by Paul Slaybaugh | Sep 18, 2010 | Home Buying, Scottsdale Real Estate
That is the G rated version.
The working title was initially more along the lines of:
“What the &^%$ Do You Mean the &^%$#&^ House Is Under &^%$^&# Contract? The &^%$#$@ Listing Says It Is &^%^&#%$ Active!”
There is little more frustrating to the do-it-yourself consumer than outdated data. It’s hard enough to navigate unfamiliar territory with an accurate map, but it’s downright infuriating when that map is hopelessly obsolete. Like punching in the street address to the nearest Starbucks and being warned that there be dragons beyond the intersection of Hayden and Shea. A modern expedition requires modern cartography.
And yet, with the technological onslaught that has shifted the landscape of Real Estate practice, we still suffer from the “garbage in, garbage out” axiom that stifles growth in all human endeavors. All too often, an online home shopper comes across that perfect home that is everything he or she has ever wanted in a house … or rather, it would be if it were actually available.
Son of a &^%$!!!!!!!!!!!!!!!
Before converting your Nissan Murano into a makeshift scud missile and driving it through the listing brokerage’s plate glass window, humor me for a moment.
Once a buyer and seller successfully negotiate a purchase contract here in Scottsdale, with all terms and conditions agreed to and ratified by each party, the listing agent has two choices: change the listing status to “Active With Contingency” or “Pending.” Whether the home remains visible to the consuming public depends on which selection is chosen.
If the home is updated to reflect “Active With Contingency” status, the home remains on the market while the transaction is shepherded through the escrow process. Whether the contract is subject to the buyer’s financing, inspection, ability to sell another property, etc, there are certain contingencies in place that must be satisfied prior to closing. During this time, the seller can market the home for backup offers if he or she so desires. By essentially keeping the home in active status, but disclosing the presence of an existing contract, a seller does exactly that.
If the home is listed as “Pending” once an offer is accepted, it is removed from the market while the escrow is processed. In essence, the seller and listing agent are telling the Real Estate community to cease showing the home and that backup offers are not being solicited at this point.
With those two primary options serving as the choices for listing agents and their clients, you can imagine why many opt to go with the former. With the challenges buyers face in obtaining financing, in addition to typical inspection and appraisal concerns, some consider keeping the home available for possible backup offers the biggest no-brainer since all-you-can-eat ribs.
I actually prefer to utilize the “Pending” status as it shuts down the Days On Market accumulation that can stigmatize a property in the event that the transaction explodes, but that is another post altogether.
The truly baffling thing is that the public is not generally privy to the “With Contingency” part of “Active With Contingency” status. Take your pick amongst several possibilities and/or conspiracy theories as to why the listings displayed to consumers online will show up with no differentiation between the two entirely different categories, but the upshot is that you often stumble upon interesting properties that haven’t really been available for weeks, if not months. Just be aware that it’s no trickery being undertaken by the agent whose site search you are utilizing. While some industrious types might theoretically thrive on creating such confusion to create their own clarifying need, most of us are just as annoyed by the data disconnect as you are. We’d much rather the information that is disseminated be 100% correct and up to date than to field calls that lead to inevitably frustrated consumers. It’s simply a limitation of the information that is parsed out by the local MLS.
So there you go. Every home you come across online is available to purchase. Except those that aren’t.
On behalf of the industry, my apologies for rewarding your self-directed internet search for new construction in Scottsdale with a map of Pangaea.
Give me a call or shoot me an email if you want to request current availability on any and all “active” listings you come across online.
by Paul Slaybaugh | Sep 15, 2010 | Home Buying, Scottsdale Real Estate
If you were to stand in the center of Scottsdale and spit in any direction, chances are good that you’d hit a home with negative equity. Thus if you’ve been shopping for a home, chances are equally good that you have come across a short sale listing or fifty along the way. If you are willing to subject yourself to the short sale process for the right home, there is a mental hurdle that must be navigated when sitting down to draft an offer.
