by Paul Slaybaugh | May 24, 2009 | Daily Listing Updates, Scottsdale, Scottsdale Listings, Scottsdale Real Estate
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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 19, 2009 | Home Buying, Scottsdale Real Estate
“There sure is a lot of crap out there.”
This from a buyer who by all practical measure has been bound and determined to see every single one of the 37,000 active listings currently on the market in the greater Phoenix area.
“Yep, there sure is.”
This from the weary Scottsdale Realtor who is barely suppressing the I-Told-You-So urge.
Throw out the tighter restrictions on financing. Forget about the would-be buyers who can’t buy because they are tied to a house they can’t sell. Pay no mind to interest rate surfers and bottom seekers. If there has been one under-reported factor influencing the purchasing habits of home buyers in the past six months, it has been an overabundance of choice. Believe it or not, but many of the folks fortunate enough to be in a position to buy in this market are being held hostage by … themselves. Give a person too many perceived options and watch the latter half of Newton’s first law of physics take hold.
The buyer at rest tends to stay at rest unless acted upon by a 1% interest rate and a crowbar.
As our inventory has slowly contracted in the last few months, however, so has the rationale for delaying the purchase that you want to make.
Now, before I go any further, repeat after me: “I want to buy a house.”
Sometimes, it can be helpful to remind yourself of the penultimate objective. It’s easy to get so wrapped up in the allure of winning a negotiation or the status of the current global economy that you forget what you are actually trying to accomplish.
I told people when there were 55,000 properties on the market, and I tell them today, the overwhelming majority of the homes I see are either overpriced or in deplorable condition. The sheer volume of the listing inventory has convinced buyers that they will have thousands of viable options and that they will basically get to name their price for the home that they want, but a rude awakening often awaits.
While conditions are ripe to secure a terrific value, those who expect hundreds of impeccable options for their specific criteria will be disappointed. The good properties and the good values still come and go with lightning speed, leaving the dawdling buyer to sift through the rest of the damaged goods that have been on the market for 300 days.
Want to make a steal? You can. But you have to be fast and you have to be well qualified ahead of time. Matter of fact, the last two bank properties that I went after with clients had a total of 25 offers between them. I went 1 for 2 in my pursuit, and the prices were bid up substantially in each instance because the list price was so far below market value.
It’s like 2005 with greatly reduced prices for this segment of the market. There is an armada of cash laden buyers looking for the same turnkey property at the same bargain basement price.
As such, not only may you have to pay over full price for that hot property, but you will likely purchase it “as is” with no seller warranties or disclosures if it is a foreclosure listing. That’s just life in the big city when you are dealing with a bank. Given the pricing, it is often worth it.
There will be those buyers, though, who still believe they can knock 100-200k off of any price due to the “buyer’s market” about which they have been hearing.
Newsflash: You only knock that kind of coin off a price when there is no demand for the product. In other words, the home must be overpriced or under-maintained significantly enough that it attracts no suitors.
I don’t know about you, but this doesn’t sound like the home I’d be after.
Don’t become one of the zombie house shoppers that turns into a hobbiest through unrealistic expectations. You know the type. At some point along the way, they go from being active home buyers to tourists when they fail to match up the reality of the marketplace with their preconceived notions. They wander around aimlessly every weekend looking at open houses and half-heartedly seeking sustenance for their undead pre-qual letters.
Realtor: “So, can you see yourself living in this home?”
Zombie Buyer: “Brains!”
You have to be ready to move when the right home comes along at the right price, lest you be resigned to thumbing through the stack of also-ran listings while the more pragmatic consumers eat up the good values.
Inertia, it’s a fickle thing. If you recognize value when you see it, you will be successful in securing it. Keep missing the good ones by submitting unrealistic offers or waiting for the magical unicorn to appear with the million dollar home and $100,000 price tag, and the sedentary buyer will seep further into the earth.
It’s a great time to be a buyer, but you have to separate the hype from your purchasing decisions. You might even find that some of the better values are found in the resale market now that sellers have begun to wise up and price more competitively with the banks, but that is fodder for another post.
Now, do you want to go speulunking, or do you want to buy a house? I’m up for either, but I need to know which shoes to wear.
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.
by Paul Slaybaugh | May 6, 2009 | Home Buying, Scottsdale Real Estate
How many days do I get to back out of a home purchase in Arizona?
Now that is an often misconstrued matter. Many people view the due diligence period (inspection period) as a “free look.” While it is true that a buyer is entitled to a full return of his/her earnest money and freedom from the obligation to continue with the purchase based upon the results of inspection(s) or other material matter (discovery of neighborhood crack house right next door, improper square footage in listing, scary structural or insurance history as reported in the Seller Property Disclosure Statement or insurance loss history report, etc) during the first 10 days of the escrow period, it should not be abused. It’s not really a “free” look anyway if you are shelling out money for inspections. I’ll address the question by examining the buyer protections that are in place regarding the initial inspection period in the standard AAR (Arizona Association of Realtors) purchase contract.
As a protection, the time frame for the inspection period is often slightly misunderstood. The buyer has 10 days from the full execution of the purchase contract (the day it the contract by both parties is executed is considered Day Zero) to provide the seller with notice of his/her intentions. Any time up to 11:59 PM on Day 10, the buyer can elect to (A) move forward with the purchase, (B) decline to move forward based upon a specific objection(s) or (C) agree to move forward provided that the seller make certain repairs. If the buyer chooses option A, he/she is committed to the purchase and the inspection period is over. If option B is selected, the buyer withdraws from the purchase and earnest money is fully refundable (provided the seller doesn’t contest the validity of the buyer’s objection). If option C is selected, the seller has 5 days to respond to the repair demands. If the seller responds in any manner other than full acceptance of buyer demands, the buyer has another 5 days to review upon receipt of seller’s response. The options for the buyer at that point are to either walk away or accept and move forward.
So, like so many things in Real Estate, the answer is that “it depends.” Depending on the choices made by each party, the buyer can actually have up to 20 days to cancel the contract based upon inspection issues. There are other potential walk-aways in the standard purchase contract, such as the financing and appraisal contingencies, that extend beyond the initial inspection period, but those are dependent upon your good faith effort to obtain timely loan approval failing or the property not approving for at least the sales price (in financed transactions), respectively. They aren’t reliable escape clauses to be leveraged if you simply change your mind weeks into the escrow period.
There is also the final walk-through, which provides the buyer with the opportunity to ensure that the property is both in substantially the same condition as it was when they agreed to purchase terms, and that all agreed upon repairs have been competently performed. Again, however, this is not a reliable walk-away at the zero hour. There would have to be some serious material reason for exiting the transaction at this point. A reason that would have to stand up to scrutiny as you can bet your bippy the seller will contest it.
Long story short, there are ways out of a purchase agreement in Arizona if certain contingencies are not met, or the other party breaches the agreement, but you shouldn’t rely on them as safeguards against a change of heart. Your “free look,” if you insist on considering that, effectively ends at midnight of Day 10.
* A note of importance: If the buyer supplies the seller with notice of repair demands prior to Day 10, he/she effectively waives the remaining time left in the initial 10 day inspection period. For example, if the buyer sends repair demands to the seller on Day 5, he/she cannot come back with additional demands on Day 9. And if the seller signs off on the agreement to make all repairs, the buyer is now bound to proceed. *
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Ray and Paul Slaybaugh are not attorneys, just humble Real Estate agents. Please do not be silly enough to rely on any opinions given here for legal advice. Consult with a qualified attorney should you have any legal matter pertaining to a Real Estate transaction that needs to be addressed.
