-be buyer to indecisiveness. We all want to buy when the market is most conducive to securing a bargain, but such considerations must be in concert with, not mutually exclusive of, present need. Good and bad purchases are made every day.
Q: How much off the listing price should I offer?
A: Seeing that every sale involves a different seller, it’s a losing proposition to think in terms of a standard percentage of offer price to list price. Not only is the financial position of every seller unique, there is little with more emotional attachment than a home. Carve off an unrealistic amount in an initial offering, and you risk alienating the seller. You torpedo the negotiation before it even begins. Even when you remove emotion from the equation, such as with bank-owned property or short sales, the offer should be based upon value, not an arbitrary formula. For instance, if a bank-owned property is 100k undervalued in the list price, you can forget about knocking 10% off an already solid bargain. Consider yourself lucky if multiple suitors don’t show up to bid it up well over asking price. On the other hand, if a home is overpriced by 100k, offering 90% of list price likely means you would be overpaying considerably. Each property and its owner are unique, as should be the consideration that goes into the crafting of your offer.
Q: What’s all the fuss I keep hearing about appraisals?
A: Appraisals, and financing in general, comprise the soft underbelly of our slow-motion Real Estate recovery. The challenges start with the professional who is tasked with performance of the appraisal. New regulations were enacted to prevent fraudulent evaluations from artificially inflating home values, but we’ve traded one set of problems for another. These days the appraiser is essentially picked from a hat to prevent conflicts of interest. Unfortunately, this means that out of area appraisers of varying degrees of competence are often charged with evaluating homes in neighborhoods they have never previously worked. Further, as a designated “declining market,” even the home that closed across the street just last month is subject to a markdown in value to allow for depreciation in that short period of time since it closed escrow. Until we can overcome this stigma, home values will continue to be adjusted downward from the recent sales comps. Factor in the multiple appraisals that are often required for FHA financing on “flipped home” purchases (homes that sold within 90-120 days of the current transaction), and loan underwriters with the authority to review and reject the appraiser’s findings, and you get the minefield we have today.
Q: Should I pay off my credit cards to qualify for a loan?
A: Don’t even break wind without consulting your lender first. While I would hope that it is obvious that major purchases are off limits during loan qualification/processing (can affect debt to income ratios, credit scores, cash reserves, etc), many a home purchase has been derailed by the misguided good samaritanism of the borrower. You may need the good credit associated with the line that you aim to shut down or deplete required cash reserves that are necessary to gain full loan approval. Never assume that paying something down or off is beneficial to your unique financial profile without first consulting your mortgage professional.
Q: Should I bother with an inspection and final walk-through on an “as is” transaction?
A: The nature of an “as is” sale is one of the most fundamentally misunderstood concepts in Real Estate. Assuming that the purchase is made utilizing the standard Arizona Association of Realtors “As Is” addendum and the boiler plate language is not contradicted anywhere in the contract, all you are really agreeing to is the dismissal of seller warranties as to the condition of the property. You maintain full inspection rights with the option to walk away from the sale if condition is unsatisfactory. There is nothing that precludes you from requesting repairs at that point as well, the seller is simply not contractually bound to make any. As to the walk-through, it is important that you verify the property is still in substantially the same condition at closing as it was when the contract was signed. “As is” reflects the condition of the property at the time of the agreement. Any subsequent damage to the property is the responsibility of the seller. If the A/C has stopped working, or a tree fell on the roof, you likely have a case to demand repair or walk away from the sale.
Q: What am I actually looking for in a title report?
A: In short, you want to make sure the seller’s Uncle Willy from Topeka, who hasn’t been seen or heard from in forty years, doesn’t pop up after closing to claim an ownership interest in the property. Tax liens, mechanic’s liens, encroachments, easements, back HOA dues … you are basically looking for anything that can preclude your full rights to ownership and use of the property. I always pay special attention to the “Schedule B” of the preliminary title report that is furnished during the escrow period by the title company as it lists those items that will be exceptions to the title insurance policy. Gremlins that might pop up after closing, and will be outside of the scope of your title insurance coverage, typically hide here. With the abundance of short sales, foreclosures, tax sales, etc in our midst, the transference of clean title to a buyer has never been more rife with potential sabotage. If you are purchasing a bank-owned property, or really any property with recent changes in ownership, you want to make sure all encumbrances on the property have been or will be resolved in advance of settlement. Short sale buyers will need to know that the seller’s lienholders have, in fact, agreed to release the lien(s) on the property at closing. While these are functions of the chosen title company, they are not matters that can be taken for granted in 2010. All of those documents supplied by the title company during the escrow process that nobody used to read? Read them. If you aren’t sure which items are cause for concern, ask your agent. If your agent doesn’t know (or instill confidence in you that he does), contact a Real Estate attorney to review and advise.
Prevailing wisdom may label this a “buyer’s market,” but there are things roaming around out there in the haze. Biting things. Make sure you know what you are doing before stumbling out of the house, armed only with a pre-qual letter.