Prevailing wisdom holds that a Scottsdale short sale seller doesn’t give a fig about the ultimate sales price. Seeing that he won’t walk away from the transaction with one wooden nickel in his pocket, what would he care about the size of the loss that the bank(s) that holds his mortgage takes? The same bank that qualified him to buy a $750,000 home with zero down and an adjustable rate on a stated income loan. The same bank that bilked him of taxpayer bailout funds while he’s stuck with that albatross of a house. Screw the bank. He’d gladly facilitate a deal that calls for the lienholder to absorb as large a loss as possible while carving his initials in the front door on the way out, right? Right?
Not so fast, Johnny Oversimplifier.
There are several reasons why a seller with an interest in actually completing the transaction will attempt to negotiate the most favorable terms from his side of the table. First and foremost, the seller wants to submit an offer to the bank that has a chance of succeeding. If you come in with an offer of $200,000 on a $400,000 short sale listing, there is little chance that approval from the bank (the ultimate decision maker in the process) will be forthcoming. Knowing that, the seller will not be receptive to tying the bank up with an unrealistic offer. The higher the price the seller can negotiate before the package is sent to the bank for approval, the better the chances of getting out from under the house.
While gaining approval constitutes the lion’s share of the concern a seller will have with your supremely low offer, the approval itself will raise additional considerations. The larger the loss the bank takes, the larger the possible tax ramifications the seller faces for the forgiven debt (The Mortgage Forgiveness Debt Relief Act of 2007 has limitations on residence types and amount of the debt forgiven). Further, assuming full release from the lien is obtained from the bank once an offer is approved (something that cannot be taken for granted and should always be reviewed by a Real Estate attorney prior to ratification), the seller may be asked to bring additional monies to the table as part of the approval. Especially in instances in which there is more than one loan, the larger the loss, the more likely one of the banks will try to shake the seller by the feet to see if any loose change falls out of his bank account at closing.
Long post short, the seller has legitimate reasons to negotiate in full capacity against your initial purchase offer. Just because he stands to gain nothing in terms of cash at closing, he does stand to gain substantially. A new lease on life and release from the responsibilities of an underwater mortgage are pretty high stakes, after all.
Moreover, the seller that willingly accepts your lowball offer without a fight might not be interested in actually selling his home. There is plenty of gamesmanship and hidden motivation at play in the short sale arena at present. Your low offer may be forwarded to the bank merely to stall foreclosure. Knowing that it will never gain approval, the seller buys a little more time for rent-free living while the bank processes the file and ultimately returns with a rejection four months later.
The seller who counters your initial offer is doing you a favor. Not only is he demonstrating an interest in a successful conclusion to the sale, but he’s giving your offer a chance. If he signs off on your lowball without a fight, he is just prolonging the agony.
I’d recommend getting comfortable in that studio apartment you are renting if you are floating lowball offers on Scottsdale short sale listings.
by Paul Slaybaugh | Sep 11, 2010 | Home Buying
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by Paul Slaybaugh | Sep 4, 2010 | Home Buying, Scottsdale Real Estate
Is that Scottsdale home really for sale?
It sure looks like it is. There’s a sign in the yard, property information on the internet, an asking price and everything. The comings and goings of Real Estatey type people with wide eyed gawkers in tow confirms that the quaint Spanish hacienda is looking for a new owner.
Or is it?
There is a disturbing new trend in the Scottsdale Real Estate scene: the fictitious listing.
By now, anyone who is not somewhat up to speed on the short sale market should be stoned to death with the rock under which he has been sleeping. Get used to them, people, as they are not going anywhere anytime soon. Though we all know the uncertainties and complexities involved in a short sale transaction mean that the listed price is not necessarily the real price, we generally take for granted that a seller is actually interested in selling.
Given the rise in anecdotal reports of would be sellers who haven’t made payments in two years while attempting to consummate short sales, you can imagine what the more entrepreneurial freeloaders in our midst have concluded: going through the motions of a short sale for the sake of appearance can keep the bank off one’s back while he lives rent free for as long as the ruse will allow.
Financial institutions are not so naive to believe such subterfuge never happens, so it typically takes a viable offer on a property to postpone a trustee’s sale (Arizona’s version of a foreclosure). That’s where you, the buyer, come in. For the “seller” interested in staying in the payment-free property for as long as possible, the facade entails the procurement of an offer for submission to the bank. Whether the seller intends to actually complete the sale or not.
