by Paul Slaybaugh | Jul 29, 2009 | Home Selling, Scottsdale Real Estate
“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.
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.