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Ray and Paul Slaybaugh are NOT attorneys. None of the opinions herein should be construed as legal advice. Should you have specific legal questions regarding the purchase or sale of Real property, contact a Real Estate Attorney.
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Have Scottsdale Real Estate questions? Send them to us through the contact form below. We’ll do our best to answer all in a timely fashion, and will use our favorites for future posts.
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by Paul Slaybaugh | Oct 9, 2010 | Home Selling, Scottsdale Real Estate
With the latest scuttlebutt in the housing industry centering around a rising political push for a large scale foreclosure moratorium by leading lending institutions, most are aware that Bank of America became the first to issue a temporary nationwide pause in foreclosures this past week. Though B of A is the first to stay their executions across all fifty states, JP Morgan Chase and GMAC agreed to halt foreclosures in the 23 states where foreclosure is a judicial process. The pressure to do so originated over procedural impropriety in several specific locales, and has snowballed into wholesale questioning of the internal processes of the major banks. Mounting concern over erroneous foreclosures spawned the voluntary cessation (expected to last several weeks). While Wells Fargo has spurned calls to do the same, it would not be surprising to see more institutions yield to the rising pressure and follow suit.
What does this mean? Plenty has already been written about this with homeowners facing foreclosure and prospective buyers in mind, so I won’t belabor those perspectives here. Suffice it to say that while any additional quality control that can prevent people from wrongly losing their homes to foreclosure would be a good thing, the upshot in terms of market reaction is likely to be a collective shrug of the shoulders. Not content to simply halt the actual act of foreclosure, B of A is temporarily taking their inventory off the market while the review is ongoing. It’s been posited that fewer listings will translate to a possible surge in prices, but this is pure mularky. The market simply does not react in a matter of a few weeks to any stimulus, as it takes time for consumers to make heads or tails out of new developments and how they translate to negotiable strength. On the contrary, I think this will make buyers who are already non-harried take even more of a wait and see approach. Rather than buying what is left, those who are not under a time crunch to get into a new house will probably just wait for the moratorium to end and for the withheld inventory to flood the market. In essence, we could be looking at an unintentional buying moratorium as well.
Though it would be foolish to anticipate a surge in values, the one segment of the consumptive spectrum that stands to gain from this turn of events is the non-distressed homeowner. With a small window opening for mom & pop home sellers to compete with significantly fewer bank homes for buyers, I would not be shocked at all to see a percentage gain of resale home sales while overall sales volume remains flat, or even declines slightly, in the coming weeks. I expect many buyers will choose to wait it out, but there are those who do not have the luxury of time. Be it a job relocation, family circumstances, etc, there are always buyers who need to buy now. With fewer distressed properties on the market, and likely buyer uncertainty over how this will translate to the short sale arena (will B of A process short sales while foreclosures are in limbo, or pause all such decisions? Will short sale sellers temporarily remove their homes from the market in anticipation of a reprieve?), this could be the traditional seller’s best opportunity to vie for buyers in quite some time.
Again, don’t misconstrue the knee-jerk hypothesis. The value of your home is not going to spike due to this temporary phenomenon, nor are you suddenly in the catbird’s seat. For those in an equitable position to sell, this window merely represents the best possibility to attract a buyer in months.
No screwing around – price your home right and get it sold while there are fewer alternatives for buyers. As a regular seller, with the tax credit gone as a buyer incentive and microscopically low interest rates and low prices not translating to appreciable gains in sales/values, you have to leverage every conceivable strength in this market to accomplish your goals.
Ready to sell your Scottsdale home? Contact us today to schedule a no-obligation consultation, but do it fast. When the moratorium ends and the holidays are fast approaching, it will be time to hunker down for another long, cold winter.
by Paul Slaybaugh | Sep 30, 2010 | Home Selling, Scottsdale Real Estate
Certainly, we are all aware that Real Estate fees are negotiable and that there is no set standard for the services of a REALTOR. Mind you, that does not mean agents are under any obligation to deviate from their stated rates, but it does mean that what Agent X quotes for his services is not to be mistaken for what Agents Y and Z might charge for theirs. That piece of legal housekeeping out of the way, there are means at your disposal for securing the best possible value on professional service from your agent. Follow this simple list of Do’s & Don’ts, compiled over the course of eleven years in the business, and you will give yourself the best chance at securing the lowest commission rate to go along with the level of service you demand.
Do:
- Refer me business. This one goes at the top of the list for a reason. In a commission based existence, new sources of business are my lifeblood. While it seems patently obvious, many simply don’t think about sending potential clients to their agent unless prompted. The primary reason that the fees in a Real Estate transaction tend to be high is the risk to the professionals involved. Mitigate some of the risk in an “eat what you kill” profession by helping me find my next paycheck, and I am more likely to reward the added security with a concession of my own.
- Provide me with repeat business. Unlike the wireless companies who are always offering deep discounts to new customers, I am far more likely to offer a lower rate to an existing client than the man off the street. As multiple transactions from a loyal client over the years will eliminate much of the reliance on cold business lead generation, we agents consider the client for life the holy grail of financial security.