In essence, the prospective buyer could get strung along for months by a seller who is just buying time. Or stealing time, I should say.
Perhaps his credit is already damaged beyond repair. Perhaps he doesn’t want to bring any of the money to the table that the bank demands. Perhaps he does not qualify for the short sale at all (yes, a seller does have to meet certain qualifications to gain bank approval). Perhaps the seller is simply bitter beyond reason and unwilling to let some buyer have his home for pennies on the dollar. Whatever the reason, there are properties on the market that aren’t really available.
How do you identify those shiftless wasters of time before embroiling yourself in a slow, emotional death? There are a few tactics that a competent buyer’s agent will employ when separating fact from fiction on a short sale offering, but none is foolproof. Short of peering into homeowner’s soul, all one can do is take basic precautions to assess the viability of a sale. Unfortunately, the determination of what the owner can do is not necessarily indicative of what he will do.
The guy could be dealing with you in good faith, or he could simply be using your offer to delay his inevitable foreclosure.
My advice? If you are going to go the short sale route, start with properties that have been through the process to the point that they have a bank approved price attached. If the seller is playing games in this instance, at least the process will resolve itself faster and allow you to move on down the road. If you fall in love with a home that has not yet been approved for a short sale by the bank, make sure the appropriate questions are answered and that the listing agent has a competent record of successful short sale transactions. The good ones are adept at separating the viable candidates from the disingenuous types as they have a vested interest in getting the transaction to the closing table as well.
At the end of the day, though, you just never know what is in store from one short sale to the next. With all of the variables to contend with in the best of circumstances, adding the integrity and intention of the seller to the list of concerns is almost comical in a tragically masochistic sense. All the more reason I recommend avoiding the short sale quagmire unless all other avenues have been exhausted.
It’s a beautiful Scottsdale home alright, but is it really for sale?
by Paul Slaybaugh | Sep 3, 2010 | Scottsdale Real Estate
Is it time for an MLS database of active buyers?
I ponder this on the heels of difficulties in locating quality resale homes amidst the bank owned rubble of today’s market.
We have long been beholden to the seller in the Real Estate hierarchy as a home listing sets all subsequent wheels in motion. Cooperating agents are alerted to the new offering. Those agents, in turn, seek matches for the property against their current active buyer rolodex.
Is it time we turned that seller oriented paradigm on its ear?
I’m wondering if I’m alone in my thinking when I posit that it would be beneficial to reach agents via the broad scale of the MLS with our buyer needs. We tout such needs at office meetings and tour groups, so why not disseminate them across a collective platform? No need to be strictly beholden to the current crop of listings when we could create a database for all agents to peruse based on buyer specific criteria (location, price, size, etc preferences). In addition to helping match up buyers with forthcoming properties that have yet to hit the market, I imagine such a beast could help potential sellers gauge the level of demand for their properties prior to “testing the market.” What a tremendous listing tool as well. Imagine looking through the day’s hotsheet for new buyer needs to find a potential match for a would-be seller who has been on the fence about putting his home on the market.
“Mr. Seller, there are now 7 listed buyers for a home that fits your exact parameters. That is up from 3 last month. It’s time to throw this thing on the market.”
In this regard, such a dual database of homes for sale and active buyers could serve the interests of both parties. A seller could opt to keep the general public at bay and make his home available only to those buyers his listing agent targets as candidates (no sign in the yard, no nosey neighbors, no showings with little to no notice), and a buyer could tap into the burgeoning inventory of almost sellers.
If we are to consider the Multiple Listing Service as Match.com for Real Estate buyers and sellers, why does half of that equation gets the benefit of perusing the pictures and profiles of prospective mates while keeping their own buckteeth hidden behind a pixelated avatar?
Precautions would have to be taken for privacy concerns, of course, but such obstacles are not insurmountable. Only buyers signed to Exclusive Buyer Brokerage Agreements would constitute suitable “listing” candidates.
What say you forward thinkers of the Real Estate industry and interested members of the consuming public, care to join me for some impromptu brainstorming? Is it time for dual databases for buyers and sellers?
Or have I been eating too many paint chips again?