- Be pleasant to work with. Touchy-feely as it sounds, no one likes working for a Napoleonic boss. I deal with all types in this business, but I’m more apt to offer a better rate to those I’m eager to assist than the rabid seller in the Hannibal Lecter mask.
- Do your homework. While I will inevitably have to help you unlearn a few things that you’ve gleaned from your internet sleuthing (amateur home evaluation via online calculator, anyone?), an educated client saves me time. That is additional time I can direct to procuring new business or coddling less prepared clients.
- Provide me with an excellent product to sell at my recommended list price. Some listings are simply creampuffs. Beautifully appointed and priced right, I know without a doubt that it is going to sell within 30 days on the market. While I will earn my keep in establishing value and marketing to fetch a top of market sales price, such creampuffs are the closest thing to money in the bank that this profession offers. I’m not adverse to reducing my normal fee if it means planting a sign in the yard of a home that will sell quickly and generate a ton of buyer calls (new potential business).
- Purchase with an eye towards future resale. This is an offshoot of the previous item. When looking for a new home, many buyers focus exclusively on their needs and budget. This is a mistake. Future value potential and desirability of the property across a broad spectrum of buyers is critical to not only your return on investment, but to its appeal to Real Estate agents as a listing sometime down the line. I won’t turn cartwheels when you call me to list a home for sale with a funky, unpermitted addition. A tough property to sell means no discounted rate.
See the pattern here? The idea is to give a little to get a little. Take away some of the financial risk associated with the job, and I can work with you on the reward. On the flip side, there are surefire ways to relegate yourself to the going rate. Avoid the following list of don’ts unless you enjoy talking yourself out of a deal.
Don’t:
- Ask me what I charge in advance of an initial consultation. It is human nature to want to cut to the chase, but lacking context, I have no idea whether your home is a creampuff or a dud. Further, demanding to know what I charge without giving me the opportunity to outline what services I provide for that fee raises a red flag. It sets an adversarial tone and tells me that you are likely going to be a grinder. Until you give me the opportunity to see the property, and/or you present me with a special circumstance that might make me amenable to a discounted offering, you are going to get quoted the standard fare. If anything, I might even quote a slightly higher fee than typical as I have no idea what I’m walking into.
- Haggle with me. There is certainly no harm in asking me about my fees (how could you agree to do business with me without knowing the costs, after all?), or asking if I would be willing to reduce them. Instead of trying to junkyard dog me into a lower rate, however, offer me something of value (see list of DO’s) in return. I don’t respond well to coercion, and I negotiate for a living. Give me a reason to reduce my rate, don’t blindly demand it.
- Own the only million dollar home in a $250k neighborhood. You must purchase and remodel/renovate shrewdly. Making poor initial purchasing decisions, over-improving for the neighborhood, or otherwise rendering your home difficult to sell is the single greatest saboteur of a better deal from me. Signing up for 6 months of marketing on an unsalable property will not put me in a generous mood. You’ll pay full boat, if I opt to take the listing at all.
- Play me off of other agents. It’s the oldest trick in the book, and one I can see coming a mile away. Fear of loss is a powerful motivator, just don’t be so obvious about it. A well-placed mention of the upcoming interview with another agent will work better than a full frontal assault of “Agent B said she’d list my house for ___%.” I know that I am likely competing for your business, and factor that into the rate I quote you. A subtle reminder won’t hurt, but a mugging will make me hold tight to my wallet.
- Approach me on one of my listings directly under the misguided belief that I will reduce my fee if you do not have representation. This bothers me on principle. I may offer a cooperating broker a percentage of my fee to produce a buyer, but under no circumstances does that percentage vanish or adjust if I am the only agent involved. I am actually hesitant to handle both sides of the transaction, as it opens the door to twice the transactional liability, and certainly will not double my workload for free. Regardless, this tactic is akin to cutting your nose off to spite your face. Go get yourself an agent of your own who will negotiate a better deal for you rather than dinking and dunking around with a percent or two of agent compensation. Think big picture.
- Ask me to reduce my fee if I find the buyer without the involvement of another agent. This is the flip side to the previous entry. Yes, I stand to earn a larger fee if there is no other agent involved in the transaction, but this approach is problematic in that you are essentially providing me with a disincentive to find your buyer myself. Why would I bust my behind and open myself up to the greater liability of handling both sides of the transaction for no additional reward? Such a commission arrangement essentially directs your agent to the couch, where he waits with feet up on the ottoman for a buyer’s agent to do his job.
I abhor the phrase “win-win.” So overused and misapplied to a business transaction. We are not Real Estate mediators, after all, but agents tasked with securing the best possible terms for our clients in the sale of real property. When it comes to the relationship between agent and client, however, it is the appropriate cliche. If we are to function as a cohesive unit to satisfy mutual goals, there are different routes to the “win-win” scenario. No need to butt heads when we each have things of value to offer in exchange for that which is most important to us. For consumers, that means making your agent’s job easier and directing future income potential his way. For agents, that means rewarding that consideration with quality, professional service at the lowest possible rate of compensation.
Symbiosis … it’s a beautiful thing.
